The economic IiberaIisation in India** refers to ongoing economic reforms in ndia that started on 24 July 1991.

After ndependence in 1947, ndia adhered to

socialist policies. n the 1980s, Prime Minister P. V. Narasimha Rao initiated some reforms. n 1991, after ndia faced a balance of payments crisis, it had to pledge
67 tons of gold to Union Bank of Switzerland and Bank of England as part of a bailout deal with thenternational Monetary Fund (MF). n addition, MF required
ndia to undertake a series of structural economic reforms
[1]
. As a result of this requirement, the government of P. V. Narasimha Rao and his finance
minister Manmohan Singh (the present Prime Minister of ndia) started breakthrough reforms, although they did not implement many of the reforms MF
wanted.
[2][3]
The new neo-liberal policies included opening for international trade and investment, deregulation, initiation of privatization, tax reforms, and inflation-
controlling measures. The overall direction of liberalisation has since remained the same, irrespective of the ruling party, although no party has yet tried to take on
powerful lobbies such as the trade unions and farmers, or contentious issues such as reforming labour laws and reducing agricultural subsidies.
[4]
The main
objective of the government was to transform the economic system from socialism to capitalism so as to achieve high economic growth and industrialize the nation
for the well-being of ndian citizens. Today ndia is mainly characterized as a market economy.
[7]

As of 2009, about 300 million peopleequivalent to the entire population of the United Stateshave escaped extreme poverty.
[8]
The fruits of liberalisation
reached their peak in 2007, when ndia recorded its highest GDP growth rate of 9%.
[9]
With this, ndia became the second fastest growing major economy in the
world, next only to China.
[10]
An Organisation for Economic Co-operation and Development (OECD) report states that the average growth rate 7.5% will double the
average income in a decade, and more reforms would speed up the pace.
[11]

ndian government coalitions have been advised to continue liberalisation. ndia grows at slower pace than China, which has been liberalising its economy since
1978.
[12]
McKinsey states that removing main obstacles "would free ndia's economy to grow as fast as China's, at 10 percent a year".
[13]

For 2010, ndia was ranked 124th among 179 countries in ndex of Economic Freedom World Rankings, which is an improvement from the preceding year.

History
The architect of the system of Licence Raj was Jawaharlal Nehru, ndia's first Prime Minister.
[3]
nspired by the economy in the Soviet Union, he implemented a
mixed economy in ndia. A mixed economy is one in which capitalism is combined with government intervention. Private players could manufacture goods only
with official licenses. The quantity of goods they were allowed to produce was determined by the license regime, not by free-market demand.
The key characteristic of the Licence Raj is a Planning Commission that centrally administers the economy of the country. Like a command economy, ndia
has five-year plans on the lines of the Five Year Plans in the former Soviet Union.
Before the process of reform began in 1991, the government attempted to close the ndian economy to the outside world. The ndian currency, the rupee, was
inconvertible and high tariffs and import licensing prevented foreign goods reaching the market. ndia also operated a system of central planning for the economy,
in which firms required licenses to invest and develop. The labyrinthine bureaucracy often led to absurd restrictions up to 80 agencies had to be satisfied before
a firm could be granted a licence to produce and the state would decide what was produced, how much, at what price and what sources of capital were used. The
government also prevented firms from laying off workers or closing factories. The central pillar of the policy was import substitution, the belief that ndia needed to
rely on internal markets for development, not international trade a belief generated by a mixture of socialism and the experience of colonial exploitation.
Planning and the state, rather than markets, would determine how much investment was needed in which sectors.