Overview

Economic Policy of India Since 1991 — how this chapter fits the syllabus

The previous chapter looked at Poverty in India — how deprivation is measured and why it persists. This chapter steps back to ask a bigger question: what economic model did India actually follow for the first four decades after Independence, why did that model run into a genuine crisis by 1990-91, and what fundamental policy change did India make in response? The answer is the New Economic Policy (NEP) of July 1991 — a decisive shift away from a heavily regulated, inward-looking "mixed economy" toward a more open, market-driven one, built on three pillars that are usually referred to together as LPG: Liberalisation, Privatisation, and Globalisation.

This chapter covers, in order: the background to the 1991 crisis and why it forced a change of course; the meaning and objectives of the New Economic Policy; each of the three LPG reforms in turn — Liberalisation (freeing domestic economic activity from excessive government control), Privatisation (reducing the public sector's role in favour of private enterprise), and Globalisation (integrating India's economy with the rest of the world); a balanced look at the reforms' positive impact as well as their genuine criticisms and limitations; and finally the 2015 replacement of the Planning Commission by NITI Aayog, itself a direct consequence of the shift toward a more market-oriented, federal approach to economic policy-making. The Maharashtra HSC (MSBSHSE) Economics syllabus places this chapter right after Poverty precisely because the 1991 reforms — for better and for worse, both sides matter and both are covered here — are the single policy turning point that shapes almost everything discussed in the rest of this Std XI paper on the Indian economy.

A note on honesty: this chapter presents the 1991 reforms as economists genuinely debate them — real, substantial gains alongside real, substantial limitations — rather than as an unqualified success story or an unqualified failure. Where a claim about growth, investment, or any other outcome is made, it is described in general, syllabus-appropriate terms rather than as a specific year's statistic, since such figures move with each new data release.