India adhered to the mixed economy of capitalist and socialist policies after independence. A’major attempt was made in 1985 by Prime Minister Rajiv Gandhi towards new economic system. In 1991. India met with an economic crisis relating to its external debt. It had to pledge 20 tonnes of gold to Union Bank of Switzerland ND 47 tonnes to Bank of England as part of a bailout deal with the International Monetary Fund. India approached the World Bank and IMF and received $7 billion as loan. In addition, the IMF asked India to undertake a series of structural economic reforms. All these situations made the Indian government to introduce a new set of economic policies.

The Union government headed by Sri P.V. Narasimha Rao and Finance Minister Dr. Manmohan Singh implemented wide range of economic reforms that IMF imposed. The Neo-liberal policies included opening for international trade and investment, deregulation, initiation of privatization, tax reforms and measures of controlling inflation. Thus liberalization emerge in India.