- India faced an economic crisis in 1991. It is claimed as the toughest time for Indian economy. - During this phase fiscal deficit was 7.8% of GDP, interest payment was eating 39% of the total revenue collection of the government, Current Account Deficit (CAD)was 3.69% of GDP and WPI inflation was hovering around 14%. India was about to be declared defaulter by the international community. In order to tackle all these problems government devalued Indian currency and the exchange rate became 1USD=24.58INR