Evaluation of economic reforms after almost 25 years of its implementation since 1991 can be done in two parts as discussed below:

(I) Favourable effects of economic reforms:
The reforms in the economic policy that took place in the form of liberalization, privatization and globalization increased the importance of market forces of demand and supply.

• As a result, determination of prices, wages and interest became market oriented, more realistic and less regulated.
• Due to reduction in regulations, producers started making decisions regarding production, investment and distribution on the basis of market trends.
• The difference between domestic and foreign investments became narrow.

All these gave rise to various favourable effects for India which are discussed below:

• Consumers started getting a variety of goods of international quality that too easily and at reasonable prices.
• India’s foreign exchange reserves increased.
• India’s exports increased.
• Along with increase in FDI, the risk of certain investments and debt burden of the state for importing costly technology etc. reduced.
• Large scale investments increased in the private sector. This in turn increased production and employment.
• Factors of production became more mobile within the nation and also between nations.
• During the period of too many regulations, corruption, bureaucratic hurdles, delayed decisions and rigid administration were quite common. All these have gradually reduced after reforms.
• There are certain sectors which are quite significant for the growth and development of the nation. However, these were neglected due to scarcity of capital and government regulations.
• These sectors got a boost after reforms when private sector was allowed to invest in them. For example, natural gas pipelines, roadways, modernization of railways, etc.
• Shortage ot goods and services were overcome. In fact many more varieties of goods and services came to market.
• Social and cultural ties with other nations improved.

(II) Unfavourable effects of economic reforms:
1. Small and cottage industries could not withstand competition from multinational companies.

2. Globalization stated along with privatization. Before the Indian private sector companies could become efficient and modern, they started facing competition from foreign companies. Some Indian companies even suffered a setback.

3. Government reduced subsidies in many sectors. Hence services of these sectors became expensive.

4. Exchange rate determination i.e. determining value of Indian currency in line with foreign currencies was left to the market. Hence, rather than bringing Indian rupee under control it fluctuated more. Many companies suffered due to such fluctuations.

5. Some foreign companies started selling their goods at abnormally low prices in India. As a result many Indian companies selling similar goods received a setback since they could not produce and sell at such low prices. Such a method of foreign companies to sell the goods at very low price in large quantities is called ‘dumping’.

6. Many policies of World Trade Organization imposed strict quality measures. This made export difficult for countries like India especially for exports of agricultural goods.

7. India could not efficiently increase its infrastructural facilities like electricity, roads, etc. to cope up with the speed of privatization and globalization.

8. Inequalities of economic power increased.

9. The production and sale of life style goods increased compared to goods of basic needs.

10. Some people believe that the social and cultural foundations of India are threatened because of globalization.