Question

Define the term liberalisation. Explain the reason for the Indian government beginning the policy of liberalisation in 1991

Answer 1

Liberalisation - It refers to the process of making simplification in the rule and regulations for Private sector. In this process Govt. opens the door for the private sector to enter in the industry and compete with the other firms.

In 1991
Govt make economic reforms to encourage Foreign direct investment.

Reasons for economic reforms.

1. Poor performance of the Govt. sector, All the Govt. enterprises were running in loss.

2. Poor quality of products, as there were no pvt sector to compete with Govt sector. There fore Govt firms started producing low quality of goods.

3. Customer dissatisfaction, there were dissatisfaction among customer because of low quality of goods produced by Govt firms.

4.Lack of Foreign Currency- Since that time Govt doesn't allowed the foreign firms to enter in the market there fore there were lack of FDI,which results in shortage in stock of Foreign Currency.

Remarks - On that time India economy was at its worst stage. They don't even have enough Foreign exchange to purchase required amount of food grains. They Govt approached the WORLD BANK, IMF to give loan but they asked Indian Govt to mortgage its Gold reserve and asked to do economic reforms.
This results in Economic reforms 1991.

काफी बड़ा उत्तर हो गया, लेकिन छोटे उत्तर से समझ नही आता इसलिए पूरा पढ़ लेना। समझ आ जाएगा।

hope this helps.
#jerri

Answer 2

Liberalization is the removal or loosening of restrictions on something, typically an economic or political system.

The Indian Government introduced the policies of liberalizing the economy because it was felt that the time had come for Indian producers to compete with the producers across the globe.