Paragraph on Financial Liberalization in India


The financial liberalization in India summarize the last 25 years. The economical system of India has seen many ups and downs from the time when this country became an independent country.

There were large shortfalls in the past that included the situations when financial system of any country can become completely handicapped.


However, the finance experts of India successfully covered these situations and now India’s economy is reached the level of stability.


During the time of 1980-90, the yearly GDP escalation of India was settled at 4-5%. However, since 2005, India has seen the biggest yearly GDP escalation of around 8.5%. This growth underlines the financial liberalization in India. It is a result of continuous hard work and efforts of the financial experts of India. They implemented a sort of improvements and alterations that aimed at increasing the access and rivalry. As a result of this, an enlarged financial sector of India is playing the main role in attaining the financial constancy as well as preserving this enlargement momentum.

The Government, especially the members of finance department plays the crucial role behind the financial liberalization in India. Let’s find out the facts behind the development of the economic sector.


Till the time of 1991, there was a huge control on the financial activities in India. Each economic activity was closely synchronized and controlled by the several sectors including the public institutions as well as the industrial sectors. It was difficult to get the access on equity capital and debt without the involvement of the government. Besides this, the rent-seeking processes were completely uncontrolled. Thus, during 1980, the growth of financial sector was little rough. Borrowing was the only option to fund the existing account shortfalls. In order to encourage the consistent financial growth, and on other hand to decrease the poverty; several economic renovations were adopted.


As a result of this, in 1991, the Indian government decided the implementation of a chain of structural reformations and stabilization. It included some of the major decisions such as interest rate liberalization, capital account liberalization, improved directives and management etc.

Key Factors:

There are some major factors that decide the financial growth of any country. They are bond, equity, share and commodity, mutual funds, insurance policies, and the pension funds. The Securities and Exchange Board of India, also called as SEBI, controls these factors to facilitate the superior moderate access as well as the transparency. We can also notice the complete set up of the National Stock Exchange of India.

These reformations have encouraged many financial markets as well as the private investors in the banking. The functioning of Indian stock market completely depends on two important nationalized indices. They are the BSE i.e. Bombay Stock Exchange and the NSE i.e. National Stock Exchange. Besides these two, India contains 22 separate stock exchanges spread all over the country.


The financial sector of India is showing a continuous progress. The number of companies listing on the indices of two main stock exchanges has been increasing rapidly. It proves the financial liberalization in India.

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