The correct answer is D. Major role of public sector.
Liberalization is the process of making an economy more open to free market forces. This can be done by reducing government regulation, privatizing state-owned enterprises, and lowering trade barriers.
Option A, liberalization of economic policies, is a key component of liberalization. This involves reducing government intervention in the economy and allowing market forces to play a greater role.
Option B, encouragement of competition, is another key component of liberalization. This involves removing barriers to entry into markets and allowing businesses to compete freely.
Option C, development of financial markets, is a supportive measure that can help to promote liberalization. Financial markets provide businesses with access to capital, which can help them to grow and compete more effectively.
Option D, major role of public sector, is not a component of liberalization. In fact, liberalization often involves reducing the role of the public sector in the economy.
In conclusion, the correct answer is D. Major role of public sector.