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Chapter - 22 Liberalisation

Liberalization refers to the dismantling of India's licensing system and import restrictions, reforming the financial system, reducing taxes, and opening sectors to foreign investment starting in the 1990s. The document discusses India's path to liberalization through policies like devaluing the rupee, reforming trade and industrial policies, and reducing import restrictions. It assesses that while India's growth increased, the liberalization process has been limited by a lack of bureaucracy reform and uneven provision of infrastructure and technology. For Indian industry to be competitive globally, further reforms are still needed.

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73 views14 pages

Chapter - 22 Liberalisation

Liberalization refers to the dismantling of India's licensing system and import restrictions, reforming the financial system, reducing taxes, and opening sectors to foreign investment starting in the 1990s. The document discusses India's path to liberalization through policies like devaluing the rupee, reforming trade and industrial policies, and reducing import restrictions. It assesses that while India's growth increased, the liberalization process has been limited by a lack of bureaucracy reform and uneven provision of infrastructure and technology. For Indian industry to be competitive globally, further reforms are still needed.

Uploaded by

rjvmafia
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© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Chapter - 22

LIBERALISATION
Meaning of LIBERALISATION
The term economic LIBERALISATION means-
► Dismantling of industrial licensing system
built over the previous four decades.
► Reduction in physical restrictions on imports
and reduction also in the rate of import
duties.
► Reform of the financial system.
► Reduction in the levels of personal and
corporate taxation.
Meaning of LIBERALISATION
► Reduction in restriction on foreign investment.
► Opening up of areas hitherto reserved for public
sector.
► Partial privatization of public sector units.
► Softening of MRTP (monopolies and restrictive
trade practice act) regulations and
► Making various sectors of the Indian economy
competitive on the global economic platform by
making them produce quality goods in a cost
effective manner.
The path of LIBERALISATION
► Relief to foreign investors.
► Devaluation of the Indian rupee.
► New industrial policy.
► New trade policy.
► Removal of import restriction.
► Budgetary policy.
► Liberalized exchange rate management systems. (LERMS)
► Memorandum to international monetary fund. (IMF)
► LIBERALISATION of NRI remittances.
The path of LIBERALISATION
► Encouraging foreign tie-ups.
► Narasimhan committee report.
► FERA and MRTP relaxation.
► Decontrol of steel.
► Redefining SEBI’s role.
► Privatization of public sector.
► Simplification of industrial licensing.
► GATT agreement.
Reform achievements

► GDP growth trend.


► Declining savings and investments.
► Taxes and subsidies – reduced role of state.
► Poverty and inequality.
► Employment concerns.
Industrial growth
► Declining to free industry from licence and permit raj.
► Deterioting balance of trade.
► Declining rupee value.
► Mounting external debt and liabilities.
► Disastrous consequences of entry of mncs.
► Voltile portfolio investment and stock market.
► Increasing concentration of economic and political
power.
LIBERALISATION – an
assessment
► The overall post LIBERALISATION growth of
Indian economy has not been inspiring. India lifted
to its growth rate during the 1990s but is still
underperforming.
► The LIBERALISATION process in the country has
not been able to take off in the real sense because
the instrument of change, that is the bureaucracy
has not been reformed.
► Formulation of policies in areas like insurance,
banking, foreign trade ,and telecom ,require an in
depth understanding of the subject.
LIBERALISATION – an
assessment
► In the united states specialists like lawyers,
economists, and financial experts provide he
necessary expertise and also the latest inputs to
the government so that it would be able to
formulate the best possible policy.
► If Indian industry is to be competitive in price, cost
and equality ,it must provide a level-playing field
in the technology transfers, Infrastructure ,interest
on finance ,labour reforms ,government
regulations, custom tariffs on imports, taxes of
central and state government’s and so on.
LIBERALISATION – an
assessment
► The over all growth of Indian economy has
not been inspiring .India lifted its growth
rate during the 1990’s but is still
underperforming.
► The LIBERALISATION process in the country
has not been able to take off in the real
sense because the instrument of change that
is the bureaucracy has not been reformed.
LIBERALISATION – an
assessment
► formulation of policies in the areas like insurance,
banking, foreign trade, and telecom require an in
depth understanding of the subject.
► If Indian industry is to be competitive in price,
cost, and quality it must provide a level
Playing field in technology transfers,
infrastructures, Interest on finance,, labour
reforms, government regulations ,customs tarrifs
on imports, taxes on central and state government
and so on.
LIBERALISATION – an
assessment
► The review of past policies followed during the
first 40 years of planning reveals that there was no
alternative to the present policy of economic
reforms.
► The very purpose of the LIBERALISATION was to
remove unnecessary control and regulations,
liberating the trade and industry from unwanted
restrictions and to make various sectors of the
Indian economy, competitive on the global
economic platform by making them produce
quality goods in a cost effective manner.
LIBERALISATION – an
assessment
► LIBERALISATION means removal of controls and
not of regulations LIBERALISATION does not imply
any secret deals on the contrary it does not mean
the elements of transparency and accountability in
the functioning and procedure of the economy.
► Under the present circumstances there is no reverse
to economic reforms, whatever policy reforms and
restructuring programmes are to be adopted in the
Indian economy must have ADAPTABILITY TO THE
INDIAN SOIL.

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