Economic liberalization in 1991 from "summary" of A Brief History of Modern India by Rajiv Ahir
The year 1991 marked a significant turning point in the economic history of India. It was during this time that the country embraced economic liberalization, a departure from the previously closed economy that had characterized India's economic policies since independence. Under the leadership of then Finance Minister Dr. Manmohan Singh, India initiated a series of reforms aimed at opening up its economy to the global market. This move was motivated by the need to address the severe economic crisis that the country was facing at that time, with dwindling foreign exchange reserves and a high fiscal deficit. The key aspects of economic liberalization in 1991 included the dismantling of the License Raj system, which had stifled entrepreneurship and innovation in the country for decades. This system had required businesses to obtain licenses for almost every aspect of their operations, leading to bureaucratic red tape and corruption. Additionally, the government reduced barriers to foreign investment and trade, allowing for greater participation of foreign companies in the Indian market. This was a significant departure from the protectionist policies that had previously shielded Indian industries from global competition. Furthermore, the government initiated privatization of state-owned enterprises, transferring ownership and control of these entities to the private sector. This move was aimed at improving the efficiency and competitiveness of these industries, which had been plagued by inefficiency and lack of innovation under government ownership.- The economic liberalization of 1991 marked a shift towards a more market-oriented economy, with an emphasis on deregulation, privatization, and opening up to foreign investment. These reforms laid the foundation for the rapid economic growth that India experienced in the following decades, transforming the country into one of the fastest-growing major economies in the world.
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