"In India, the monetary policy framework significantly changed during the 1990s". Elaborate on this statement and evaluate the monetary policy followed by the Reserve Bank of India during nineties.

The 1990s was a transformative decade for India's economic landscape, with significant shifts in economic policies, including the monetary policy framework. The era marked the liberalization of India's economy, a move that necessitated a shift in various macroeconomic policies, including the monetary policy. This change was driven by both internal and external factors, including a balance of payments crisis, globalization, and the need to make the Indian economy more market-oriented. The Reserve Bank of India (RBI) played a crucial role in shaping this transformation, aligning the monetary policy to foster growth while controlling inflation and stabilizing the currency.

### Background of the Monetary Policy Before the 1990s

Prior to the 1990s, India's monetary policy was largely focused on maintaining exchange rate stability and financing the fiscal deficits of the government. The country’s financial system was characterized by strict controls, including interest rate caps, directed credit, and regulated capital markets. The RBI’s policies were influenced by the need to manage the country’s fiscal deficits and maintain a stable exchange rate. The central bank had limited autonomy, and monetary policy often took a back seat to fiscal policy.

India’s monetary policy during the 1980s was largely expansionary, with low interest rates and easy access to credit. However, by the late 1980s and early 1990s, this approach led to rising inflation, increased fiscal deficit, and a significant deterioration in India’s balance of payments position. The country was unable to meet its foreign exchange obligations, and by 1991, India faced a severe economic crisis.

### The 1991 Economic Crisis and Policy Reforms

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