Liberalisation

Introduction

At the time of independence, Indian economy was an agrarian economy and characterised as underdeveloped. The year 1991 marked as a watershed in the process of growth of the Indian economy, due to the adoption of new economic policy. The new economic policy is comprised of three main policies:

    Liberalisation

    Privatisation and

    Globalisation

Liberalisation is the policy of granting freedom to enterprises from government control. Existing license Raj established the irresponsible, self-perpetuating bureaucracy and corruption that hampered the economy’s growth. Social and economic infrastructures were in poor condition and becoming an obstacle. A number of public sector emerged and State-owned enterprises were making huge losses. Thus, these factors arouse the need for liberalisation.

The main features of liberlisation are:

    De-licensing

    Relaxation on control of monopoly

    Liberlised industrial policy

    Removal of restrictions

    Liberlisation in capital market

    Development of infrastructure

The significance of liberlisation is felt in overcoming the problem of ‘Control Raj’, in providing more freedom to entrepreneurs, in generating the spirit of competition in the economic system and encouraged entrepreneurs to make investment, etc.

The changes in the Indian economy after adoption of liberlisation policy are:

    Increase in national income

    Improvement in the industrial sector

    Changing composition of national income

    Improvement in saving and investment performance

    Increase in foreign exchange reserve

    Role of public sector in the economy has increased, etc.

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