In 1980s there were many restrictions in the economy. These restrictions hampering the Liberalisation is one of the part of it. Liberalisation came into effect to end these restrictions. To make economy open for all sectors. Sectors on which reform worked were:-
- Industrial sector
- Financial sector
- Tax reform
- Foreign exchange markets
- Trade and investment policy reform
- Licensing of industries abolished.
- Private sector allowed.
- Restriction of goods to be produced by small scale industries removed.
- Price fixation policy removed.
- Distribution of limited goods policy removed.
FINANCIAL SECTOR REFORM-
- To change the role of RBI from regulator to facilitator.
- To open private sector and foreign bank in India.
- Foreign investment limit increased to 74%.
- Foreign Institutional Investors can invest in Indian financial markets.
- Reduction in direct taxes to prevent tax evasion.
- Corporation tax rate decreased.
- In 2016 Goods and service tax introduced, which came into effect from 2017.
FOREIGN EXCHANGE REFORMS-
- To remove balance of payment crisis rupee devalued.
- Government control from determination of rupee value abolished.
- Market forces allowed to determine rupee value.
TRADE AND INVESTMENT POLICY-
- The protection policy adopted to protect domestic industry removed. As these policy hampering development. So that imports and exports take place freely and development can take place.
- Tariff that were there in imports sector reduced.
- Licensing of imported products removed.
- Export duties removed.