The reform process in India was initiated with the aim of accelerating the pace of economic growth and eradication of poverty. The process of economic liberalization in India can be traced back to the late 1970s. However, the reform process began in earnest only in July 1991. It was only in 1991 that the Government signaled a systemic shift to a more open economy with greater reliance upon market forces, a larger role for the private sector including foreign investment, and a restructuring of the role of Government. The process of economic reforms by the government of India in 1991 for taking the country out of economic difficulty and speeding up the development of the country. The centre of economic reforms has been liberalisation, privatisation and globalisation these three terms are explained as follows:
(A) Liberalisation:Liberalisation means to unshackle the economy from bureaucratic cobweb to make it more competitive. Following are its chief features:
(i) To do away with the necessity of having a license for most of the industries
(ii) Freedom in determining the scale of business activities
(iii) Removing restrictions for the movement of goods and services from one place to another
(iv) Freedom to fix the prices of goods and services
(v) Reduction in the rate of taxes
(vi) Freedom from unnecessary control over economy
(vii) Simplifying import-export procedure
(viii) Simplifying the process of attracting foreign capital and technology.
(B) Privatisation:In brief, privatisation means such an economic process through which some public sector undertaking is brought either partially or completely under private ownership.Broadly speaking, establishing a new enterprise in private sector instead of public sector is also privatisation. Not only this, depriving public sector of the job of production which was earlier reserved for it or transferring its production, without depriving it, to the private sector also amounts to privatisation. Its chief features are given below:
(i) Reducing the role of public sector and increasing the role of private sector
(ii) Reducing fiscal burden of the government
(iii) Reducing the size of the government machinery
(iv) Speeding up economic development
(v) Improving management of enterprises
(vi) Increase in government treasury
(vii)Increasing competition by opening industries reserved for the public sector to the private sector.
(C) Globalisation:Globalisation means integrating the economy with the rest of the world. Following are its chief features:
(i) Free flow of goods and services in all the countries
(ii) Free flow of capital in all the countries
(iii) Free flow of information and technology in all the countries
(iv) Free movement of people in all the countries
(v) The same conflict-solving technique in all the countries.