Mexico had so face a severe economic crisis in recent years due to its huge external current account deficit. Which made it vulnerable to changing international investment. Moreover, Mexico had its economic boom from pure borrowings and not through national savings which went on the decline.

Now, relevance of Mexico-type crisis the India is a topic under discussion. The indications provided by the "structural adjustment" of the economy are showing early clouds of economic crisis by double-digit inflation and growing external current account deficit and others.

Economists warn of Mexico type economic crisis for the nation if the inflow of foreign exchange into the economy is lift uncontrolled and unconditional. If the economy is to be healthy, large scale borrowing should not be resorted to and inflationary pressure should be left under check through effective govt. policies.

Economic analyses of different research institutes reveal that the govt. has failed to arrest the spiraling prices of essential items. It is but appropriates to adopt a fiscal policy rather monetary policy to control and keep under check the inflationary pressures in the economy. The Asian Development Bank (ADB) has warned the Asian Countries (including India) to learn lessons from the worst Mexican episode.

Moreover, some economists have raised their voice of dissent against the policies incorporated in the so-called economic reforms in India. They have categorically criticised the policies adopted by the govt. which it neglected public investments in social sectors, in agriculture and in rural development as it was very much pre-occupied with liberalisation policy. They have warned that time has come for the govt. to overcome the emporia of liberalisation and also to be more sympathetic about common people. The govt. must pay due attention to the example of Mexico where the common people have been hit badly. According to a group of 13 eminent economists the policies adopted by the govt. are mostly unproductive. They criticised the govt. on the ground of "abdicating its rule in the belief that market knows best."

Fears are expressed constantly over India’s debt position (both internal and external). India seems to be gradually drifting towards a debt trap. Only the cost of servicing is about Rs.75,000/- crores per annum which is close to the country’s revenue earning of Rs.1,00,000 crores every year. The interest paid on the debt is likely to increase further in the near future as the govt. has recently taken external loans at a high rate of interest. India’s debt service ratio, which is the ratio of the debt service payments to exports of goods and services should be brought down and the govt. should try to reduce the amount of debt, both external and internal. Foreign exchange reserving, which is an important indicator of economic strength of the country in its external front, shows a downward trend. Although the govt. is maintaining that foreign exchange reserves position of the country is comfortable, it is, in fact not so. There is an apprehension that the position will further deteriorate in view of the strong current demand.

In the mean time, the forces of liberalisation brought about a considerable change in the factors that are responsible to determine the country’s current account. Abolition of licensing regime provided sufficient impetus to the industry, which has boosted up the demand for their import of capital goods and raw materials. Almost each of the Indian firm started to borrow from overseas and going in for technological collaboration, the liabilities arising out of technical know how fees and royalty have increased considerably. Such increase in foreign exchange requirements was further abetted by phase – wise tariff reduction and phasing out of exchange control.