LIBERALISATION

The term liberalisation has its origin in the political ideology ‘liberalism’, which took its form by early nineteenth century (it developed basically in the previous three centuries). The term is sometimes protrayed as a meta- ideology capable of embracing a broad range of rival values and beliefs. The ideology was the product of the breakdown of feudalism and the growth of a market or capitalist society14 in its place, which became popular in economics via the writings of Adam Smith (its founding father in the USA) and got identified as a principle of laissez-faire.15‌

The term liberalisation has the same connotation in economics as its root word liberalism. Pro-market or pro-capitalistic inclination in the economic policies of an economy is the process of liberalisation. We see it taking place in the whole Euro-America in the 1970s and particularly in the 1980s.16 The most suitable example of this process could be China of the mid-1980s when it announced its ‘open

door policy’. Though China lacks (even today) some trademark traits of liberalism, as for example, individualism, liberty, democratic system, etc., still China was called a liberalising economy.

We may take an example from the history of the world economy—putting the USA of the early 20th century and the communist China on the two poles of the scale—thus representing the best historical example of the liberal economy and China being the best example of the ‘illiberal’ economy. With the USA on the south pole and China on the north any policy movement towards ‘the south’ is ‘liberalisation’. The movement from the south to the north will be known as ‘illiberalisation’.

It means that the process of decreasing traits of a state economy and

increasing traits of a market economy is liberalisation. Similarly, the opposite will be the process of illiberalisation. Technically speaking, both the processes will be known as the processes of economic reforms, since ‘reform’ as a term does not say anything about the ‘direction’. All the economic reforms in the world have been from the ‘north to the south’. Similar is the case with the process of liberalisation.

It means, in the Indian case the term liberalisation is used to show the direction of the economic reforms—with decreasing influence of the state or the planned or the command economy and increasing influence of free market or the capitalistic economy. It is a move towards capitalism. India is attempting to strike its own balance of the ‘state-market mix’. It means, even if the economic reforms have the direction towards market economy it can never be branded a blind-run to capitalism. Since the economy was more like the state economy in the former years, it has to go for a greater degree of mix of the market. But in the long run, Liberalism curtails the powers of the Parliament.17