- India launched LPG reforms in 1991 amid a severe economic crisis and balance of payments issues
- Reserve Bank of India pledged 46.91 tonnes of gold to secure $405 million emergency foreign exchange
- Gold reserves have grown to 880.52 metric tonnes as of March 2026, with 77% stored domestically
On July 24, 1991, India changed course.
Facing one of the worst economic crises in its history, then Finance Minister Manmohan Singh unveiled the Liberalisation, Privatisation and Globalisation (LPG) reforms in Parliament. The sweeping measures dismantled decades of restrictive licensing, opened several sectors to private and foreign investment, reduced import barriers and integrated India with the global economy.
The reforms came at a desperate moment. India had slipped into a severe balance of payments crisis. Foreign exchange reserves had fallen so sharply that the country barely had enough dollars to pay for a week's worth of imports. Credit rating agencies downgraded India, overseas lenders lost confidence and the government scrambled to secure emergency funding.
To avoid a sovereign default, the Reserve Bank of India took an extraordinary step. In July 1991, it pledged 46.91 tonnes of gold with the Bank of England and the Bank of Japan, raising about $405 million in emergency foreign exchange.
Thirty-five years later, the numbers tell the story of just how dramatically the country has changed.
30 Years Of LPG Reforms: From Survival To Strength
The RBI's gold reserves have grown to 880.52 metric tonnes as of March 2026. Nearly 77 per cent of the country's gold holdings --around 680 tonnes -- is now stored within India, marking a sharp rise from 2023. Between 2000 and 2020, the central bank's gold holdings recorded a compound annual growth rate (CAGR) of 13.3 per cent, reflecting stronger financial buffers and greater confidence in the economy.
The transformation is even more visible in India's foreign exchange reserves. From reserves that could finance barely a week of imports in 1991, the country today holds one of the world's largest forex war chests, providing a crucial cushion against global economic shocks.
The reforms also fundamentally changed India's investment landscape. Speaking on India's transformation in the last 35 years, Divakar Vijayasarathy, founder and chief executive officer (CEO) of DVS Advisory Group, told NDTV, "In 1991, India airlifted gold abroad to secure a $600-million loan just to keep the lights on -- reserves covered barely three weeks of imports. Today, India holds nearly 900 tonnes of gold, reserves exceeding $700 billion, and the world's fifth largest and fastest-growing economy. FDI has moved from under half-a-billion dollars a year to roughly $650-billion cumulative in the last decade alone. The story of these 35 years isn't just growth -- it's a reversal of position: from a nation seeking capital to survive, to one the world now competes to invest in."
In the years immediately after liberalisation, registrations of foreign companies steadily increased. Their numbers rose from 565 in 1993-94 to 1,213 by 2001-02, signalling improved investor confidence in the Indian market within just a decade.
That momentum has only accelerated. Today, India is home to more than 17,000 multinational companies (MNCs) across sectors ranging from manufacturing to technology, financial services and consumer goods.
Global Capability Centres (GCCs) have emerged as another symbol of India's economic transformation. What began as back-office operations has evolved into innovation hubs. Thousands of GCCs now employ millions of professionals, with global firms increasingly using India for research, engineering, artificial intelligence, product development and strategic decision-making.
1991 Reforms: The Legacy Of Liberalisation
The impact of 1991 economic reforms is equally visible in the lives of ordinary Indians.
Per capita income has risen several-fold since 1991, reflecting higher productivity, stronger services exports and sustained economic growth. While income inequality and employment challenges remain, the size of India's economy has expanded dramatically, making it one of the world's fastest-growing major economies.
Trade has undergone a similar transformation. Indian companies now compete globally, foreign brands have become commonplace, exports have diversified beyond traditional sectors and consumers enjoy access to products that were unimaginable before liberalisation.
The reforms also reshaped policymaking. Competition replaced protectionism in many industries. The private sector gained a larger role in driving investment, while successive governments continued opening the economy through tax reforms, digital infrastructure, manufacturing incentives and ease-of-doing-business measures.
However, not every challenge has disappeared. India continues to grapple with unemployment, uneven income distribution, rural distress and global economic uncertainties. Yet few economists dispute that the 1991 reforms marked a turning point.
Thirty-five years ago, India pledged its gold to survive. Today, it counts one of the world's largest gold reserves, hosts thousands of multinational companies, attracts billions of dollars in foreign investment and stands among the world's leading economies.
"The apprehensions of throwing the economy open back in 1991 and doubts about the ability of Indian businesses have been proven wrong over the past three decades... As India looks to work on self-sufficiency and indigenisation to de-risk itself from global supply chain disruptions, we must be careful in calibrating the same. We must indigenise, grow manufacturing, grow exports and reduce imports of goods that have revealed comparative advantage for India to make. However, we must continue to leverage global supply chains and progressively increase our participation in them," said Ranen Banerjee, Partner and Leader, Economic Advisory, PwC India.
