Several things we can improve:

 * don't repeat the multi words and the same multi words with tags - just have a list of multi-words and, if it is in the `corp`, replace each word with a tagged word
 * use `with` context manager to read the file contents
 * use a list comprehension for tagging all other words
 
Improved version:

    MWE = ['prime minister', 'new delhi', 'reserve bank']

    def rule_disc():
        with open("/python27/MWETagtext1.txt") as f:
            corp = f.read().lower()
        
        # tag all MWEs
        for multi_word in MWE:
            if multi_word in corp:
                for word in multi_word.split():
                    corp = corp.replace(word, word + "/MWE")
    
        # tag all NMWEs and return
        return " ".join([word if "/" in word else word + "[NMWE]"
                         for word in corp.split()])