New economic policy refers to adoption of Liberalisation, Privatisation and Globalisation (LPG) which aims at rendering the economy more efficient, competitive and developed.ELEMENTS OF NEW ECONOMIC POLICY:

1. Liberalisation: It means to free the economy from the direct and physical control imposed by the government.
2. Measures adopted for Liberalisation:

• Abolition of industrial licensing.
• De reservation of production areas.
• Expansion of production capacity.
• Freedom to import capital goods.

3. Privatisation: It refers to general process of involving the private sector in the ownership of management of state owned enterprises. It implies partial or full ownership and management of public sector enterprises by the private sector.
4. Measures adopted for Privatisation:

• Contraction of public sector.
• Disinvestment of public sector undertakings.
• Selling of shares of public enterprises.

5. Globalisation: It means integrating the economy of a country with the economies of other countries under condition of free flow trade and capital and movement of persons across borders.
6. Measures adopted for Globalisation:

• Increase in equity limit of foreign investment.
• Partial convertibility of Indian rupees.
• Long-term trade policy.
• Reduction in tariffs.