Economic liberalization in India, initiated in 1991, marked a significant shift from the previously state-controlled economy to one that is more open to market forces and global trade. This transition aimed to make the Indian economy more market-oriented and consumption-driven, with a focus on increasing private and foreign investment to stimulate economic growth and development. Earlier attempts at liberalization in 1966 and the early 1980s were less comprehensive.

The 1991 economic reform, often referred to as the LPG (Liberalisation, Privatisation, and Globalisation) reforms, was largely triggered by a balance of payments crisis, leading to a severe recession. The dissolution of the Soviet Union, which left the United States as the sole superpower, also played a role, as did the need to meet the requirements of structural adjustment programs for loans from international financial institutions like the IMF and World Bank.

These reforms had profound effects on the Indian economy. They led to a significant increase in foreign investment and steered the economy towards a more service-oriented model. The liberalization process is widely credited with boosting economic growth and modernizing the Indian economy. However, it has also been a subject of debate and critique.

Critics of economic liberalization in India point to several concerns. One major issue is the environmental impact, as rapid industrial expansion and relaxed regulations to attract investment might have led to environmental degradation. Another area of concern is the social and economic disparity. While the liberalization has undoubtedly led to economic growth, the benefits have not been evenly distributed across the population, leading to widening income inequality and exacerbating social disparities. This critique reflects the ongoing debate about the balance between economic growth and equitable distribution of its benefits in India's liberalization journey.