New Delhi: Prime Minister Manmohan Singh on Saturday ruled out the possibility of India witnessing a repeat of the 1991 balance of payments crisis and also reversing the path to globalisation of the economy.
“There is no no questi on of going back to1991 (balance of payment crisis). At that time foreign exchange in India was a fixed rate. Now it is linked to market. We only correct the volatility of the rupee,” he told PTI.
In 1991, Singh said, the country had only foreign exchange reserves for 15 days. “Now we have reserves of six to seven months. So there is no comparison. And no go question of going back to 1991 crisis.”
Against the backdrop of the high Current Account Deficit (CAD) the Prime Minister was asked about fears in some quarters that the country may be witnessing a throw back to 1991 crisis when gold was pledged and the country was forced to adopt a reforms programme that put it on the path of globalisation of economy.
He was speaking after release of the fourth volume of RBI history titled “RBI History-Looking Back and Looking Ahead” at a small function at his Race Course residence.
When asked that the Current Account Deficit was still high, Singh acknowledged the problem saying high imports of gold was one of the major factors contributing to it.
“We seem to be investing a lot in unproductive assets,” he added.
Prime Minister called for evolving a fresh thinking on RBI’s monetary policy in a globalised economy and dealing with the constraints of its macro economic policies.
“The time has come to look at the possibilities and limitations of the monetary policy in a globalised economy and dealing with the constraints of the macro economic problems. That is where a fresh thinking is called for,” he said.
“I think Raghuram Rajan (governor designate) will evolve a policy with the help of professional persons for a national consensus if we have to carry on with implementing social and economic changes in a complex economy, Singh said.
The remarks assume significance in the context of the raging debate over RBI’s hawkish policy stance on checking inflation vis a vis government priority on growth.