The year 1991 is known for many tragic events that happened during that period - New reforms enthralled the people, end of the golden rule of the mafia, bomb blasts devastated many and many more.
To make it interesting just discuss some instances of Mafia raj. Mumbai mafia started in the 1930s and was mainly divided into three gangs, each specializing in different crimes. During the same period, the Maharashtra government-imposed restrictions on the consumption of Alcohol. The Mafia seized the opportunity in it, to make money as there was a lot of demand for alcohol but no legal supply of it. The mafia started illegally supplying alcohol to the people for higher rates, these brought them huge lumps of cash flow. Being there are different gangs, there was only a little bit of tension between them as their source of income mainly based on 3 sources 1. Illegal supply of alcohol 2. Smuggling of high tax-imposed goods 3. Gambling.
Decline of Mafia
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The Mafia has its golden days, but it has come to an end when the government implemented the LPG act and everything turned upside down to mafia. They started losing their main source of income - Smuggling of highly tax-imposed goods and during the same period, the Maharashtra government lifted restrictions on Alcohol. To recover their lost income, they resorted more to Extortion, gambling, kidnapping, Murder. Mafia went out of control, many riots happened, there was a time when Mumbai police used to get approx. 30 extortion cases in a day. Mumbai underworld was divided into different religious groups which lead to bomb 12 bomb blasts in Mumbai. The blasts shook the country, the mafia leaders now became terrorists to the country. After the attack, Mumbai police turned very aggressive against underworld criminals which lead to the fall and swept off the Mumbai Mafia.
The Sole Purpose of LPG reform is to solve the Countries economic problems but It has no intention to deal with the Mafia problem, with or without knowing, the reform had a huge impact on the decline of the Mumbai Mafia. It's just a spark of fire that destroyed the whole forest.1991 Economic Crises
The Event which affected everyone in the country is the “1991 Economic Crises”. India’s economic situation started worsening from the year 1985 as imports swelled, leaving the country in a twin deficit, the Indian trade balance was in deficit at a time. The economic crisis was primarily due to the large and growing fiscal imbalances over the 1980s where India started having the balance of Payments problems, India’s oil import bill swelled, exports slumped, credit dried up, and investors took their money out.
I don’t want to bore you out with the numbers, so here is a rough idea of the situation
Period % Increase in Fiscal Debt
1980-81 9.0%
1985-86 10.4%
1990-91 12.7%
From the above figures we can see that the economic conditions in India were not so good, so to face the problems the government brought many new reforms in practice to maintain the country’s economic stability, one of them is the LPG or Liberalisation, Privatisation and Globalisation model, announced on July 24, 1991
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LPG Act - the game changer :
Liberalization, Privatisation and Globalisation model is defined by its own name, in simple words “it brought the world to India.” India has restricted imports and exports after the independence in the regulation of the balance of payments and the then government introduced explicit restrictions on the rate at which foreign exchange could be run down. LPG act decreased the fiscal debt and increased the balance of payments and employment in the country.
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