What is Liberalisation?

Liberalisation means liberating the economy. It helps in accelerating the process of globalisation, reduces government control over the economy and opens it for national and international business organisations. In this process the national and international organisations are treated differently. In some cases the national organisations may have an advantage over the international/multinational or transnational companies. National companies are protected. The pace of change is determined by the concerned government.

Public and private sector companies can coexist in a liberalised economy. Liberalisation basically involves ending of the monopoly of government owned companies. In the 1990s the Indian Government liberalised the insurance sector which was the monopoly of the Life Insurance Corporation of India (LIC), a government owned company. After liberalisation private national and international players entered the field. LIC continued to operate in the new environment still under government ownership and control. This example clearly indicates that liberalisation doesn‘t necessarily mean privatisation of all government owned companies.

Liberalisation encouraged competition among the players. Consumers had better options to choose from. In case of the insurance sector it was practically impossible for LIC alone to cater to the needs of the huge Indian insurance market. Private players in the insurance sector have helped to expand the insurance market. The use of state-of-the-art technology by these companies has simplified the transactions for the consumers and has also compelled the LIC and other government owned companies to modernise their business.

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