What is Liberalisation and its Effects on the Indian Economy?

By BYJU'S Exam Prep

Updated on: November 9th, 2023

The term liberalization refers to the removal of restrictions for local private traders and businesses to expand into the global world. In India, the LPG policy for liberalization, privatization, and globalisation was implemented in 1991, allowing private individuals and businesses to participate in foreign trade.

Effects of Liberalisation on the Indian Economy

After the liberalization policy was implemented in 1991, many effects were seen on the Indian economy, which was positive, and the financial condition of the country improved. The effects of liberalization on the Indian economy are as follows:

  • This increased employment opportunities for the people as more jobs were available in the market due to foreign direct investment.
  • This reduced the monopoly of the public sector, as many services and products were made available by foreign companies.
  • Increase in foreign direct investment in various sectors in the country.
  • The debt burden on the country was also reduced.
  • Reduction in interest rates.
  • The policy of liberalization led to increased dependence on foreign technology and exchange

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