Question

Which of the following best describes liberalisation of the economy?

• A. Creation of new government-owned industries.
• B. Expansion of rural employment guarantees.
• C. Removal of restrictions on trade and financial flow.
• D. Increasing taxation on foreign companies.

Hint:

Liberalise means to free from control.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:
We need the option that best describes what liberalisation of the economy means, using the idea given in the passage.

Step 2: Key point from the passage.
The passage says liberalisation meant the steady removal of rules that controlled Indian trade and finance.

Step 3: Check option 1.
New government-owned industries mean more state control. Liberalisation reduced state control, so this is wrong.

Step 4: Check option 2.
Rural employment guarantees are a welfare measure. They have no link with opening up trade and finance, so this is wrong.

Step 5: Check option 3.
Removing restrictions on trade and financial flow is the same as removing rules on trade and finance. This is right.

Step 6: Check option 4.
Higher tax on foreign firms would discourage them and protect local business. That is the older protectionist approach, so this is wrong.

Final Answer:
Liberalisation means removing restrictions on trade and finance, option 3. \[ \boxed{\text{Option 3}} \]