Glossary term
Liberalisation: Meaning and Definition
Reviewed and approved by Dr. Anamika ShrivastavaPublished Last updated
Liberalisation is the removal of government rules and controls that restrict the working of markets, so that firms can start, expand and trade more freely. India’s 1991 reforms abolished most industrial licensing, cut import quotas and tariffs, eased foreign investment and reduced the Reserve Bank’s regulatory role.
In more detail
Liberalisation after 1991 meant fewer licences, lower tariffs and freer foreign investment. It aimed to raise efficiency through competition. Supporters point to faster growth; critics point to weak job creation and pressure on farmers and small firms. It is a policy choice that governments can adjust.
Example
Before 1991 a firm needed a licence to expand output; after 1991 most industries needed none.
Key points
- A policy strategy, not an outcome.
- Covers industry, finance, tax, foreign exchange and trade.
- Followed the 1991 crisis.
Common mistake
Treating liberalisation and globalisation as the same thing.
Related terms
Where it is explained
This term is explained in Class 11 Indian Economic Development Chapter 3: Liberalisation, Privatisation and Globalisation: An Appraisal.