Understanding Liberalisation in 1991

India introduced significant economic reforms in 1991, collectively known as liberalisation. The primary goal was to move away from a highly regulated economy towards a more market-oriented one. This involved reducing the government's extensive control over economic activities, thereby encouraging private enterprise and boosting economic growth.

Key Aim: Eliminating Restrictions on Industries

The liberalisation policy of 1991 primarily targeted the removal of specific government controls that were seen as hindrances to industrial development and economic efficiency. Among the key measures was the elimination of:

• Industrial Licensing (The 'License Raj'): Before 1991, entrepreneurs needed government approval (licenses) to start, operate, or expand most industries. This system involved complex procedures, delays, and potential corruption, stifling competition and innovation. Liberalisation aimed to abolish this requirement for most sectors.
• Quota System: The government had imposed restrictions on the quantity of goods that could be produced or imported. This limited the availability of goods and protected inefficient industries. Removing quotas allowed market forces to determine production levels and increased access to goods through imports.

By dismantling the industrial licensing and the quota system, the government sought to unleash the potential of the private sector, promote competition, improve efficiency, and make Indian industries more globally competitive.

Context of Other Options

While liberalisation in 1991 did influence other areas of the economy:

• Banking services underwent reforms, but eliminating control wasn't the sole or primary aim; rather, it was about improving efficiency and competition within the sector.
• Public sector employment was affected by reforms, but reducing employment wasn't the direct primary objective of liberalisation itself.
• Agricultural subsidies were part of broader economic policy, but their removal was not the central focus of the 1991 liberalisation drive concerning industrial and economic activity controls.

Therefore, the most accurate answer reflecting the primary aim of reducing government control over economic activities through liberalisation in 1991 is the elimination of the industrial licensing and quota system.