Which of the following statement (s) is/are correct in the context of economic crisis of 1991?

Statement 1: There was not sufficient foreign exchange to pay the interest that needed to be paid to international lenders from whom money was borrowed earlier.

Statement 2: No country or international funder was willing to lend to India at the time of crisis.

Both statements are correct.

In the late 1980s, government expenditure began to exceed its revenue by such large margins that meeting the expenditure through borrowings became unsustainable. Prices of many essential goods rose sharply. Imports grew at a very high rate without matching growth of exports. Foreign exchange reserves declined to a level that was not adequate to finance imports for more than two weeks. There was also not sufficient foreign exchange to pay the interest that needed to be paid to international lenders. Also no country or international funder was willing to lend to India.