Question

3. What is liberalisation? What steps were taken by the government to liberate the indian economy?

Answer 1

Liberalisation of the economy means to free it from
direct or physical controls or restrictions imposed by the government. It can be similar to deregulation.



Measures of liberalisation taken by the Government of
India are:

1. Exemption of industries from licensing - All
industries except alcohol, hazardous chemicals, cigarettes, drugs, electronic
aerospace and explosives are exempted from industrial licensing.

2. Expansion of industries - There is no ceiling for
capital. Industries can expand according to the needs of the market.

3. Freedom of production - Producers can produce goods of
their choice.

4. Concept of MRTP is not applicable - The companies can
make their own investment decisions and expansion plans.

5. The investment limit of small industries has been
increased - The investment limit of small scale industries has been raised to
one crore. So they can modernize their industries.

6. Inviting direct foreign investment - Indian firms can
invite foreign investors to invest in their industries to expand and enlarge
their business.