I have a json dumped string dumped in a file. Here is the file format -
{
u'key1':u'abc'
}
It's invalid json because its should have double quotes. How do I convert this into valid json?
If you have read this data from your file:
s = """
{
    u'key1':u'abc'
}
"""
You may be able to convert it to a Python object using ast.literal_eval():
import ast
data = ast.literal_eval(s)
# data = {'key1': 'abc'}
Note that it might not work with other contents, because it seems you dumped a string (str() or repr()) representation of a dictionary to a file, instead of JSON. Other, more complex types may not be readable by ast.literal_eval(). 
You should use the json module instead to produce and write proper JSON to the file.
For reference:
As it seems you are working with Python 2:
jsonmoduledict.