Has the Indian governmental system responded adequately to the demands of Liberalization, Privatization and Globalization started in 1991? What can the government do to be responsive to this important change?
Approach · directive: “has / what can”
What it asks · Assess how far institutions and the administration adapted to the 1991 reforms, then suggest what the government should do to keep pace.
It asks 2 things — answer each
- Assess whether the governmental system has responded adequately to liberalisation, privatisation and globalisation since 1991: the response and the gaps
- Suggest what the government can do to be responsive to this change: specific measures
Open with · NCERT notes that economic conflicts and other problems led the government to a new economic policy in 1991, recasting the State from controller to regulator and facilitator.
Cover
- Response: industrial licensing dismantled; FEMA (1999) replaced FERA; the Competition Act 2002 replaced MRTP; SEBI, TRAI and other regulators created; GST amendment and IBC in 2016.
- Visual: a timeline from 1991 licensing reform to the 2016 GST amendment and IBC.
- Gaps: multiple clearances, red tape and slow contract enforcement; the 2012 retrospective tax amendment; a control mindset with weak regulatory and PPP skills; lagging safety nets.
- Verdict: adequate in law, inadequate in administrative practice.
- What to do: time-bound single-window clearances with regulatory impact assessment; specialised, trained officers with performance-linked accountability.
- Safeguards: independent, predictable regulators, consumer protection and social security for informal workers, so reform also delivers inclusion.
Close with · SDG target 16.6 calls for effective, accountable and transparent institutions at all levels; building them is the unfinished half of the 1991 reforms.
Add value (verified)
- SDG target 16.6 calls for effective, accountable and transparent institutions at all levels.Goal 16 targets - United Nations, Department of Economic and Social Affairs (sdgs.un.org) ↗“Target 16.6 Develop effective, accountable and transparent institutions at all levels Indicators 16.6.1 Primary government expenditures”
Question: UPSC's CS (Main) 2016, GS Paper II — paper ↗. Approach: Minimalist IAS, checked 3 Oct 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer· 266words · Minimalist IAS
NCERT notes that conflicts in the old policy, 'alongwith other problems', led the government 'to introduce a new economic policy in 1991'. It recast the State from controller to regulator and facilitator. The laws changed quickly; the administration changed slowly.
How the governmental system responded to LPG
- Deregulation: industrial licensing was dismantled for most industries.
- Laws for a market economy: FEMA (1999) replaced FERA, and the Competition Act 2002 replaced the MRTP Act.
- A regulatory State: SEBI, TRAI and other sectoral regulators were created.
- Second-generation reform: the GST constitutional amendment and the Insolvency and Bankruptcy Code, both in 2016.
- 1991: Licensing dismantled
- 1999: FEMA replaces FERA
- 2002: Competition Act replaces MRTP
- 2016: GST amendment, IBC
Why the response is not yet adequate
- Process burden: multiple clearances, red tape and slow contract enforcement raise the cost of business.
- Unpredictable policy: the 2012 retrospective tax amendment shook investor confidence.
- Control mindset: discretion and rent-seeking survive; generalist officers lack skills in regulation and PPP contracts.
- Inclusion gap: safety nets for workers, consumers and the vulnerable lagged behind market reform.
The response is adequate in law but inadequate in administrative practice.
What the government can do to be responsive
- Simplify: time-bound clearances through a single digital window, with regulatory impact assessment before new rules.
- Professionalise: domain specialisation and training in economics and regulation, with performance-linked accountability.
- Independent regulators: statutory autonomy, transparent selection and predictable rules.
- Inclusive reform: stronger consumer protection and social security for informal workers.
SDG target 16.6 calls for 'effective, accountable and transparent institutions at all levels'. Building them is the unfinished second half of the 1991 reforms.
Prepared by Minimalist IAS to the answer standard of Shivam Singh (mentor, 7 years) · facts checked against official sources (how we verify) · updated 3 Oct 2026. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.
