The answer to this question is that the Indian government liberalized trade regulations in 1991 to address the balance of payments crisis and to jumpstart economic growth.
In the late 1980s, India was facing a balance of payments crisis due to a large and growing current account deficit, which was largely fueled by a high import bill and a decline in export earnings. To address the crisis, the Indian government implemented a series of economic reforms in 1991, which included liberalizing trade regulations, reducing import tariffs, and devaluing the currency.
The liberalization of trade regulations was aimed at increasing competition and efficiency in the economy, attracting foreign investment, and boosting export earnings. The reforms also aimed to modernize and streamline India’s industrial and agricultural sectors, which had been subject to heavy regulation and protectionism for decades.
Overall, the liberalization of trade regulations in 1991 marked a major turning point in India’s economic history, and is widely credited with laying the foundation for the country’s rapid economic growth in the years that followed.
