Which of the following was a primary objective of 'Liberalization' within the New Economic Policy (NEP) of 1991?
Abolishing industrial licensing for most industries to encourage private entry.
The question concerns the 1991 New Economic Policy, and specifically the meaning of its 'Liberalization' pillar as distinct from Privatization and Globalization.
Liberalization means freeing the economy from excessive government controls, permits, licences and quantitative restrictions so that market forces and private enterprise can operate more freely.
The central liberalizing step in 1991 was the abolition of industrial licensing, the so-called Licence Raj, for most industries, allowing private firms to establish and expand units without seeking prior government approval.
Expanding the list of industries reserved for the public sector would increase state control, which is the opposite of liberalization, so that option is incorrect.
Strengthening the MRTP Act to curb the growth of large business houses would also tighten restrictions on private expansion, again contradicting the liberalizing thrust; in fact the MRTP restrictions were eased.
Raising the peak customs duty is a protectionist measure, whereas liberalization actually lowered tariffs to open the economy to trade and competition.
Therefore the primary objective was Abolishing industrial licensing for most industries to encourage private entry.
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