The new economic policy in 1991 was released under the supervision of Finance Minister Dr. Manmohan Singh and the leadership of P.V. Narsimha Rao, the Prime Minister of India at that time. This policy played a major role in economic reforms, as it was designed to reduce restrictions on foreign trade and strengthen India’s position in the global financial landscape. The primary focus of this policy was to build foreign exchange reserves, eliminate market restrictions, and promote the international exchange of goods, services, capital, human resources, and technology to drive economic growth. The three main components of this policy are- Privatisation, Liberalisation and Globalisation.

Under privatization, the focus was on improving the efficiency of public sector companies which were suffering losses due to underutilization of capacity and resources. Which made way for private enterprises to set up industries and businesses in sectors that were previously controlled by the government as the public sector.

The new economic policy in India abolished the need for private sector licenses to start new ventures as a liberalization measure. This allowed more private companies to come forward to invest in the industrial sector which further helped increase the production capacity of private companies without any government restrictions.

Lastly, under globalization, the aim was to establish better economic interactions with other countries around the world. This helped India gain well-needed exposure and involvement in the world’s economic landscape through contribution and exchange of trade, investment, production, technology, and financial matters with other countries.