Question

Which of the following was a major objective of the LPG reforms introduced in India in 1991?

• A. Expansion of the public sector
• B. Reduction in foreign trade
• C. Liberalisation of the economy
• D. Nationalisation of industries

Hint:

LPG is the "Opening of the Doors." L = Fewer rules, P = More private business, G = Connecting with the world.

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
The New Economic Policy (NEP) of 1991 introduced structural reforms classified under three heads: Liberalisation, Privatisation, and Globalisation (LPG).
Step 2: Detailed Explanation:
Before 1991, India followed an inward-looking policy with heavy government control over industries and foreign trade.
Liberalisation aimed to remove "License Raj" and restrictions on the private sector to make it more competitive.
Privatisation involved reducing the role of the public sector and transferring ownership to the private sector.
Globalisation aimed to integrate the Indian economy with the global economy by reducing trade barriers.
Options (A), (B), and (D) represent the pre-1991 "socialist" model of development which the reforms aimed to move away from.
Step 3: Final Answer:
The central objective of the 1991 reforms was the liberalisation of the economy to encourage private investment and efficiency.