Liberalisation, Privatisation, and Globalisation (LPG) are three interrelated economic policies that were introduced in India in 1991 to replace the earlier model of Licensing, Quotas, and Permits. Here is a brief explanation of each policy:
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Liberalisation: This policy aims to free the economy from direct or physical controls imposed by the government. It involves the removal of unnecessary controls and restrictions for the smooth functioning of trade and business. The liberalization of the economy ensures greater freedom from any physical or direct control extended by the countrys government.
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Privatisation: This policy involves the transfer of roles and operations of publicly owned means to private ownership. It means a property or business of the government being taken by a private owner with an aim to function and discipline well. Privatization refers to the partial or full ownership and operation of the public sector enterprises by the private sector. It implies the withdrawal of government ownership from the public sector.
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Globalisation: This policy aims to increase the network of trade and culture interconnecting the whole world. It is a process associated with increasing openness, growing economic interdependence, and deepening economic integration in the world economy. Globalization is the integration of a country’s economy with the world economy. The attempt here is to create a borderless world in which goods, services, and people move seamlessly across borders.
The LPG model was introduced to make the economy more open, guarantee more economic and financial independence, and integrate the economy on a global scale. The policies have had a significant impact on the Indian economy, leading to increased foreign investment, economic growth, and a shift towards a market-oriented economy.
