What is Liberalisation? Explain the measures taken for liberalisation.

Liberalisation means ‘economic freedom’ or ‘freedom for economic decisions’. All economic units are free to take decisions for self-interest e.g. consumer, producer, owner of a factor of production, etc.

Measures were taken for Liberalisation: 

• The flexibility of Interest rate: Banks are free to determine the rate of interest. Earlier it was determined by RBI. 
• Freedom for expansion of industries: The industries are free to expand and produce. The producers are now free to produce anything on the basis of demand in the market. 
• Abolition of Monopolies and Restrictive Trade Practices: Companies falling under MRTP Act are given concession. Firms are free to make decisions regarding investment. 
• Reforms in FERA: FEMA (Foreign Exchange Management Act) was introduced in place of FERA. It will encourage international trade. 
• Investments in infrastructure: Domestic and foreign investment is allowed in infrastructure to improve its quality. 
• Encouragement to foreign technology: The use of foreign technologies allowed in high-priority industries resulting in cost cuts. 
• SEBI: SEBI was formed to secure the interest of the investors and to regulate the securities market.