Briefly explain the important areas of liberalization
Answers
Meaning of liberalisation :
Major sector reforms :
(a) Deregulation of Industrial sector. (b) financial sector reforms.
(c) Tax reforms. (d) Reforms in Trade and Investment - Explain each sector.
Detailed Answer :
Liberalization is the loosening of government regulations in a country, so that, private sector companies are allowed to operate business transactions with lesser restrictions. Major reforms under liberalization are categorized as :
(a) Industrial sector reforms which include (i) Contraction of public sector industries. (ii) Abolition of industrial licensing. (iii) Dereservation of production areas for all scales of business. (b) Fiscal reforms which include (i)
Reduction in rate of indirect taxes. (ii) Simplification of income tax structure. (iii) Moderation of overall tax regime. (c) Financial sector reforms which include (i) Reserve Bank of India’s role changed from regulator to facilitator. (ii) Opening of Banking sector for private sector. (d) Trade reforms which include (i) Abolition of import quota. (ii) Abolition import licensing. (iii) Withdrawal of export duty. (iv) Reduction in tariff rates. (e) Foreign Exchange reforms which include. (i) Devaluation of rupee. (ii) Determination of foreign exchange rate by market forces of demand and supply.
Explanation: