India’s Major Economic Reforms Since 1991

Since 1991, India’s economic reforms have steadily moved the system away from heavy state control toward a more market-oriented framework. The changes have focused on improving competition, formalizing regulation, widening tax compliance, strengthening insolvency resolution, and creating simpler rules for business and labour.

The 1991 Structural Reforms (LPG)

The July 1991 reforms, led by Prime Minister P. V. Narasimha Rao and Finance Minister Dr. Manmohan Singh, were introduced to deal with a severe Balance of Payments crisis.

• IMF support: In 1991, India received a USD 7 billion structural adjustment loan from the IMF and the World Bank.
• Policy conditionalities: The assistance was linked to reducing government controls, dismantling industrial licensing, and expanding private sector participation.
• LPG framework: The reforms introduced Liberalisation, Privatisation and Globalisation to integrate India more closely with global markets.

GST and GST 2.0

The Goods and Services Tax, enacted through the 101st Constitutional Amendment, was launched on July 1, 2017. It replaced a large number of central and state indirect taxes with a unified tax system.

• Tax merger: GST subsumed 17 indirect taxes and 13 cesses.
• Structure: The simplified GST 2.0 framework removed the 12% and 28% slabs and now consists of 0%, 5%, 18% and a 40% slab for specified luxury and demerit goods.
• Compliance expansion: Registered GST taxpayers increased from 66.5 lakh in 2017 to 1.65 crore by May 2026.

IBC and Labour Code Reforms

The Insolvency and Bankruptcy Code, enacted in 2016, consolidated fragmented recovery laws into a time-bound, creditor-driven corporate resolution system.

• IBC overhaul: The Insolvency and Bankruptcy Code (Amendment) Act, 2026 introduced a Creditor-Initiated Insolvency Resolution Process (CIIRP) and minimum payouts for dissenting financial creditors.
• Recovery performance: Cumulative creditor recoveries under approved corporate resolution plans reached nearly ₹4.32 lakh crore by March 2026.
• Bank asset quality: Gross NPAs of public sector banks declined from 14.58% in 2016 to 2.3% by 2025.
• Labour consolidation: India merged 29 central labour laws into four codes — Code on Wages, Code on Social Security, Occupational Safety, Health and Working Conditions Code, and Industrial Relations Code.
• Operational rollout: All four Labour Codes came into force on November 21, 2025, and the final Central Rules were notified on May 8, 2026.
• Key labour provisions: The codes cap non-basic allowances at 50% of total remuneration and extend social security coverage to gig workers.

UPS and RERA

Alongside broader reforms, the government introduced targeted institutional changes in pensions and real estate regulation.

• Unified Pension Scheme (UPS): Approved on August 24, 2024, and operationalized on April 1, 2025, it provides an assured, inflation-indexed alternative to the market-linked NPS for central government employees.
• UPS benefits: Employees with 25 years of service are guaranteed 50% of their average basic pay from the last 12 months, with employee contribution at 10% and government contribution at 18.5%.
• RERA: The Real Estate (Regulation and Development) Act, passed in 2016 and implemented in May 2017, requires projects above 500 square metres or eight units to register with state RERA authorities.
• Buyer protection: Developers must deposit 70% of buyer funds into a project-specific escrow account to prevent diversion.
• Registration growth: RERA registrations crossed 1.5 lakh by mid-2026.

Recent Institutional and Policy Markers

• GST Council changes: The GST 2.0 reforms were recommended by the 56th GST Council on September 3, 2025, and implemented on September 22, 2025.
• MPC framework: The Monetary Policy Committee was formed through the Finance Act, 2016, which amended the RBI Act, 1934.
• GST collections: In August 2026, gross GST collections reached ₹1,99,853 crore, showing strong compliance and buoyancy.
• Repo rate: The MPC maintained the policy repo rate at 5.25% with a neutral stance in its August 2026 meeting.

Key Prelims Takeaways

• 1991 reforms: Introduced LPG to address the Balance of Payments crisis and shift India toward a market-based economy.
• GST basis: Enacted through the 101st Constitutional Amendment and launched on July 1, 2017.
• GST 2.0: Removed the 12% and 28% slabs; current structure includes 0%, 5%, 18% and 40% slabs.
• IBC: Aimed to provide time-bound resolution of stressed assets and improve creditor recovery.
• Labour Codes: Four codes replaced 29 central labour laws and came into force on November 21, 2025.
• UPS: Provides an assured pension option for central government employees, with 25 years of service as the key benchmark.
• RERA: Focuses on project registration, escrow discipline and consumer protection in real estate.