The immediate factor that triggered India's economic reforms of 1991 was a severe balance of payments crisis that occurred in the same year. The first signs of India's balance of payments crisis became evident in late when foreign exchange reserves began to fall. With the onset of the Gulf War, world oil prices starting increasing. and remittances from Indian workers in the Gulf region fell sharply as many of these workers left the region. From a level of U.S.S3.11 billion at the end of August 1990 , foreign exchange reserves dwindled to million in January The rapid loss of reserves prompted the Indian government to initially tighten restrictions on the importation of goods. The new government of Prime Minister P. V. Narasimha Rao, who assumed office in June moved swiftly to deal with the situation. It implemented a macroeconomic stabilization program on an urgent basis, along with a comprehensive and far-reaching overhaul of the policies governing India's and industrial sectors.