Introduction

In the past 15 years, several political scientists have tried to understand and explore ‘liberalisation’ reforms in India: first, the efforts in the 1980s and why they failed, and later, the apparent success of the reforms in the 1990s. This chapter reviews the literature that focuses on the latter – and still ongoing – reform process. It does not discuss the impact of economic reform as such, instead concentrating on political explanations for the reforms: the success or failure of both stages of reforms and the relative absence of opposition to them. The terms ‘reform’ or ‘reforms’ are used here rather loosely. I do not refer to specific monetary or financial measures, but rather to the whole process of change from a more state-regulated economy to a more market-oriented economy.

The real beginning of the economic reform process in India is widely viewed as having been in 1991. There had been earlier episodes of economic liberalisation: first, during the post-Emergency rule of Indira Gandhi (1980–4) and later during Rajiv Gandhi's regime (1984–9), but the pursuit of liberalisation policies during the 1990s was much more significant. In 1991, a new government, headed by PV Narasimha Rao and with Manmohan Singh as Finance Minister, announced its first reform measures almost immediately after taking office in June 1991, and continued to introduce new reform measures in various key economic sectors during its term. The first measures aimed at stabilisation and included a substantial currency devaluation and deflationary measures.