Forex reserves in 1991

NEW DELHI, June 27— Facing a grave economic crisis, the newly elected Indian Government has begun urgent talks with the International Monetary Fund seeking emergency aid of several billion dollars.

Yet the conditions for such assistance are stirring anxiety in this nation, which historically prides itself on self-reliance. At issue is not only the economy but also India's sensitivity to Western involvement. What makes the nation's plight especially delicate is the realization that, without bowing to Western conditions for economic change, India could slide into collapse. The immediate issue is India's struggle to avoid defaulting on loans.

It has never defaulted since independence 44 years ago.

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The loan plan has been front-page news for several days, and the political opposition has responded with confusion. Essentially, parties on the right and left have expressed anxiety about India's perilous economic condition, but ask if there are other options besides going to an international agency that would attach firm strings to a huge loan. The Government says there are not. Officials said that it would be the biggest loan the I. India, which still views itself as a socialist nonaligned leader, views the potential arrangement with pain, even embarrassment.

Ninan, editor of the Economic Times, an influential daily, said: We have never had this kind of debt problem. The Government fiscal position has never been as bad as it is today.

There will be some demurring from critics about a loan. There'll be some opposition.

The left will oppose this arrangement. But most of us know that the alternative will be much worse than accepting an I.

The economic crisis came about because of an overlap of political and economic problems, including India's revolving-door Governments in the last two years, with four Prime Ministers and four finance ministers, which led to virtual economic paralysis.

With the Soviet Union, once a major patron and supporter of India, facing its own economic and political crisis, India, essentially, has nowhere else to go now but the West. Recently, India was forced to sell 20 tons of gold in order to pay off creditors. Rao, who was sworn in as Prime Minister last week, has already sent a signal to the nation -- as well as the I. Rao made his comments in a speech to the nation Saturday night. On Tuesday, the new Finance Minister, Manmohan Singh, said that India must face the "harsh realities" of a changed world, that excessive bureaucracy and controls had damaged the nation's economy, that foreign investment would be sought and that India must face the realities of failed policies.

In remarks that would have been unthinkable by a Cabinet official in recent years, Mr. Singh demanded "no ideological hang-ups" and contrasted India to South Korea.

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The two nations had the same per capita income in Such comments -- coupled with the I. A wing of the Communist Party has already described as "unacceptable," a potential condition of the I. Indrajit Gupta, general secretary of another group, the Communist Party of India, said: That's what concerns us.

The economic situation is serious. Something must be done.

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