In the decades leading up to India’s liberalization, neoliberal economic thought, particularly the ideas of Milton Friedman and F. A. Hayek, gained prominence in India and seemingly influenced its economic policies. As the economy stagnated under socialist policies, policymakers began reevaluating them in light of new economic theories promoting free markets, deregulation, and minimal state intervention.

At the time, Friedman and Hayek were two of the strongest voices advocating a limited government role in economic affairs and arguing that free markets, rather than central planning, fostered growth, innovation, and individual freedoms. An economic crisis in the early 1990s led India to implement neoliberal reforms, including reducing tariffs, opening up to foreign investment, and privatizing state enterprises.

After liberalization, these ideas continued to shape India’s economic policy framework. Neoliberal thought promoted financial and trade liberalization, which India embraced. As a result, the private sector has grown substantially, global trade expanded, and the country experienced higher growth rates.