4. Opening of Indian Economy- Neo Liberal Economic Reforms 1991

♤ Until 1980s, when seeming reforms to open Indian economy had shown initial signs, the Indian economy was largely subjected to an overall protectionist regime, with a strong focus on import substitution, centralised public sector and state monitoring.

♤ By 1991, India had a fixed exchange rate system, where the rupee was pegged to the value of a basket of currencies of major trading partners.

♤ As discussed, India faced its economic crisis in 1991.

♤ In the wake of realising how pivotal it was to open Indian economy, the government announced trade liberalisation neo liberal economic reforms in 1991 aiming to liberalise India in the advent of globalisation.

♤ The objective was to abandon the legacy of License Raj, introduce Indian economy to markets and private sector, reduce restrictions and introduce Foreign Direct Investment.o Reduction in import tariffs, deregulation of markets, reduction of taxes, and greater foreign investment.4.2. Criticism of Neo-Liberal Economic Reforms / Is the Neo- Liberal Policy of 1991 Sustainable?