Class 11 Economics - KERALA
Liberalisation Privatisation and Globalisation
This chapter explores the major economic reforms introduced in India in 1991, commonly known as the LPG model. Kerala State syllabus (SCERT) Class 11 students will learn how India moved away from a controlled regime towards a market-driven economy due to a severe balance of payments crisis. The chapter details the three pillars: Liberalisation (removing government controls), Privatisation (transferring public sector units to private hands), and Globalisation (integrating the domestic economy with the world economy). Understanding these concepts, along with the arguments for and against outsourcing, WTO, and the impact of reforms, is crucial for scoring high in board exams.
Start Learning FreeKey Concepts
New Economic Policy (NEP) 1991
A set of economic reforms introduced by the Government of India in July 1991 to rescue the country from a severe economic and balance of payments crisis.
Liberalisation
The process of releasing the economy from excessive government regulations, controls, and licensing requirements to encourage private sector participation.
Privatisation
The shedding of ownership or management of government-owned public sector enterprises (PSEs) to the private sector through disinvestment or outright sale.
Globalisation
The integration of the national economy with the world economy through the free flow of trade, capital, technology, and labour across international borders.
Outsourcing
A business practice where a company hires regular service providers from outside, often from foreign countries like India, to perform routine tasks such as IT services and customer support.
World Trade Organisation (WTO)
An international organization founded in 1995 (replacing GATT) to establish rules for global trade and ensure smooth, predictable, and free international commerce.
Important Formulas
Board Exam Info
In the Kerala (SCERT) Class 11 Economics board examination, this chapter usually carries around 8 to 12 marks. Questions frequently include short-answer questions defining Liberalisation, Privatisation, or Globalisation, distinguishing between outsourcing and other business models, and essay-type questions evaluating the positive and negative impacts of the 1991 economic reforms on the Indian economy.
Frequently Asked Questions
What were the main reasons for the introduction of economic reforms in 1991?
The primary reasons included a severe balance of payments crisis, mounting foreign debt, high inflation, depleting foreign exchange reserves (down to about two weeks of imports), and poor performance of Public Sector Undertakings (PSUs).
What is the difference between Liberalisation and Privatisation?
Liberalisation means removing state-imposed restrictions and controls on economic activities and licenses. Privatisation means transferring the ownership, management, and control of public sector enterprises to the private sector.
Why is India considered a preferred destination for outsourcing?
India attracts global companies for outsourcing due to the availability of cheap, skilled, and English-speaking human capital, lower operational costs, and rapid advancements in IT infrastructure.
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