With the hindsight I could venture to say that the liquidity buffers that were built up earlier helped during the crisis. Deleveraging during the crisis led to reversal of capital flows. India’s balance of payments came under pressure in Q3 of 2008–09 due to capital outflows.
It became necessary to draw down reserves to finance the shortfall and maintain orderly conditions in the foreign exchange market. This led to a corresponding contraction in the base (reserve) money.