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Since independence, India followed the mixed economy. India has beenable to achieve growth in savings,diversifiedindustrial sector, ensured food security etc. In 1991, Indiamet with economic crisisand govt.wasnot able to make repaymentson itsborrowings from abroadand foreign exchange reserves. All this ledthe govt.to introduce a new set of policy measures which changed the direction of ourdevelopmental strategies
The origin of financial crisis can be traced from the inefficient management of the Indian economy in 1980s For implementing various policies, the govt. generates funds such as taxation. When expenditure is more than income, the government borrows to financethe deficit from banks and from people within the country and frominternational institution.