Question
Explain the economic policy of liberalisation.

Answer

  • The term liberalisation refers to a range of policy decisions that Indian state took since 1991 to open up Indian economy to the world market.
  • After independence, the Indian market and the indigenous business were protected from the competition of the wider world.
  • Liberalisation of the economy meant the steady removal of rules that regulated the Indian trade and finance regulations.
  • These measures are also described as economic reforms – Loosening of Government regulations on capital labour and trade. These reforms were seen in all the major sectors of the economy such as agriculture, industry, trade, foreign investment and technology.
  • The basic assumption was that greater integration into the global market would be beneficial to Indian economy.
  • The process of liberalisation involved taking of loans from international institutions such as I.M.F on certain conditions.
  • There is also a greater say by international institutions such as W.T.O.
  • The Government makes commitments to pursue certain kind of economic measures that involves policy of structural adjustments.
  • Reduction in tariffs and import duties so that foreign goods can be imported easily and allowing easier access for foreign companies to set up industries in India.

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