why did Narasimha Rao government adopt New policy in the year 1991?
Answers
India changed its economic policy because: to bring in competition for the indian producers. this would in turn improve performance of producers within the country since they would have to improve their quality. therefore barriers on foreign trade and investment were removed.
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In the closing years (1988 and 1989) of the Rajiv Gandhi government it was known that a balance of payments (BoP) crisis was building up. This gained momentum through the V.P. Singh government (December 1989-November 1990) and, after the Iraqi invasion of Kuwait in August 1990, developed into a full-fledged crisis during the apology of the Chandra Shekhar government (November 1990-June 1991). India had obtained loans from the International Monetary Fund (IMF) in late 1990 and early 1991, and was possibly in negotiations for a larger structural adjustment loan which did not go far because of the collapse of the Chandra Shekhar government.