Question

What is the removal of unnecessary controls and restrictions on economic activities by the government called ?

• A. Privatization
• B. Disinvestment
• C. Liberalization
• D. Globalization

Hint:

Remember the LPG reforms in India (1991): \[\begin{array}{rl} \bullet & \text{Liberalization = Freedom from rules (Reducing restrictions).} \\ \bullet & \text{Privatization = Transfer of ownership (Selling government companies).} \\ \bullet & \text{Globalization = Integrating with the world (Opening up the economy).} \\ \end{array}\]

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The question asks for the term that describes the process of reducing government regulations on the economy.

Step 2: Detailed Explanation:
\[\begin{array}{rl} \bullet & \text{Liberalization: This refers to the process of making policies less constraining for economic actors. It involves loosening or removing government regulations, controls, and restrictions (like licenses, permits, quotas) on private business and trade, thereby giving more freedom to private enterprises.} \\ \bullet & \text{Privatization: This is the transfer of ownership of a business, enterprise, or property from the public sector (government) to the private sector.} \\ \bullet & \text{Disinvestment: A form of privatization where the government sells a part of its equity (shareholding) in a public sector undertaking.} \\ \bullet & \text{Globalization: The integration of a country's economy with the world economy.} \\ \end{array}\]

Step 3: Final Answer:
The removal of unnecessary controls and restrictions on economic activities by the government is called liberalization.