It was during Narasimha Rao’s government in 1991, that India met with the economic crisis which occurred due to its external debt. Due to debt, the government was not able to make the payments for the borrowings it had made from the foreign countries.
As a result, the government had to adopt new measures to reform the conditions of the Indian economy. There were many programs and initiatives introduced primarily consisted of liberalization, privatization, and globalization.
Liberalization
Liberalization was brought up with the fact that any restrictions which became a hindrance to development and growth will be put to an end. Largely, this reforms made government regulations and policies lose. It allowed for opening up of economic borders for foreign investment as well as multinationals.
Privatization
Privatization largely refers to giving more opportunities to the private sector, such that the role of the public sector is reduced. The main objectives of privatization are reducing the workload of the public sector, providing better goods and services to the end users, improving the government’s financial condition, and many more. Privatization is a way to allow the entry of foreign direct investments and bringing healthy competition into the economy.
Globalization
Globalization in simpler terms is to connect with the world. In this context, globalization means the integration of the economy of India with that of the world. Thus, it encourages private and foreign investment and also foreign trade. Globalization attempts to establish the links in such a way that the Indian happenings can be met by the world or vice versa.
