LIBERALISATION

Liberalisation is an essential pre-requisite for a successful privatisation.In the absence of liberalised rules and regulations,the private sector will not be willing to venture, due to several restrictions which would hinder the independent growth of the private sector institutions.We know that the industrial policy of 1991 announced by the government of India is nothing but economic and industrial liberalisation.This liberalisation has tremendously expanded the scope of the private industry in India.Prior to liberalisation,seventeen of the most important industries were exclusively reserved for the public sector.Further, in twelve of the most important remaining industries were allocated for the private sector..Even the industries are open to private sector,several regulations like industrial licensing,clearance from MRTP act and Foreign Exchange restrictions etc.,would hinder private investments.With the liberalisation policy,these restrictions were removed,offering large scope for the expansion of the private sector.Now only six industries are reserved for the public sector and even in some of these industries,selective entry of the private sectors is allowed.Industrial licensing is confined to only fourteen industries.These industries,subject to licensing,account for only fifteen percent of the value added in the manufacturing sector.The MRTP regulations regarding  entry and growth were scrapped.In short,private enterprises can now enter and grow in most of the industries.Further automatic approval of foreign investment upto fifty one per cent and foreign technology agreements are permitted for 48 priority industries.