This paper traces the genesis of India's 1991 economic crisis and analyzes the policy response of the goverment in terms of macroeconomic stabilization and structural reforms. It is suggested that the economic crisis was primarily due to the large and growing fiscal imbalances over the 1980s. Large fiscal deficits, overtime, had a spill over effect on the trade deficit culminating in a external payments crisis. A program of economic policy reform has since been put in place which has yielded very satisfactory results so far. While a lot still remains on the unfinished reform agenda, the prospects of macro stability and growth are indeed encouraging.