The liberalization of the Indian economy represents one of the most significant transformations in the country's economic history. While the reforms initiated in 1991 are commonly associated with deregulation, privatization, and globalization, they also reflected a profound shift in the political economy of India. The political economy of liberalization concerns the interaction between economic reforms, political institutions, state power, social interests, and global economic forces. Liberalization was not merely an economic policy but a political project shaped by domestic crises, changing class alliances, ideological shifts, and international pressures. The economic strategy adopted after independence was based on state-led development, import substitution industrialization, planning, and extensive regulation. The Industrial Policy Resolution of 1956 gave the public sector a commanding role in the economy. Private industries operated under an elaborate system of industrial licensing, foreign exchange controls, quantitative restrictions, and price regulations, popularly known as the "License-Permit-Quota Raj." This system was intended to promote balanced growth, self-reliance, and social justice. However, by the late 1970s and 1980s, it increasingly came under criticism for creating inefficiency, rent-seeking, bureaucratic delays, and slow industrial growth. The roots of liberalization can be traced to the gradual reforms initiated during the 1980s. Governments under Indira Gandhi and Rajiv Gandhi introduced selective deregulation, technological modernization, and greater encouragement to private enterprise. These measures reflected growing recognition among policymakers that excessive state control had become an obstacle to economic growth. Nevertheless, these reforms remained limited because the broader political consensus still favored a mixed economy with a dominant public sector. The immediate catalyst for comprehensive liberalization was the balance of payments crisis of 1990–91. India faced severe foreign exchange shortages, rising fiscal deficits, mounting external debt, and declining investor confidence. The Gulf War further aggravated the crisis through higher oil prices and reduced remittances. India was left with foreign exchange reserves sufficient for only a few weeks of imports. The government approached the International Monetary Fund (IMF) and the World Bank for financial assistance, which was accompanied by structural adjustment conditions emphasizing market-oriented reforms. The New Economic Policy announced in July 1991 under Prime Minister P. V. Narasimha Rao and Finance Minister Dr. Manmohan Singh marked a decisive break from the earlier development strategy. Industrial licensing was abolished for most industries, foreign investment restrictions were relaxed, import tariffs were reduced, the exchange rate was liberalized, financial sector reforms were initiated, and public sector enterprises were subjected to disinvestment and greater competition. The political economy of liberalization reflected a redefinition of the role of the state rather than its complete withdrawal. Instead of functioning primarily as a producer, the state increasingly became a regulator, facilitator, and promoter of private investment. Regulatory institutions such as the Securities and Exchange Board of India (SEBI), Telecom Regulatory Authority of India (TRAI), and Competition Commission of India (CCI) emerged to oversee markets. Thus, the state's functions shifted from direct economic management to creating an enabling environment for markets. An important feature of liberalization was the emergence of new political coalitions supporting