LIBERALISATION: INTRODUCTION

In simple words, liberalisation refers to a relaxation of government restrictions in the areas of

social, political and economic policies. In the context of economic policy, liberalization refers
to lessening of government regulations and restrictions for greater participation by private
entities.

It is a process to removing controls systems in order to encourage economic development.

The economy is thrown open and the best goods and services compete in the market and the
consumer has a choice and monopolies disappear.

In India, economic liberalisation is initiated in 1991 with the goal of making the economy
more market-oriented and expanding the role of private and foreign investment.

These include partial, sometimes full privatisation of government institutions and assets,
greater labour market, tax rebates for businesses, reduced restrictions on both domestic and
offshore capital, opening markets for free trade.

There has been a revolutionary change in Indian Economy since the espousal of the New
Economic Strategy in 1991. This had great impacts on all the areas of life in India. When a
nation becomes liberalised, the economic effects can be intense for the country and as well as
for the investors.

Economic liberalisation is relaxing the government regulations in a country to allow the

private sector companies to operate business transactions with comparatively fewer
restrictions.

The economic liberalization in India refers to the economic liberalization of the country’s
economic policies, with the goal of making the economy more market oriented and
expanding the role of private and foreign investment.

For developing countries like India, liberalisation has opened economic borders to foreign
companies and investments. Earlier, Investors has to encounter difficulties to enter countries
with many barriers.

These barriers included tax laws, foreign investment restrictions, accounting regulations, and
legal issues. The economic liberalisation reduced all these obstacles and waived few
restrictions over the control of the economy to the private sector.