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Economic liberalisation in India
Economic liberalisation in India refers to the policy changes, made mainly from 1991 onwards, that opened the Indian economy to foreign trade and investment and gave markets and private enterprises a larger role. Although some attempts at liberalisation occurred in 1966 and the early 1980s, a more comprehensive reform came in 1991. The 1991 reforms followed a balance-of-payments crisis in which foreign exchange reserves fell to about three weeks of imports. The crisis followed a decade of large fiscal deficits and rising external debt, and was triggered by the oil-price spike and the loss of Gulf remittances caused by the Gulf War of 1990–91, as well as the collapse of trade with the Soviet Union. The reforms dismantled most industrial licensing, cut tariffs, moved the rupee to a market-determined exchange rate, opened many sectors to foreign investment, and freed interest rates and capital markets. India borrowed from the International Monetary Fund (IMF) and the World Bank, whose loans...
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