Manuscript Number : SHISRRJ193323

Democracies find it difficult to switch quickly to a trade-friendly policy change.These policies hurt small but powerful interests, such as the politicians and the bureaucrats who thrive on government controls, industrialists who are used to the comfort of home economy, subsidized rich farmers and managers and workers in inefficient firms.Authoritarian regimes on the other hand like Taiwan and Korea have successfully initiated economic transitions.They managed labour and business consistent with the demand of trade led growth.They allocated credits for export promotion increased taxes pursued a tight money policy and successfully reduced the risk of exporters by providing vital information and finance but this was not the case with India. The trajectory of India’s economic transition was different from the economic reforms under authoritarian regimes thanks to its democracy and sheer size of its politico- economic system.The process of shifting of policy ideas from import substituting industrialisation(ISI) to trade led growth(TLG) during 1980s is the fulcrum to a critical understanding of economic reforms in India.This approach further moves towards an analysis of the presence of synergetic linkage between International Monetary Fund, the executive and Indian industry which developed during the crucial time of Balance of payment crisis which accentuated the process of economic transition.But basically the onus of policy shift rests on the contemporary economic policies and their loopholes and deficiencies which made the transformation not just a shift in policy process but need of the hour.Hence, this section will deal with various characteristicfeatures of ISI to sketch a comprehensive description of the process of economic transformation.