Which of the following Prime Ministers, is responsible for Liberalisation, Privatisation and Globalisation in India ?

The correct answer is Narsimha Rao.

Key Points

• P. V. Narsimha Rao served as the Prime Minister of India from 1991 to 1996 and is widely credited for introducing key economic reforms.
• His government initiated the landmark policies of Liberalisation, Privatisation, and Globalisation (LPG) to address India's financial crisis in 1991.
• The reforms were spearheaded by Dr. Manmohan Singh, then Finance Minister, under Rao's leadership.
• These policies opened up the Indian economy to foreign investments, reduced trade barriers, and encouraged privatization of state-owned enterprises.
• The 1991 reforms were pivotal in transforming India into a more market-oriented economy and integrating it with the global economy.

Additional Information

• Liberalisation:
  • Refers to the relaxation of government restrictions in areas like trade, industry, and investment policies.
  • Key steps included reducing import tariffs, removing licensing requirements, and allowing foreign investments.
• Privatisation:
  • Involves transferring ownership of public sector enterprises to private entities to improve efficiency and profitability.
  • The disinvestment of shares in public enterprises was a key component of this reform.
• Globalisation:
  • Refers to integrating the Indian economy with the global economy through increased trade and capital flows.
  • It led to India's participation in international markets and organizations like the WTO.
• 1991 Economic Crisis:
  • India faced a severe balance of payments crisis, with foreign exchange reserves barely sufficient for two weeks of imports.
  • This crisis catalyzed the adoption of the LPG reforms under Rao's leadership.
• Impact of Reforms:
  • India experienced higher GDP growth rates, industrial expansion, and increased foreign direct investments (FDI).
  • However, the reforms also led to challenges such as income inequality and reliance on foreign capital.