Previous Year Question
Which of the following was the primary outcome of the initiatives of liberalisation and privatisation under the New Economic Policy (NEP) of 1991?
Correct Answer: C
Detailed Solution
A major outcome of the policies of Liberalisation and Privatisation was the acceleration of Globalisation. NCERT states the relationship very clearly: globalisation is an outcome of the policies of liberalisation and privatisation. These reforms helped integrate the Indian economy more closely with the world economy.
Under Liberalisation, many government restrictions relating to industrial licensing, imports and investment were reduced. Under Privatisation, the role of the public sector was reduced while greater participation of private enterprises was encouraged. At the same time, fewer restrictions on foreign trade and foreign investment strengthened India's economic links with other countries. This process of increasing economic integration is known as Globalisation.
It should be noted that fiscal and monetary reforms were also important components of the wider reform programme of 1991. However, the question specifically asks about the outcome of liberalisation and privatisation. In that context, NCERT directly links these policies with Globalisation.