New Delhi: Are we heading towards the dangerous economic crisis of 1991? According to a report presented by major industry body FICCI on Friday, the current financial situation is somewhat similar to 1991.

The report presents a very gloomy picture of the economy. Report said that current state of borrowings and fiscal imbalance is more worrying than the crises two decades earlier.

Economic crisis of 1991 is considered to be the worst ever since independence. The government had to take decision on mortgaging gold outside India to retrieve the situation. FICCI has done a comparative study of economic scenario between now and then. FICCI has indirectly said that at both the occasions, wrong economic policies of the governments are accountable for the economic crisis.   

FICCI’s report says that in the decade prior to 1991, the government’s borrowings increased significantly by annual average rate of 12 percent. Whereas in last five years, government’s borrowings increased by annual average rate of 32 percent. Similarly in the decade of 80s, non-plan expenditure saw an annual average increase of 20 percent whereas it is growing by annual average rate of 30 percent presently.

In last five years, fiscal deficit has grown by annual average rate of 30 percent as compared to annual average rate of 18 percent prior to the 1991 crisis. In the present scenario, growing revenue deficit is seen as a threat by economists.

Situation may worsen further by consistent slow revenue collection figures.  In the last five FY, tax revenue growth has been 13 percent whereas it was 16 percent in the decade ended in 1990-91.