Class 12 Economics - ANDHRA-PRADESH
Liberalisation Privatisation and Globalisation
This chapter explores the New Economic Policy (NEP) introduced in India in 1991 to overcome a severe economic crisis. Students will learn about the three pillars of NEP: Liberalisation (removing government controls), Privatisation (transferring ownership to the private sector), and Globalisation (integrating the national economy with the world economy). It also covers the arguments for and against outsourcing, the role of WTO, and an appraisal of LPG policies. For Andhra Pradesh (BSEAP) board exams, this is a high-scoring chapter that frequently features direct conceptual questions, short notes on NEP components, and analytical questions on the impact of globalisation.
Start Learning FreeKey Concepts
New Economic Policy (1991)
A set of economic reforms introduced by the Government of India in July 1991 to pull the country out of an economic crisis, shifting towards a market-oriented economy.
Liberalisation
The process of releasing the economy from rigid government regulations, controls, and licensing requirements, particularly in industrial and financial sectors.
Privatisation
The transfer of ownership, management, and control of public sector enterprises (PSEs) to private entrepreneurs, either directly or through 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 business practice where a company hires external organizations, often overseas, to perform regular business activities like IT services, customer care, and legal advice.
World Trade Organisation (WTO)
An international organization established in 1995 (replacing GATT) to provide a rule-based trading system and promote free and fair international trade among member nations.
Important Formulas
Board Exam Info
In the Andhra Pradesh (BSEAP) Class 12 Economics board exam, this chapter typically carries around 8 to 12 marks. Students can expect very short answer questions (2 marks), short answer questions (5 marks), and essay-type questions (10 marks) focusing on the background of the 1991 crisis, the merits and demerits of globalisation, and the distinction between liberalisation and privatisation.
Frequently Asked Questions
Why was the New Economic Policy (NEP) introduced in 1991?
NEP was introduced to tackle severe balance of payments crises, high inflation, mounting foreign debt, and depleted foreign exchange reserves that dropped to levels insufficient for even two weeks of imports.
What is the difference between Outsourcing and In-sourcing?
Outsourcing involves contracting out regular business functions to external agencies (often in developing countries like India), whereas in-sourcing brings those operations back in-house or utilizes internal resources.
Is globalisation beneficial for developing countries like India?
Globalisation has benefits like access to foreign capital, advanced technology, and global markets, but it also poses challenges such as intense competition for domestic industries, threats to small-scale sectors, and income inequality.
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