Class 11 Economics - ISC
Economic Reforms Since 1991
The chapter 'Economic Reforms Since 1991' explores the critical turning point in India's economic history when the government introduced sweeping policy changes due to a severe Balance of Payments crisis. Students will learn about the components of the New Economic Policy (NEP): Liberalisation, Privatisation, and Globalisation (LPG). It highlights the shift from a heavily regulated, state-controlled economy to a market-driven, globally integrated one. This chapter is vital for ISC Class 11 board exams as it tests both theoretical understanding and analytical skills regarding India's development strategy, structural changes, and the ongoing debate over the impacts of globalization.
Start Learning FreeKey Concepts
Balance of Payments (BoP) Crisis of 1991
A severe economic crisis where India's foreign exchange reserves plummeted to levels barely enough to cover two weeks of essential imports, forcing the government to mortgage gold and seek emergency aid from the IMF.
Liberalisation
The process of releasing the economy from rigid government controls and regulations, which included the abolition of industrial licensing and reduction of import tariffs.
Privatisation
The transfer of ownership, management, and control of public sector enterprises (PSUs) to the private sector, implemented through strategies like disinvestment.
Globalisation
The integration of the domestic economy with the world economy through the free flow of goods, services, technology, capital, and labor across international borders.
Outsourcing
A major business outcome of globalisation where companies hire external agencies, often abroad, to perform regular business processes like IT services, customer care, and legal transcription.
World Trade Organisation (WTO)
An international organization established in 1995 (replacing GATT) to provide a platform for member countries to negotiate trade agreements and administer rules of global trade.
Important Formulas
Board Exam Info
In the ISC Class 11 Economics examination, this chapter typically carries around 6 to 10 marks. Questions frequently appear as short-answer definitions (e.g., explaining disinvestment or outsourcing), distinguish-between questions (e.g., Liberalisation vs. Globalisation), and long-form analytical questions assessing the arguments for and against the LPG policy.
Frequently Asked Questions
Why were economic reforms introduced in India in 1991?
India faced a severe economic crisis characterized by high inflation, mounting fiscal deficits, and a dangerous depletion of foreign exchange reserves that could not pay for two weeks of imports.
What is the difference between Privatisation and Disinvestment?
Privatisation is a broad term meaning the general entry of private ownership in public domains. Disinvestment is a specific method of privatisation where the government sells a portion of its equity in Public Sector Undertakings to the private sector or public.
Is globalisation beneficial or harmful for developing countries like India?
Globalisation has benefits such as increased foreign investment, better technology, and wider consumer choice, but it also has drawbacks like unequal growth, neglect of the agricultural sector, and severe competition for domestic small-scale industries.
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