One of the economic reforms that was introduced in 1991 led to freedom in deciding the scale of business activities as well as freedom in fixing the prices of goods and services.
Identify the economic reforms.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Liberalization
Option (1) Privatization — Incorrect. It reduces the role of the public sector. It is not about freedom of scale and prices.
Option (2) Liberalization — Correct. Liberalization gave freedom in deciding the scale of business activities and freedom in fixing the prices of goods and services.
Option (3) Globalization — Incorrect. It is about foreign participation and links with the world economy.
Option (4) Disinvestment — Incorrect. It means the government selling its share in public sector companies.
NCERT (2026-27 Edition): “In essence, this policy has sought to liberate industry from the shackles of the licensing system (liberalisation), drastically reduce the role of the public sector (privatisation) and encourage foreign private participation in India’s industrial development (globalisation).” “Liberalisation: The economic reforms that were introduced were aimed at liberalising the Indian business and industry from all unnecessary controls and restrictions. They signalled the end of the licence-pemit-quota raj. Liberalisation of the Indian industry has taken place with respect to:” “(ii) freedom in deciding the scale of business activities i.e., no restrictions on expansion or contraction of business activities,” “(iv) freedom in fixing the prices of goods services,” |