Abstract

India opened up the economy in the early nineties following a major crisis that led by
a foreign exchange crunch that dragged the economy close to defaulting on loans. The country
ran out of foreign exchange reserves. To face the crisis situation, the government decided to
bring about major economic reforms to revive Indian economy. This paper studies the Impact of
New Economic Policy on Indian economy. The Economic Reforms that made by government by
New Economic Policy in 1991 made significant impact on the Indian Economy. The reforms did
away with the License Raj, reduced tariffs and interest rates and ended many public monopolies,
allowing automatic approval of foreign direct investment in many sectors. The primary objective
of this model was to make the economy of India the fastest developing economy in the globe
with capabilities that help it match up with the biggest economies of the world.