Economic reforms:

(A) Meaning:

Economic reforms refer to The changes brought about in economic policies . since 1991 in order to change the economic system of India from one which was highly regulated by the state to one which is more market oriented. At the same time also reduce the extent of public sector in the mixed economic system.’

(B) Objectives:

• To encourage private and foreign investments on a large scale. This would then utilize India’s abundant natural and human wealth for its economic development that too with higher productivity.
• Optimum and efficient allocation of India’s resources.
• Reduce and restrict state expenditures. Organize resources obtained through disinvestment of non-performing public enterprises in such a manner that their utility can be increased and public welfare can be done from the same.
• Increase domestic income, employment and export income of the country.
• Increase competitiveness of the Indian economy.
• Ensure steady economic growth and development of the Indian economy in the long run.

In order to fulfill these objectives, in 1991, the government of India started making systematic reforms in its economic policy.

The economic reforms focused on three main components. They are:

1. Liberalization
2. Privatization and
3. Globalization.