The Liberalization of India According to Eichenberg in his lecture on February 2, 2000, liberal international relations theory suggests that the key to peace is through the promotion of free trade and the institution of democratic principles. In late 1991, with the transfer of the Indian Parliament into the hands of political and economic reformers, despite much opposition, India began its quest towards liberalization. The reform implemented freer trade in the largest democracy in the world.Facets of the Reformed PolicySince India’s independence from British control in 1947 until Rao took office, Indian foreign policy can be characterized as fairly isolationist. During the Cold War period India retained a policy of nonalignment. It was uncommitted to either the West or the East and stuck to “swadeshi” ideology adopted. Swadeshi simply means “India first,” and is an extremely nationalistic ideology that advocates self-sufficiency. Just under a decade ago, Indian foreign policy has taking significant strides towards liberalization. Since Prime Minister Narasimha Rao assumed his position as the head of this state in economic shambles, India has undergone significant reform in its domestic and foreign economic policy. Rao’s administration implemented major changes in banking, interest rates, and the ability to fully convert rupees (India’s currency) in trade transactions. But most importantly, towards the end of 1991, Rao opened India’s doors to foreign investment.The reforms in 1991 were simply necessary. As Clive Crook reported in The Economist at the time, the new government attempted to restructure the “ever-proliferating bureaucracy” and the “license raj”. This reshaping dismantled the barriers for foreigners to enter into the Indian markets. Such barriers included series’ of permits and licenses granted only by members of the Indian Parliament or high-rank...
