Suresh is an entrepreneur. Before 1990, for setting up an industry, he required license from the government. Now, after the New Economic Policy 1991, he does not need any license. What would you call this process?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Liberalisation
Option (1) Privatisation — Incorrect. Privatisation is the handing over of enterprises or sectors from the government to private owners. Suresh’s case is not about who owns an industry; it is about a government control, the licence, being removed.
Option (2) Globalisation — Incorrect. Globalisation is the growing interconnection of the world, through trade, investment, technology and culture. Suresh setting up his own industry without a licence involves no link with other countries.
Option (3) Corporatisation — Incorrect. Corporatisation means turning a government department or business into a company run on commercial lines. Nothing in the case changes the form of an enterprise.
Option (4) Liberalisation — Correct. Since the 1990s the government has followed a policy of liberalisation, removing restrictions on economic activity. One of its measures is that licenses are no longer required to open industries, which is what changed for Suresh after the New Economic Policy of 1991.
Note: The term ‘corporatisation’ in Option (3) is not in NCERT (2025-26); it is explained here for the benefit of the students.
NCERT (2025-26): “Globalisation, Liberalisation and Changes in Indian Industry … Since the 1990s, the government has followed a policy of liberalisation. Private companies, especially foreign firms, are encouraged to invest in sectors earlier reserved for the government, including telecom, civil aviation, power, etc. Licenses are no longer required to open industries. Foreign products are now easily available in Indian shops. As a result of liberalisation, many Indian companies— small and large, have been bought over by multinationals.…” |