Liberalisation means ‘economic freedom’ or ‘freedom for economic decisions’. All economic units are free to take decisions for self-interest e.g. consumer, producer, owner of a factor of production, etc.
Measures were taken for Liberalisation:
- The flexibility of Interest rate: Banks are free to determine the rate of interest. Earlier it was determined by RBI.
- Freedom for expansion of industries: The industries are free to expand and produce. The producers are now free to produce anything on the basis of demand in the market.
- Abolition of Monopolies and Restrictive Trade Practices: Companies falling under MRTP Act are given concession. Firms are free to make decisions regarding investment.
- Reforms in FERA: FEMA (Foreign Exchange Management Act) was introduced in place of FERA. It will encourage international trade.
- Investments in infrastructure: Domestic and foreign investment is allowed in infrastructure to improve its quality.
- Encouragement to foreign technology: The use of foreign technologies allowed in high-priority industries resulting in cost cuts.
- SEBI: SEBI was formed to secure the interest of the investors and to regulate the securities market.
