📷 Image: Wikimedia Commons / National Museum of American History
Politics
India’s 1991 Gold Pledge: A Turning Point in Economic Policy
✍️ ThePrint
🗓 06 Oct 2026, 07:03 AM
👁 10
In 1991, India pledged gold to meet its international debt obligations, marking a decisive shift in fiscal policy amid political turmoil.
In early 1991, India faced a severe balance‑of‑payments crisis, with foreign reserves dwindling to a few months’ worth of imports.
The government, led by then Prime Minister P.V. Narasimha Rao, decided to pledge gold reserves to secure a loan from the International Monetary Fund and other creditors.
This move was unprecedented, as India had never before used its gold holdings as collateral for international borrowing.
The pledge not only helped avert a default but also signaled a broader shift toward liberalizing the economy, setting the stage for the reforms that followed later that year.
The government, led by then Prime Minister P.V. Narasimha Rao, decided to pledge gold reserves to secure a loan from the International Monetary Fund and other creditors.
This move was unprecedented, as India had never before used its gold holdings as collateral for international borrowing.
The pledge not only helped avert a default but also signaled a broader shift toward liberalizing the economy, setting the stage for the reforms that followed later that year.