“Is there some action a government of India could take that would lead the Indian economy to grow like Indonesia’s or Egypt’s?” (Lucas, 1988) The first half of the twentieth century, India experienced rapid growth and economic liberalization. 1991 is a very important and significant year in the economic history of India. As for the first time, Indian government introduced serious reforms. It is basically changing in policy regime in Indian Economy. Before 1991, there were various basic problems such as widespread unemployment, poverty, and others. Despite the fact that after twenty-five years of economic liberalization still, the basic problems are remaining there. Naturally one wonders which factors we still need to rectify to overcome those difficulties.Researchers have different opinions on the strategy of economic reforms. Some called it as either transition to the market economy or liberalization strategy or political liberalization strategy. In this paper, I reinvestigate the rationale and political economy reforms in India since 1991. The main vessel through which I conducted my analysis is comparing distinct events of post-reforms with pre-reforms. It is possible to assess on the ground of economic history.I discussed six reasons as the main driving forces behind the economic reforms which took place in 1991. Firstly, the huge balance of payments (BOP) deficit since the late 1970s, then the dismal performance of public sector undertakings’s(PSU), fall in foreign exchange reserves, the broader difference between tax revenue and government expenditure, strictly increasing inflation and last but not least the contemporary Iraq War.The paper is organised as follows, Section 2 reviews the history of independent Indian economy till 1991, Section 3 describes the reasons behind the reforms,Section 4 presents a short analysis on whether those reforms were endogenously determined or exogenously given, Section 5 analyses the political economy reforms, Section 6 discusses the various nature of reforms-types, Section 7 evaluates the performance of post reform briefly and Section 8 concludes.