Every one thinks that the economic liberalization in India started in 1991. but it is partially. the roots of liberalization lies in the early years of 80's. but india's democratic policies took some time to implement, while the neighboring country China successfully implemented in the early 80's with the autocratic govt. we used to get 3-4% of growth rate before 1980. the scene completely changed after that. the government of India started to loosening the policies in "license permit raj" by adopting policy called broadbanding ( it is a technique to categorize different pay structures of an employee in an organization), it was done by india's ex-PM Smt.Indira Gandhi. the critics say that the policies that adopted by the govt. is to benefit the Dhirubhai Ambhani's reliance industries. at some point it is true. Reliance is the company that was benefited the most by these policies.


Also the efforts continued in the governments of Rajiv Gandhi and V.P. singh. but those are not that much effective to change the face. Rajiv gandhi's government was mainly suffered from the corruption and politics overwhelmed them. "Bofors" scam immobilized the Rajiv gandi's govt, while the mandal-mandhir politics consumed V.P.Singh. Yaswanth Sinha also came up with many reforms but unfortunately the budget didn't come to existence (1991-92 budget did not proposed because the government, headed by Chandra Shekhar, fell down before the budget present). 


After that under all circumstances the P.V. Narasimha Rao government came into existence. He appointed Dr.Manmohan Singh (who is currently the Prime minister of India) as finance minister, who did not have any past experience as a politician. it was a very dare and a wise decision took by PV Narasimha Rao. Critics says that he appointed Manmohan as a finance minister, who does have any past experience as politician, because he didnt want to have threat to his seat ( as the same happened in the Rajiv's govt by the VP Singh). In 1991 India pledged 67 tonnes of gold to International Monetary Fund (IMF) for getting loan of $2.2 billion. Indian foreign exchange reserves came to ever lowest level of $1.2 billion in January 1991, which is barely enough to last for three more weeks. GDP growth rate recorded in the year 1991 is 2.5%. one should give credit to PV Narasimha rao for the economic reforms in India, even though he let Manmohan take entire credit.


The IMF and World bank gave the basic frame work for economic liberalization. PV Rao allowed  Manmohan a free hand to take every measure needed to meet the obligations to these International institutions. As congress president and PM Rao bore all the brunt of criticism from his party and opposition, since both saw Manmohan as a Rao's creation. As they are loosing the grip on Nehruvian model every one in his party started blaming him. In these circumstances Rao took care of Manmohan. And he didn't accept the resignation letters when the attacks intensified. It took two years for the government of India to come out of macro economic crisis. There after India saw the highest growth rate in Indian industry.