Why was the rupee devalued in 1991?

India had to go for a devaluation of the Indian rupee because India was facing a massive economic crisis. India had very limited foreign reserves to carry out international trade for a few days. India was facing a balance of payment crisis. You can read about the Balance of Payment Crisis, 1991 – Causes and Measures to Control it in the given link.

Exports from India had reduced, India’s oil import bills increased massively, high current account deficit, loss of investors confidence were some of the reasons behind India’s economic crisis.

Further readings:

1. Forex Reserves – Meaning, Importance, Advantages (Notes for UPSC IAS exam)
2. New Economic Policy of 1991 – Objectives, Liberalisation, Privatisation, Globalisation