Former Union Minister and BJP leader Subramanian Swamy on Friday recalled his encounter with the then US Ambassador to get India $2 billion loan from International Monetary Fund (IMF) to save the country from a "grave economic crisis" in 1991.

Swamy, who was Law and Justice Minister in Chandra Sekhar government in 1991, said a decision to allow American war planes to refuel at Indian airports during the first Iraq war was taken after the US agreed to arrange $2 billion IMF loan for India.

Speaking on 'responsible capitalism' at the annual conference of Kerala Management Association here, Swamy said India faced severe financial crisis in 1991 due to some steps taken by the previous government regarding providing bank loans to industries.

Swamy, who commended Rajiv Gandhi for liberalising India's economy, however, said Gandhi, during his 1984-89 tenure did not prescribe that industrialists must only get long term loans.

"So, they (industrialists) got short-term loans", but in the process, in five years, the payments became due and there was a financial crisis, he said.

"The Prime Minister (Chandra Sekhar) asked me what we can do? Fortunately the American Ambassador came to see me for a political matter. He wanted to know whether we would help Americans in their war against Iraq. At that time, Iraq had conquered Kuwait. I asked what kind of help you want. He said he wants that their (war) planes from the Philippines be allowed to land in India, refuel in India and they are ready to pay three times more (than the landing rate for refuelling a commercial airline)."

"I told him that we don't want to change our landing policy for peanuts," Swamy said without naming the US ambassador.

"He asked... what do you want? I said we want $2 billion because we are on the verge of becoming bankrupt. He asked 'you want it from the United States?' I said no... from the IMF and without conditions.

"He said 'how can I get you money from IMF'. I said, you have 87% voting right in IMF. So, if you want landing rights, then on Monday I want $2 billion," Swamy revealed.

"He (the ambassador) said today is already Friday... I said in Washington it is still Thursday night.

"So, they gave us $2 billion... and they were given landing rights... we changed our landing policy," Swamy said.