Question

When was the LPG process started in India?
A. 1757
B. 1850
C. 2000
D. 1991

Answer 1

Hint: Liberalization, Privatization, and Globalization (LPG) is an economic policy or a structural model for a country's economy which reduces the control of the state on the industries, both domestic and multinational. It liberalises the economic policies of the country and increases competition for the domestic market.

Complete answer: Due to the low balance of payments and inflation in the country, India approached the World Bank for further economic assistance. In return, the World Bank asked the Indian Government to open its economy and allow foreign companies to invest in India without any trade and tariffs. Therefore, former Prime Minister Manmohan Singh introduced New Economic Policy in 1991 under which Liberalization, Privatization, Globalization (LPG) was implemented. It included tariffs and taxes cuts and opening markets for private and foreign companies in order to expand the economy. The following are the main characteristics of LPG reform:
-Abolition of Industrial licensing or Quota-Permit Raj
-Public sector role was diluted
-Free entry to foreign investment and technology
-Reduction in import tariffs
-Deregulation of markets
-Reduction of taxes
-Liberalization of Industrial Location Policy
-selling shares of Public Sector Units and financial institutions
-The Indian currency was made partially convertible
-Foreign Exchange Management Act (FEMA) replaced the Foreign Exchange Regulation Act (FERA).
Thus, option (D) is the correct answer.

Note: The impact of LPG led India to record it's highest GDP growth rate of 9.6% in 2006. This made India the second-fastest-growing major economy in the world, after China.