Echoes of 1990-91?

Let us hope that 2026-27 will remind us of 1991-92, when economic policy shifted from increased foreign and domestic borrowing to implementing serious policy reforms

- SHANKAR ACHARYA

It has been 17 months since I last contributed a column to Business Standard “Macro signals flashing amber” (January 16, 2025).

It has been 17 months since I last contributed a column to Business Standard “Macro signals flashing amber” (January 16, 2025). Today those signals are “locked and loaded” at red, to use Pete Hegseth’s favourite phrase.

Last month, the Prime Minister emphasised the gravity of India’s economic predicament in today’s difficult global circumstances.

In some ways, the situation is eerily reminiscent of 1990-91. Back then, the US-Iraq-Kuwait war had sharply increased the global prices of oil and gas and thus delivered a serious terms of trade shock to all major oil-importing nations like India. Today, the three-month-old massive assault on Iran by America and Israel and the consequent closure of the Strait of Hormuz have ramped up oil prices by over 50 per cent, with experts warning of even higher prices in the near future, as government and private stocks run down globally.