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Submitted by Kalpana on
Mr. Subramanian is right that the reforms took place after India experienced a severe balance of payments crisis. But let me quote Montek Singh Ahluwalia, one of the architects and executors of India's economic reforms of the early 1990s. "India's economic reforms began in 1991 when a newly elected Congress government, facing an exceptionally severe balance of payments crisis, embarked on a programme of short term stabilisation combined with a longer term programme of comprehensive structural reforms. Rethinking on economic policy had begun earlier in the mid-eighties by when the limitations of a development strategy based on import substitution, public sector dominance and pervasive government control over the private sector had become evident, but the policy response at the time was limited to liberalising particular aspects of the control system without changing the system itself in any fundamental way. The reforms initiated in 1991 were different precisely because they recognised the need for a system change, involving liberalisation of government controls, a larger role for the private sector and greater integration with the world economy." I emphasize especially his statement that rethinking of policies had begun already in the mid-1980s but like in many other countries,it is very difficult to muster the political will to implement significant policy changes until the economy's back is against the proverbial wall. That the reform program happened only after the BOP crisis occurred and that it was supported by an IMF standby does not negate the fact that the newly elected Congress government under Narasimha Rao, with Manmohan Singh, Montek Ahluwalia and P. Chidambaram in the drivers' seat were instrumental in designing the contours of the reform program as much as or more than their counterparts in the IMF.