<P> Before the process of reform began in 1991 , the government attempted to close the Indian economy to the outside world . The Indian currency , the rupee , was inconvertible and high tariffs and import licensing prevented foreign goods reaching the market . India also operated a system of central planning for the economy , in which firms required licences to invest and develop . The labyrinthine bureaucracy often led to absurd restrictions -- up to 80 agencies had to be satisfied before a firm could be granted a licence to produce and the state would decide what was produced , how much , at what price and what sources of capital were used . The government also prevented firms from laying off workers or closing factories . The central pillar of the policy was import substitution , the belief that India needed to rely on internal markets for development , not international trade -- a belief generated by a mixture of socialism and the experience of colonial exploitation . Planning and the state , rather than markets , would determine how much investment was needed in which sectors . </P>
<P> Before the process of reform began in 1991 , the government attempted to close the Indian economy to the outside world . The Indian currency , the rupee , was inconvertible and high tariffs and import licensing prevented foreign goods reaching the market . India also operated a system of central planning for the economy , in which firms required licences to invest and develop . The labyrinthine bureaucracy often led to absurd restrictions -- up to 80 agencies had to be satisfied before a firm could be granted a licence to produce and the state would decide what was produced , how much , at what price and what sources of capital were used . The government also prevented firms from laying off workers or closing factories . The central pillar of the policy was import substitution , the belief that India needed to rely on internal markets for development , not international trade -- a belief generated by a mixture of socialism and the experience of colonial exploitation . Planning and the state , rather than markets , would determine how much investment was needed in which sectors . </P>
mention two problems that forced india to undertake new economic policy after 1991
mention two problems that forced india to undertake new economic policy after 1991
the rupee , was inconvertible high tariffs
the rupee , was inconvertible high tariffs