Deals with the process of stabilization after the economic crisis suffered by India in 1991. It presents a mixture of evidence and theory to examine the success of various stabilization methods attempted. It shows how stabilization was achieved for the medium term through successful reorientation of the balance of payments. This was a success, but inflation remains higher than would be ideal and has yet to be properly managed. For long-term stabilization, public-sector debt must be cut to help boost private-sector investment.
Keywords: balance of payments, fiscal policy, inflation, monetary policy, stabilization