Under the 1991 Trade and Investment Policy reforms, dismantling the regime of quantitative restrictions on imports and reducing very high tariffs was a mechanism of:
Show answer & explanation
Correct answer: C
Explanation
Solution: The correct answer is Liberalisation.
Explanation:
☛ Under the New Economic Policy (NEP) of 1991, India adopted the framework of LPG (Liberalisation, Privatisation, and Globalisation) to overcome a severe balance of payments crisis.
☛ Liberalisation refers to the removal of government-imposed restrictions, complex regulations, and bureaucratic controls on trade and economic activities.
☛ As a key component of trade policy reforms under liberalisation, the government dismantled quantitative restrictions (quotas and import licensing) on imports and exports.
☛ It also significantly reduced high customs tariffs to promote domestic industrial efficiency, technological upgradation, and international competitiveness.
Extra Exam-Relevant Facts:
☛ Privatisation: Involves reducing the government's role by transferring ownership, management, or control of public sector enterprises to the private sector, mainly through disinvestment.
☛ Globalisation: Refers to the integration of the domestic economy with the world economy by facilitating the cross-border movement of goods, services, capital, and technology.
☛ Under the Industrial Policy of 1991, industrial licensing was abolished for almost all product categories, retaining it for only a few strategic sectors.
☛ The quantitative restrictions on imports of all consumer goods and agricultural products were completely phased out by April 2001.
Important One-Liners for Upcoming Exams:
☛ Who was the Prime Minister of India during the launch of the 1991 economic reforms? → P. V. Narasimha Rao
☛ Who presented the historic Union Budget of 1991 as Finance Minister? → Dr. Manmohan Singh
☛ In which year were quantitative restrictions on all consumer imports completely dismantled in India? → 2001
☛ What is the process of selling government equity in Public Sector Undertakings called? → Disinvestment
☛ Which committee was constituted in 1991 to recommend direct and indirect tax reforms? → Raja Chelliah Committee