Liberalization

Following the independence of 1947, India adhered to a mixed model of nationalist and socialist policies in the early years, with protectionism and closed-borders attitude dominating its approach to foreign relations and global economy. In the aftermath of the economically precarious circumstances during the 1980s, and the subsequent economic crisis in the early 1990s, paradigmatic reforms, widely known as liberalization, were officially announced. However, considering Indian liberalization as a gradually evolving process, rather than a one-off project, this paper intends to take a political economy approach and employ historical analysis in order to scrutinize the pre-1991 contextual trajectory through which India underwent liberalizing its economy. The paper explicates the implemented economic approaches by studying the key primary sources, the Five-Year Plans in particular, and the relevant secondary sources. The authors propound the notion that India, since its independence till the early 1990s, appears caught in a cycle of oscillations between protective measures on one hand and attempts to move towards a liberalized economy on the other. The statist model of development that overwhelmingly disfavored interaction with the global economy at the outset was gradually replaced by a decentralized model that sought to open up the Indian economy to the world.