India faced a balance of payments crisis in 1991 that pushed the country near bankruptcy. In response, India began liberalizing its economy through various reforms like abolishing industrial licensing, freeing interest rates, and opening the economy to foreign investment and trade. The economic reforms led to rapid GDP growth, exports of IT services, and increases in foreign exchange reserves, investment, and savings over the following decades. However, liberalization also introduced new challenges around governance, infrastructure development, and unemployment.

1. LIBERALIZATION

2. INTRODUCTION Liberalization of the economy means to free it from direct or physical controls imposed by the government. Economic reforms were based on the assumption that market forces could guide the economy in a more effective manner than government control. Examples of one of other undeveloped countries like Korea, Thailand, Singapore, etc. that had achieved rapid economic development as a result of liberalization were kept in consideration .

6. COMPONENTS OF LIBERALIZATION Industrial Liberalization Trade Liberalization Financial Liberalization Fiscal Sector Reforms

10. Financial liberalization (FL) refers to the deregulation of domestic financial markets and the liberalization of the capital account. In one view, it strengthens financial development and contributes to higher long-run growth. In another view, it induces excessive risk-taking, increases macroeconomic volatility and leads to more frequent crises. 3. Financial Liberalization

11. Financial Liberalization reforms REFORMS IN BANKING SECTOR REFORMS IN CAPITAL MARKET REFORMS IN INSURANCE

14. Indian Foreign Exchange Reserves: a steady rise after liberalization

15. Foreign Investments after liberalization

16. Import duty Reductions after liberalization

18. CONCLUSION

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