Liberalization Of India Essay

Liberalization in India was initiated in 1991 with the main motive of opening up the economy and making it service-oriented. The Government realised that the role of foreign as well as private investments in the economy should be expanded. Some of the measures included the reduction of taxes and import tariffs and the deregulation of markets leading to increased FDI and FII. Liberalization had its pros and cons with the country recording a very high economic growth during the period 1990-2000 on the upside, whereas, on the downside, levels of inequality and poverty also increased.

The annual growth rate of India before liberalization was around 3.6% and PCI stayed around 1.2%. During this time, Pakistan grew by around 5%, Indonesia and Thailand

This is touted to be India's biggest tax reform in 70 years of independence. It is also considered as the most important reform in terms of ease of doing business since 1991. GST replaced a number of indirect taxes with a unified tax structure and is expected to reshape the country’s vast economy.

Liberalization of the tourism sector in India

For a long time, India has charged high taxes to international companies operating in the tourism and hospitality sector. Tourism has contributed well to the growth of Indian economy by both forward as well as backward linkages.

To give the domestic companies a chance to develop themselves, Indian Government had imposed some restrictions to limit the number of foreign investors building infrastructure such as hotels and resorts through FDIs and M&As. The Government had fixed rates that the foreign companies were liable to pay before investing. After the reforms in the sector, trade was encouraged by the Government through 100 percent FDIs in tourism sector. Also, Indian Government offers five-year tax exemptions to resorts, hotels and other foreign investments in the sector. International giants such as Hilton, Accor, and Intercontinental hotels are expected to be major investors in the coming