Liberalization of Economy

Liberalization of Economy

Economic reforms in India refer to the set of instruments and strategies adopted since 1991. Liberalization, privatization and globalization are the three constituents of economic reforms. Liberalization of the Economy is one of most important-part of economic growth. In the context of economic reforms, liberalization refers to shifting of license-dominated regime to de-licensing, deregulation and de-bureaucratization.  India has taken following measure towards liberalizing the economy:

Removal of Industrial Licensing : Except 18 industries relating to security and strategic,concerns, social reasons, hazardous chemicals and overriding environmental, all industrial licensing was abolished. Subsequently this list was reduced to a small group of five industries.

Dereservation of SSI Items: The items earlier reserved for SSI sector are gradually being de-reserved. In the budget 2003-04, 75 items and in 2005-06, 108 items have been de-reserved. Thus, the small-scale industry has been forced to face both domestic and international competition.

Withdrawing MRTP Restriction: The provisions of MRTP companies for clearance of investment proposals have been withdrawn. This has freed big business houses to undertake, expansion and establishment of new undertakings as well as to undertake merges, amalgamations and takeovers. They have also been given the freedom in the appointment of directors. This has provided a more liberal environment for expansion of existing undertakings and setting up of new undertakings.