Economic reforms in India refer to the series of policies and changes implemented to liberalize and transform the Indian economy from a closed and heavily regulated system to a more open and market-oriented one. The major wave of economic reforms began in 1991, driven by a severe balance of payments crisis and the need to enhance economic efficiency, competitiveness, and growth. These reforms aimed to reduce government control over the economy, promote private sector participation, attract foreign investment, and integrate India into the global economy. Over the decades, subsequent governments have continued to build on these reforms, further liberalizing the economy and introducing new measures to address emerging challenges and opportunities.

The economic crisis of the early 1990s was a pivotal moment in India's economic history, leading to significant policy changes and the adoption of economic reforms that transformed the country's economic landscape. The crisis was characterized by severe fiscal and balance of payments difficulties, which exposed the vulnerabilities of India's economic policies and prompted a shift towards liberalization and market-oriented reforms.

Background

1.Pre-Crisis Economic Policies

Post-independence, India adopted a mixed economy with a strong emphasis on state-led development and industrialization.

The economic policies were characterized by extensive government control over the economy, including licensing, quotas, and price controls.

The public sector dominated key industries, while the private sector operated under stringent regulations.