Introduction
The first major shock of what subsequently came to be called globalisation in India was the economic liberalisation programme initiated in July 1991. The Congress government headed by Narasimha Rao, faced with a crisis resulting from foreign exchange reserves sufficient for just a fortnight’s imports, undertook some of the measures recommended by the International Monetary Fund (IMF) and World Bank in the late 1980s. The new policy included abolition of licensing procedures for manufacturing investment (which had popularly come to be known as a corruption-ridden ‘license-permit raj’), reduction of the high import tariffs on most goods (but not consumer goods), liberalising terms of entry for foreign investors, and liberalising capital markets (Balasubramanyam and Mahambare, 2001). It would be a mistake to see these changes simply as being imposed on India. Many of them were designed to encourage the expansion of big business after what were perceived as decades of stagnation, for example by removing restrictions on mergers and acquisitions, encouraging businesses to seek finance abroad, and sparking a wave of expansion into new sectors which had either barely developed (e.g. telecom), or had until then been reserved for the public sector (e.g. banking).
The next milestone was the birth of the World Trade Organisation (WTO) on 1 January 1995, with India being a member from the beginning. This involved new pressures, for example to eliminate quantitative restrictions on imports, simplify and reduce tariffs, reduce export constraints, reduce the number of activities reserved for the public sector and small-scale sector, further liberalise the Foreign Direct Investment (FDI) regime, and address the fiscal deficit (cf. WTO, 2002). The process of integrating India more closely into the world economy has been more or less continuous since 1991, despite changes of government, and the world economy itself has globalised rapidly during this period.