India suffered a financial collapse in 1992, but had been growing at almost 6% annually by 2002 making it one of the fastest growing economies of the world. India removed almost all its import and capacity licensing restrictions and adopted the Washington Consensus. Financial controls were enforced by the International Monetary Fund (IMF), thus making major economic reforms in India that would grant them loans in order to move it along toward a more market-oriented economy. The focus of these reforms was to reduce the governments’ bureaucracy and stabilize the country’s macroeconomic balance. Competition barriers became less burdensome, inflation was lowered, and the current account was balanced.
Even though these issues illustrate a road to improvement, huge fiscal deficits still existed and interruptions and corruption in Pakistan continued. Foreign investment became slow to enter India due to the continued restrictions on foreign ownership, the slow progress of privatization, and India’s substandard infrastructure. To achieve growth in India, significant reforms needed to be passed. Success in India’s growth performance plan for economic and social growth into reality would be the country’s’ biggest obstacle. 1. Why did India experience relatively slow economic growth from independence until 1991?

India’s population had reached 1.05 billion by 2002 and was growing at 1.5%, more than the country could support at the time. Domestic issues existed between numerous religions. India’s government adopted an Import Substitution Industrialization model (ISI) in order to protect the economy against foreign competition but this model proved to create a high fiscal deficit of 5.6% for the country making them reevaluate their union budget [1]. The ISI model was based on regulations in the private and public sector, trade and foreign direct investment