India is a mixed economy where private sector works on principle of Laissez- Fair (Market forces decide the general price level in an economy) and Government works as a facilitator providing various schemes and policies on which private sector thrive. Before 1991 India had large public sector, closed economy , Red Tapism prevailed and certain sectors were reserved for Public sector like, Railways, Defense, Power etc. (17 in total) which led to inefficiency in economy and resulted in decline of foreign exchange reserve to a level it was difficult to even meet the import requirement of capital goods. So in order to resolve this crisis The government in leadership of Dr. Manmohan Singh introduced three measure namely:

1. Globalization: The economy was made open for foreign enterprises to as to bring in Green field and brown field foreign investment to boost foreign reserves. Due removal of trade barriers like import and export duty trade increased with world resulting into increase in foreign reserves.
2. Privatization: De-investment in Public sector undertaking was done in 14 out of 17 sectors leaving Defense, railways, Atomic energy and coal sector with PSU’s. This was to bring efficiency in the working of PSU’s to increase overall productivity.
3. Liberalization: The system of licensing raj was liberalized and red tapism was countered with more liberal economy.

In this way these reforms lead to rapid growth in Indian economy in period after 1991.