Q. 53.8( 4 Votes )

Why government in the 1990s allowed private industries in many areas which were earlier restricted only to government?

Answer :


During the 1990s, the government had faced many problems regarding the foreign exchange and payment of foreign debts in the country. Inflation was becoming uncontrollable, foreign exchange reserves were at an all-time low, and the country had to face other problems in the international market. The Gulf Oil crisis and other economic issues were propelling the country to an all-time low in the economic perspective. The government was compelled to take a revolutionary decision to open up all its restrictions to attract foreign capital and investment. Thus it opened up new opportunities for the private sector to invest in the country. This encouraged private investment in many sectors of the economy that was earlier under the control of government; except in strategic industries like military, railway, and power. The private investment in these sectors led to an increase in their competitiveness and compelled the public enterprises to compete with the private sector leading to increased efficiency in the working of the public sector. This freed the government from providing these services and enabled them to concentrate on other aspects of the economy.


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