In India, rules and laws which were initially aimed

at regulating the economic activities became

major hindrances in growth and development.
Liberalisation was introduced to put an end to
these restrictions and open up various sectors of
the economy
liberalisation measures have been undertaken to
improve the supply- side of the economy. Among
these the more important are:

(1) Trade and capital flows reforms;

(2) Industrial deregulation:
(3) Disinvestment and public enterprise reforms; and
(4) Financial sector reforms.
Trade and investment policy reforms :

 Dismantling of quantitative restrictions on imports.

 Reduction of tariff rates(taxes on imports)
 Removal of licensing procedures for imports
except in case of hazardous and environmentally
sensitive products
 Quantitative restriction on imports was also fully
decreased later.
 Export duties have been removed to promote
exports.

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Deregulation of industrial sectors :
 Industrial licensing was abolished for all but
product categories - alcohol,cigarettes,
hazardous, chemicals, drugs, explosives
etc.,
 Many industries which are reserved for
public sector in have now been
“deserved”.
 Market has been allowed to determine the
prices.
Tax reforms :
 Corporate tax, which was very high earlier
has been gradually reduced.

 The tax procedures have been simplified

and the rates also have been lowered.
Financial sector reforms :
 Reduce the role of RBI from regulator to
facilitator of financial sector.
 These reforms led to the establishment of
private banks.
 FDI in banks was raised to 50%.
 But certain managerial aspects have been
retained with the RBI, to safeguard the
interests of the account holders.
4. Foreign exchange reforms:
 ● The rupee was “devalued” against
foreign currencies which led to an

 increase in inflow of foreign exchange.

 ● Market has been allowed to determine

the foreign exchange rates
 The New Industrial Policy, 1991 proposed
to amend suitably the Monopolies and
Restrictive Trade Practices Act, 1969.
 Principle objectives of MRTP was
 Prevention of concentration of
economic power and control of
monopolies
 Prohibition of monopolistic, restrictive
and unfair trade practices.
 In 1991, the MRTP Act was restructured
and pre-entry restrictions removed with
respect to new undertaking, expansion,
amalgamation, merger, takeover,
registration, etc.
 Favourable Impact
 Increase in the rate of economic growth
 Increases competitiveness of industrial
sector
 Reduction in poverty and inequality
 Reduction in Fiscal Deficit
 Control on prices
 Decline in deficit in BOP
 Increase in efficiency
 Less importance to Agriculture sector
 More dependence on IMF and World
Bank
 Increased dependence on external
Debt
 Increased dependence on foreign
technology
 Problem of Unemployment.
Thank you !