A balance-of-payments crisis accelerates economic reform
During a severe balance-of-payments crisis, the rupee was adjusted downward in two steps on 1 and 3 July 1991 by a combined 18–19 per cent. RBI’s history places these measures within a wider transition toward external-sector liberalisation and a progressively market-determined exchange rate.
The 1991 reforms were a sequence rather than a single-day event; industrial, trade, fiscal and financial measures followed separate timetables.
Source: Reserve Bank of India: Opening up of India’s External Sector
A balance-of-payments crisis opens a new economic settlement
The government reduced licensing controls, adjusted trade and investment rules and began a long shift toward a more market-oriented economy. Reform increased growth and global integration while leaving major inequalities and uneven public services.
Liberalisation was neither one law nor a complete retreat of the state. It unfolded through later governments and interacted with older changes in agriculture, technology, welfare and federal competition.
Source: Encyclopaedia Britannica: India—Economic liberalization