In order to pay its dues, reforms were kicked off with a three pronged strategy:ġ. There was a strong possibility of India defaulting on its international debt obligations. Despite borrowing from the IMF in that very year, India's foreign exchange reserves had nearly disappeared, with just about enough dollars to meet the next three weeks of payments. The oil shock of 1990-91 meant that India was paying more for the fuel, with exports falling. The government was facing a fiscal and current account deficit. Rather than pragmatic action that was taken to stir up entrepreneurship and help founders of startups, the first set of reforms were implemented under compulsion, in order to avert a financial crisis and meltdown. Until the 1991 budget, over 90% of the system was controlled by the state, free economy was non-existent and entrepreneurs found it extremely difficult to get clearances from the government in order to pursue their startup dreams.
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