The Major Economic Crises in 1990s and Lessons for India's Trade and Financial Policy

Abstract

The paper by Archana S. Mathur and Arvinder S. Sachdeva analyzes major economic crises of the 1990s, including the Latin American (1994–96) and Asian Financial Crisis (1997–98), to derive lessons for India’s trade and financial policy. It emphasizes that strong macroeconomic fundamentals alone do not prevent crises; vulnerabilities in fiscal management, external debt, and financial regulation can trigger economic shocks. Key recommendations include improving fiscal discipline, enhancing investment efficiency, strengthening banking and financial sector regulations, and establishing robust early warning systems to monitor critical indicators such as foreign reserves, capital flows, and debt profiles. The study concludes that proactive policy measures, transparent fiscal management, and vigilant monitoring can significantly enhance India’s resilience to potential financial crises while maintaining investor confidence and economic stability.