ABSTRACT
In part because of the success of the government's agricultural policy, India's balance of trade and balance of payments positions were relatively healthy during the 1970s. In addition to internal impediments to growth, the Indian government limited foreign participation in development to the provision of soft loans. Although the Janata regime was unable to prevent India's economy from deteriorating, it has been described as an effective and stable government. The Indian government was concerned about losing face by giving in too easily to the dictates of the Fund, while International Monetary Fund (IMF) officials worried that the upcoming adjustment would consist of empty promises with no authentic reforms. The IMF and Indian economists at the time predicted that India's balance of payments deficit would not only persist, but would become chronic. An important institutional factor helps further account for India's success in its IMF negotiations. India had already carried on a long, successful relationship with the World Bank.
