When India became independent in 1947, its economy was completely ruined. The government had to act fast and in a systematic way so that it could achieve speedy economic development. To do so, India initiated its “Five Year Plans’ from year 1951. At the end of every Five Year Plan India would review the progress made in the economy. India also announced its monetary policy, fiscal policy and industrial policy during these plans to boost the economy.

Even after several Five Year Plans, India could not attain the economic development that it aimed at. The government then did thorough investigation of the causes for failures. Based on this investigation it decided to bring major changes in its economic policies. As a result, in 1991, the government brought major reforms in the industrial policy. 

The major reforms that it brought were:

1. Liberalization,
2. Privatization, and
3. Globalization.

These three reforms are also known as the ‘Economic reforms of 1991’.