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The process of economic liberalisation initiated in India in 1991 under the leadership of the Union Government headed by P. V. Narasimha Rao, with the reform agenda designed by Finance Minister Manmohan Singh, marked a decisive shift from a state-led, protectionist model of development to a market-oriented and globally integrated economy. While these reforms were introduced at the national level, their most profound and visible effects have been felt within the political economy and governance structures of Indian states. Liberalisation and globalisation have redefined the relationship between the Union and the states, altered patterns of resource mobilisation, reshaped party competition, and transformed governance priorities and administrative practices across the country. One of the most significant impacts of liberalisation has been the intensification of competitive federalism. As industrial licensing was dismantled and investment decisions were increasingly left to market forces, states emerged as crucial actors in attracting domestic and foreign investment. With the reduction of central control over industrial location and capital flows, state governments began to compete actively by offering incentives such as tax concessions, subsidised land, infrastructural facilities, and simplified regulatory procedures. This competition has been visible in industrialised states like Gujarat, Maharashtra, Tamil Nadu, and Karnataka, which have positioned themselves as investment-friendly destinations. Consequently, state governments have reoriented their economic policies toward growth promotion, infrastructure development, and investor facilitation. Liberalisation has also altered the fiscal architecture of Indian federalism. With economic reforms came changes in taxation, including the introduction of the Goods and Services Tax (GST), which reshaped the fiscal autonomy of states. Although GST aimed to create a unified national market, it required states to cede certain taxation powers in _______ _____ ______ _________ ________ __________ _________.
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