What is Liberalisation and its Effects on the Indian Economy?

By Ritesh|Updated : July 28th, 2022

The term Liberalisation implies removing restrictions for local private traders and businesses to expand in the global world. In India, the LPG policy for Liberalisation, Privatisation, and Globalisation was implemented in 1991 allowing private individuals and businesses to take part in foreign trade. Let us learn more about the effects of Liberalisation on the Indian Economy in detail.

Effects of Liberalisation on the Indian Economy

After the implementation of the Liberalisation policy in 1991, there are many effects observed on the Indian economy which are positive and improved the financial situation of the country. The effects of Liberalisation on the Indian economy are as follows:

  • It increased employment opportunities for the people as more jobs were available in the market due to foreign direct investment.
  • It reduced the monopoly of the Government sector, as many services and products started becoming available by foreign companies.
  • Increased foreign direct investment in the country in various sectors.
  • The debt burden of the country was also decreased.
  • Reduction in the interest rates.

Due to the Liberalisation policy, there was increased dependence on foreign technology and exchange.

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FAQs for What is Liberalisation and its Effects on the Indian Economy?

  • There are multiple effects of Liberalisation on the Indian Economy, some of which are as follows:

    • Increased the expansion of markets for products and services which results in higher revenue for the local businesses outside the country.
    • Increased employment opportunities.
    • In various sectors, foreign direct investment got approved.
  • Liberalisation is defined as the policy of exercising relaxations for foreign trade and investment for local traders and businesses. It was implemented in 1991 in India.

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