Indian Economic Liberalization (1991)

India's 1991 economic liberalization was a sweeping set of market reforms launched after a balance of payments crisis left the country with foreign exchange reserves covering only a few weeks of imports, brought on by the loss of Soviet trade following the dissolution of the Soviet Union and the oil price spike of the 1990-91 Gulf War. Finance Minister Manmohan Singh, backed by Prime Minister P. V. Narasimha Rao against significant political opposition, presented a reform budget on 24 July 1991 that dismantled the License Raj system of industrial permits, opened most sectors to foreign investment up to 51 percent, ended many public sector monopolies, devalued the rupee by 19 percent, and lowered tariffs and import restrictions. The reforms marked a decisive break from decades of state-directed, import-substitution economic policy and are widely credited with unleashing the sustained growth that transformed India into one of the world's largest and fastest growing economies over the following three decades.