Explain the reasons which compelled India to adopt reforms in 1991.

1.	Explain the reasons which compelled India to adopt reforms in 1991.
Answer» After independence, India adopted a mixed economic system with focus on socialist pattern of planning. By 1980s, many experts felt that the planning strategies adopted between 1947 and 1990 failed to attain the goals of economic growth and development. They believed the main reason for the failure was that the states imposed several unnecessary regulations on economic activities which then restricted people from doing economic activities. This raised a need for bringing reforms in the economy to improve it. Moreover, in the early 90s the international monetary organizations that were controlled by the developed nations of the world imposed a condition on India for providing monetary assistance. As per the condition, until India reduces its excessive and unnecessary / controls on economic activities, it should not be provided any financial assistance. India’s imports were quite high compared to its exports. This caused a severe deficit in India’s ‘balance of trade’ and India had to borrow a lot of foreign exchange from international institutions. Under all these circumstances India had no choice but to bring reforms and transform the nation. Hence, India was compelled to bring economic reforms.

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