6. Economic Reforms

In response to the internal economic crisis of 1990-91 and the changing international situation, the Narasimha Rao government decided to introduce economic reforms or the New Economic Policy (NEP). The NEP clearly reflected certain global trends, namely, the collapse of the socialist economy and growing acceptance of economic globalization across the world.

Although the reforms as a part of the process of liberalization and globalization were revolutionary in nature, these were launced within the democratic framework of the country. They marked a shift from the Nehruvian consensus of the 1950s to a new consensus around reforms. While the national goals set out at Independence remained unaltered, the change came only in the strategy to achieve these goals – from Nehru-Mahalanobis development strategy to the new development strategy of liberalization and economic reforms.