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Abstract
Though economic liberalization in India can be traced back to the late 1970s, economic reforms began in earnest only in July 1991. A balance of payments crisis at the time opened the way for an International Monetary Fund (IMF) program that led to the adoption of a major reform package by the the then government of India. Though the foreign-exchange reserve recovered quickly and ended effectively the temporary clout of the IMF and World Bank, reforms continued in a stop-go fashion. In this context the PV Narasimha Rao Government, in 1991, started the economic reforms in order to rebuild internal and external faith in the Indian economy. The reforms intended at bringing in larger cooperation of the private sector in the growth method of the Indian economy. Policy changes were proposed with regard to technology up-gradation, industrial licensing, removal of restrictions on the private sector, foreign investments, and foreign trade. The essential features of the economic reforms are: Liberalisation, Privatisation, and Globalisation, commonly known as LPG. Economic reforms were introduced in India because of poor performance of the public sector, adverse BoP or imports exceed exports, fall in foreign exchange reserves, huge debts on government, inflationary pressure and finally terms and conditions of the World Bank and the IMF. After economic reforms established in the country the reforms created jobs and reduced poverty, there are still concerns about job quality and income inequality. The reforms also integrated the Indian economy into the global economy, increasing trade and investment flows, with India's share in global trade rising from 0.5% in 1991 to around 2% in 2022. The reform process had significant effects on the Indian economy, leading to an increase in foreign investment and a shift towards a more services-oriented economy. Therefore, Dr. Manmohan Singh, former Prime Minister of India called PV Narasimha Rao as ‘Father of Economic Reforms in Indian’.
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