Title: Balance of payment crisis: lessons from Indian payment crisis for developing economies

Authors: Ashutosh Kolte; Mauro Rossi; Olimpia Torriero; Ameya Patil; Avinash Pawar

Addresses: Department of Management Sciences (PUMBA), Savitribai Phule Pune University, 411007, India ' Chartered Accountant, Benevento, 82100, Italy ' Department of Law and Economics, Sapienza University of Rome, 00185, Italy ' Sinhgad Technical Education Society, University of Pune, Pune, 411041, India ' D.Y. Patil Institute of Management Studies, University of Pune, Pune, 411035, India

Abstract: India has undergone two major economic crises since its independence, which were connected to the balance of payment (BOP) difficulties of 1991 and 2013. As a result of insufficient foreign exchange reserves for making payments, the crisis in 1991 presented itself because of the BOP difficulties. The nation was then forced to take loans from the IMF to open up the economy to the world. This led to economic changes being adopted through liberalisation, privatisation and globalisation (LPG) policy. The 2013 crisis experienced a major decrease in its currency value. These two crises have had an impact on the economy. This paper aims to study the BOP crisis of 1991 and 2013 and identify major factors responsible for these crises with root causes, and providing suggestions for prevention of future BOP crisis, including fiscal restraint, reduction of excessive imports, diversification of export destinations, abolition of the mechanism of inverted duty and flexible system of exchange rates.

Keywords: BOP; balance of payment; currency crisis; economic reforms; foreign exchange reserves; financial reforms; globalisation; Gulf crisis; liberalisation; oil shock; privatisation; economic crisis.

DOI: 10.1504/IJBAF.2021.116158

International Journal of Behavioural Accounting and Finance, 2021 Vol.6 No.3, pp.262 - 279

Received: 23 Mar 2021
Accepted: 22 Apr 2021

Published online: 12 Jul 2021 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article