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The 1991 economic reforms in India are commonly summarised by the three terms 'LPG'. Which of the following correctly describes the 'Liberalisation' component?

Liberalisation means removing or relaxing government controls on business, such as industrial licensing and entry restrictions on private firms. Selling public enterprise shares is privatisation, while integration with the global economy is globalisation. Bank nationalisation belongs to an earlier, more controlled era.

  1. ASelling shares of public sector enterprises to private investors
  2. BRemoving or relaxing controls such as industrial licensing and entry restrictions on private firmsCorrect
  3. CIntegrating the Indian economy with the world economy through trade and capital flows
  4. DNationalisation of major banks to widen credit access

Explanation

Liberalisation means easing government controls, for example abolishing industrial licensing for most industries and reducing restrictions on entry and pricing. Selling public enterprise shares is disinvestment/privatisation, and integration with the world economy is globalisation. Nationalisation of banks occurred in 1969 and is opposite to the reform direction.

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