RBI rules out 1991-type crisis in 2012

HYDERABAD: Ruling out a repeat of 1991 crisis situation in 2012, RBI Governor D Subbarao today said the current economic situation is different from what it was two decades ago as rupee is market-determined, forex reserves is good and financial markets are "resilient".

Unlike 1991, the rupee's exchange rate is market determined "which is our great strength", he said.

India now has a $280 billion foreign exchange reserves and financial markets are resilient and robust, he added.

These are the reasons "we will not have a crisis of 1991 type," Subbarao said.

"It is highly improbable we will have a 1991 crisis but I'm not saying we have no problems. There is quite a lot of development in the macro-economic sector," he added.

"Today people ask me is 2012 a repeat of 1991, my answer is no... 2012 is not a repeat of 1991 because today we are in different sort of economy," Subbarao said delivering the K Obayya Memorial Lecture here.

After expanding by 8.4 per cent for two consecutive financial years, the GDP slumped to 6.5 per cent in 2011-12. The country is now also grappling with high inflation, slowing industrial growth, sliding rupee and declining exports.