ELEMENTS OF 'NEW ECONOMIC POLICY' (LPG):-

    

     

             1- LIBERALISATION-

MEANING:- It refers to end of licence, quota and many more restrictions and controls which were put on industy before 1991. 

Indian companies got liberalisation in the following way:

i. Abolition of licence except in few.

ii. No restriction on expansion or contraction of business activities.

iii. Reduction of tax rate and lifting of unnecessary controls over the economy.

iv. Liberalisation in import and export.

v. Freedom in movement of goods and services.

vi. Freedom in fixing the prices of goods and services.

             2- PRIVATISATION:-

MEANING:- It refers to giving greater role to private sector and reducing the role of public sector. 

To execute policy of privatisation government took the following steps:

i. Disinvestment of public sector, i.e. transfer of public sector enterprise to private sector.

ii. Setting up of Board Of Industrial And Financial Reconstruction (BIFR). This board was setup to revive or close sick units in public sector enterprises suffering loss.

iii. Dilution of stake of the government. If in the process of disinvestments private sector acquires more than 51% shares then it results in transfer of ownership and management to the private sector.

            3- GLOBALISATION:-

MEANING:- It refers to integration of various economies of world. Till 1991 Indian government was following strict policy in regard to import and foreign investment, in regard to licensing of imports, tariff, restrictions etc. but after new policy government adopted policy of globalisation by taking following measures:

i. Import liberalisation: Government removed many restrictions from import of capital goods.

ii. Foreign Exchange Regulation Act (FERA) was replaced by Foreign Exchange Management Act (FEMA).

iii. Rationalisation of tariff structure.

iv. Abolition of export duty.

v. Reduction of import duty.