In the late 1990s, the Atal Behari Vajpayee government opened up the economy to counter economic sanctions imposed after the nuclear tests. In the absence of any major crises, the Manmohan Singh government and the first two terms of the Narendra Modi government preferred incremental changes over big-bang reforms
India embraced a guided free market economy in 1991 under the P.V. Narasimha Rao government — not by choice but due to the compulsion of a balance of payments crisis. In the late 1990s, the Atal Behari Vajpayee government opened up the economy to counter economic sanctions imposed after the nuclear tests. In the absence of any major crises, the Manmohan Singh government and the first two terms of the Narendra Modi government preferred incremental changes over big-bang reforms.
The year 2025 — which brought the mercurial Donald Trump to the helm of affairs in the White House — changed everything for India. New Delhi understood that it could no longer rely on Washington to promote its economic rise as part of its China policy, and that it must compete on its own strengths — a challenge no less than a major economic crisis.
India, however, as always, responded with a reform agenda aimed at making its people and industries competitive. It introduced a clean two-slab GST structure, which eased the burden on households, MSMEs, farmers and labour-intensive sectors, while reducing disputes and improving compliance. Consumer sentiment received a visible boost, reflected in robust festive-season sales. Income-tax slabs were tweaked to ensure people had more disposable income to spend.
The government changed the definition of small and medium enterprises, giving them a freer hand to operate and expand without the burden of excessive regulatory compliance. It finally adopted four labour codes, which merged 29 laws, giving employers flexibility to operate according to business cycles. Hundreds of outdated rules were scrapped under the Jan Vishwas initiative, ending needless criminalisation.
It also completely opened up the insurance sector to foreign investment and allowed private investment in small nuclear plants — moves expected to bring in much-needed foreign investment, generate more energy and create more jobs. The government has done what is required for the economy and it is hoped that the public will support its reform agenda.
