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Cycle rickshaws move past a display of Indian rupees at a roadside currency exchange stall in the old quarters of New Delhi in June.
Cycle rickshaws move past a display of Indian rupees at a roadside currency exchange stall in the old quarters of New Delhi in June.
(Anindito Mukherjee/REUTERS)

Rupa Subramanya

Why India’s economic crisis is about more than the rupee

Not a day goes by in India’s hyperactive media environment without screaming headlines suggesting that the country’s economy is spinning out of control and going into the abyss. In fact, if you just stopped at the headlines, you’d think the country was on the verge of a major economic meltdown along the lines of the 1991 foreign-exchange crisis in the wake of the first Gulf War, which caused oil prices to skyrocket and the government’s reserves of foreign currency almost to dry up. That was the occasion when India had to mortgage its precious gold reserves and knock on the International Monetary Fund’s door with a begging bowl. That indeed was the crisis that set off the first wave of economic liberalization that turned India from potentially becoming a basket case into one of the most successful and fastest-growing large economies in the world.