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After Independence India mainly adhered to socialist policies. Economic reforms in India started in 1991. In the 1980s, Prime Minister Rajiv Gandhi started the journey of economic liberalization and initiated some reforms. Facing precarious balance of payment situation in 1991, India sold 67 tons of gold to the International Monetary Fund (IMF), the government of Narasimha Rao and his finance minister Manmohan Singh started breakthrough reforms. The new neo-liberal policies included opening for international trade and investment, deregulation, initiation of privatization, and inflation-controlling measures. The overall direction of liberalisation has since remained the same, irrespective of the ruling party, although no party has yet tried to take on powerful lobbies such as the trade unions and farmers, or contentious issues such as reforming labour laws and reducing agricultural subsidies. The main objective of the government was to transform the economic system from socialism to capitalism so as to achieve high economic growth and industrialize large parts of the nation's businesses for the well-being of Indian citizens. Today India is mainly characterized as a market economy.
As of 2009, about 300 million people equivalent to the entire population of the United States—have escaped extreme poverty. The fruits of liberalisation reached its peak in 2007 when India recorded its highest GDP growth rate of 9%. With this, India became the second fastest growing major economy in the world, next only to China. An Organization for Economic Co-operation and Development report states that the average growth rate will double the average income in a decade, and more reforms would speed up the pace.