Liberalization

• A relaxation of government restrictions in the areas of social, political and economic policies.

• Economic policy – lessening of government regulations and restrictions for greater
participation by private entities in order to encourage economic development.

Economic liberalization

• Initiated in 1991 .

• Goal – making the economy more market-oriented.

• Aim – Expanding the role of private and foreign investment in a manner that ensured an adequate flow of benefits to the poor .

Situation – Prior Reforms.

• Control system in the Indian Economy – rigid
and restricted entrepreneurship.
 Private sector was not allowed to invest in a number of sectors
 Imports were more strictly controlled
 Import of technology was controlled and Foreign Direct Investment was discouraged.

• 1991 reforms – P.V. Narasimha Rao-Manmohan
Singh duo Evolution of the economy .

• Full benefits took time to materialize – the final results were striking.

• Example:
 GDP growth averaged 7% – 1992 to 2017
 Average of 5% in the preceding ten years
 4% in the preceding 20 years.

• Increase in economic growth – poverty gradually began to decline.
• In-adequate recognition – Sectors like health, education and environmental concerns • Pending reforms – Areas such as labour and land.

• India’s decision – Regional Comprehensive
Economic Partnership.
 Need to enhance its competitiveness.
 Unfair competition from China – imposing
anti-dumping duties on China instead of
raising import duties across the board
 Geopolitics – reducing their dependence on
China.
 India can expect to become a major
player in non-China-dominated supply
chains.
 RCEP membership – Reassuring partners that
trade policy will not be arbitrarily changed.
• Free trade agreements – agreements with
important groups bilaterally • Requires – more give and take policy

Pandemic – collapse in employment.

• National Income – GDP contracted by 7.3% in
2020-21.

• Priority – vaccination coverage expanded as
soon as possible
 Creates conditions conducive to a return to
normalcy.

• Achieving the 2019-20 level economic recovery.

• India’s decision – Regional Comprehensive Economic Partnership.
 Need to enhance its competitiveness.
 Unfair competition from China – imposing anti-dumping duties on China instead of raising import duties across the board
 Geopolitics – reducing their dependence on China.
 India can expect to become a major player in non-China-dominated supply chains.
 RCEP membership – Reassuring partners that
trade policy will not be arbitrarily changed.
• Free trade agreements – agreements with important groups bilaterally .

• Requires – more give and take policy Pandemic – collapse in employment.

• National Income – GDP contracted by 7.3% in
2020-21.

• Priority – vaccination coverage expanded as
soon as possible
 Creates conditions conducive to a return to
normalcy.

• Achieving the 2019-20 level economic recovery.

• Analyse the grounds that caused the slowdown before the pandemic.

• Mutually supportive policies – higher growth
and higher employment with a target for post-pandemic growth.