Question

State the appropriate concept for the given statement:
Modernisation of Indian economy.

Hint:

The Economic Liberalization of 1991 was a turning point in India's economy, focusing on deregulation, trade liberalization, privatization, and attracting foreign investment to modernize the country’s economic structure.

Answer 1

The appropriate concept for this statement is Economic Liberalization or Economic Reforms of 1991. In 1991, India underwent a series of economic reforms aimed at modernizing the economy and improving its integration with the global market. These reforms were introduced in response to a balance of payments crisis and included both short-term measures and long-term structural changes.
The key aspects of India's economic liberalization include:
1. Deregulation and Privatization: India shifted from a state-controlled, centrally planned economy to a more market-oriented one. The government reduced its role in the industrial sector, deregulated industries, and allowed private companies to play a larger role. The privatization of state-owned enterprises (SOEs) became a key feature of the reforms.
2. Trade Liberalization: India lowered import tariffs and reduced trade barriers, allowing for greater foreign investment and global competition. This made India more attractive to foreign investors and enabled Indian companies to enter the global market.
3. Financial Sector Reforms: The financial sector, including banking and capital markets, was reformed to enhance efficiency, transparency, and accessibility. The Reserve Bank of India (RBI) also took steps to modernize the banking system and promote financial inclusion.
4. Foreign Direct Investment (FDI): The reforms allowed greater foreign direct investment in various sectors, leading to a significant inflow of foreign capital, technology, and expertise. FDI contributed to the growth of industries such as telecommunications, automotive, and information technology (IT).
These reforms were instrumental in transforming India's economy, leading to high growth rates, technological advancements, and a more integrated global presence.