Question

Explain the highlights of the LPG policy.

Hint:

Remember: LPG = Liberalisation + Privatisation + Globalisation.

Answer 1

Concept: The LPG policy (Liberalisation, Privatisation, Globalisation) was introduced in India in 1991 to reform the economy and promote growth.
Step 1: Liberalisation.

• Removal of industrial licensing and restrictions
• Reduction in government control over industries
• Encouragement of private sector participation
• Simplification of procedures for business operations

Step 2: Privatisation.

• Transfer of ownership from public sector to private sector
• Disinvestment of government shares in public enterprises
• Improvement in efficiency and competitiveness

Step 3: Globalisation.

• Integration of Indian economy with global markets
• Promotion of foreign trade and investment
• Reduction of import duties and export restrictions

Step 4: Other highlights.

• Devaluation of Indian currency
• Encouragement of foreign direct investment (FDI)
• Financial sector reforms

Step 5: Conclusion.
Thus, LPG policy transformed the Indian economy by promoting efficiency, competition, and global integration.