Liberalisation, Privatisation And Globalisation : An Appraisal

Monetary measures play an important role in the development of a country. Under the new economic policy, several steps have been taken. On the recommendations of Narasimham Committee, following measures have been adopted:
(i) Abolition of direct credit programmes.

(ii) Free determination of interest rate.

(iii) Reconstitution of banking system.

(iv) More freedom to banks.

(v) Improvement in banking system.

(vi) Reduction in liquidity ratio.

The main causes of Globalisation are as follows:

(i) Rapid growth of research and development.

(ii) Removal of artificial barriers to the movement of goods, services and capital.

(iii) Spreadout of the manufacturing processes by the large companies.

(iv) Deregulation of money market.

(v) Improvement in communication media and information technology.

After the economic crisis of 1991, the government implemented new industrial policy, new licensing policy, trade policy and foreign investment policy. When India accepted the Dunkel proposals and the membership of WTO, the globalisation of Indian economy became quite by imperative. Multinational companies have started infiltrating in all segments of Indian economy. The government removed the restrictions on imports and reduced the tariff rates. Economic activities are now to be governed both by the domestic market as well as the world market.

Since independence, India followed the Mixed economy framework by combining the advantages of the market economic system with those of the planned economic system. However, over the years, this policy resulted in the establishment of a variety of rules and laws which were aimed at controlling and regulating the economy which instead ended up hampering the process of growth and development. In 1991, India met with an economic crisis relating to its external debt. i.e. the government was not able to make repayments on its borrowings from abroad. Foreign exchange reserves dropped to levels that were not sufficient for even a fortnight. The prices of essential goods touched a new height All this led the government to introduce reforms in India.