Liberalisation in India

Liberalisation: The economic reforms that were introduced were aimed at liberalising the Indian business and industry from all unnecessary controls and restrictions. They signalled the end of the licence-pemit-quota raj.

Liberalisation of the Indian industry has taken place with respect to:

(i) abolishing licensing requirement in most of the industries except a short list,

(ii) freedom in deciding the scale of business activities i.e., no restrictions on expansion or contraction of business activities,

(iii) removal of restrictions on the movement of goods and services,

(iv) freedom in fixing the prices of goods services,

(v) reduction in tax rates and lifting of unnecessary controls over the economy,

(vi) simplifying procedures for imports and experts, and

(vii) making it easier to attract foreign capital and technology to India.

Privatisation:

* The new set of economic reforms aimed at giving greater role to the private sector in the nation building process and a reduced role to the public sector.

* This was a reversal of the development strategy pursued so far by Indian planners.

* To achieve this, the government redefined the role of the public sector in the New Industrial Policy of 1991, adopted the policy of planned disinvestments of the public sector and decided to refer the loss making and sick enterprises to the Board of Industrial and Financial Reconstruction.

* The term disinvestments used here means transfer in the public sector enterprises to the private sector. It results in dilution of stake of the Government in the public enterprise.

* If there is dilution of Government ownership beyond 51 percent, it would result in transfer of ownership and management of the enterprise to the private sector.