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CMA Foundation · Fundamentals of Business Economics and Management · Economic and Business Environment

Which of the following best describes the effect of liberalisation on the economic environment of Indian businesses after 1991?

Liberalisation removed many controls such as industrial licensing and reduced trade barriers, giving firms more freedom to invest and expand but also exposing them to greater domestic and foreign competition. The other options describe the earlier controlled, protectionist approach or nationalisation, which is the opposite.

  1. AGreater licensing and tighter control over private investment
  2. BReduced competition due to higher import barriers
  3. CRemoval of many controls, giving firms more freedom and exposure to competitionCorrect
  4. DNationalisation of major private industries

Explanation

Liberalisation after 1991 dismantled industrial licensing and reduced controls, allowing private entry and more foreign competition. The other options describe the earlier restrictive, protectionist regime or nationalisation, which is opposite to liberalisation.

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