Squeezing imports reduced foreign exchange spending on the trade account. It was a solution on the demand side. But with dollars flying out of foreign currency accounts thanks to non-resident Indians losing confidence, the government had to get a grip on the capital account as well. A supply side solution was needed. The simplest, though politically tough, option available was to convert India’s gold stocks into hard cash. A proposal to this effect had been examined in detail by the RBI as early as December 1990. It was revived in March 1991, the decision was taken in April and executed in
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