Class 12 Economics - CBSE
Liberalisation Privatisation and Globalisation
This chapter explores the New Economic Policy (NEP) introduced by the Government of India in 1991 to rescue the country from a severe economic crisis. It delves into the three pillars of NEP: Liberalisation (freeing the economy from government controls), Privatisation (transferring ownership from public to private sector), and Globalisation (integrating the domestic economy with the world economy). For CBSE Class 12 Economics students, this chapter is crucial as it forms the backbone of the 'Indian Economic Development' syllabus, frequently appearing in board exams through both direct theoretical questions and application-based case studies.
Start Learning FreeKey Concepts
New Economic Policy (NEP) 1991
A set of economic reforms introduced in India to overcome the balance of payments crisis, comprising stabilization and structural adjustment measures.
Liberalisation
The removal of unnecessary government restrictions and controls over the private sector, such as industrial licensing, price controls, and import tariffs.
Privatisation
The process of shedding the ownership or management of a government-owned enterprise to the private sector, often done through disinvestment.
Globalisation
The integration of the economy of a country with the world economy through the free flow of trade, capital, technology, and persons across borders.
Outsourcing
A business process where a company hires regular service from external sources, often from other countries, to reduce costs and improve efficiency (e.g., India becoming a hub for BPO).
World Trade Organisation (WTO)
An international organization founded in 1995 to establish rules for international trade and ensure smooth, predictable, and free global commerce.
Important Formulas
Board Exam Info
In the CBSE Class 12 Economics board exam, this chapter typically carries around 6 to 8 marks. Questions usually include direct 3-mark or 4-mark questions explaining differences between liberalisation, privatisation, and globalisation, as well as 6-mark analytical questions on the merits and demerits of these reforms or the arguments surrounding outsourcing and WTO.
Frequently Asked Questions
What led to the introduction of LPG policies in India in 1991?
India faced a severe economic crisis characterized by a huge balance of payments deficit, depletion of foreign exchange reserves to less than enough for two weeks of imports, rising inflation, and poor performance of Public Sector Undertakings (PSUs).
What is the difference between FDI and FII?
FDI (Foreign Direct Investment) involves direct investment in physical assets and management control in a business, whereas FII (Foreign Institutional Investment) involves buying shares and bonds in financial markets without direct control over the enterprise.
Why are LPG policies often criticized as 'Jobless Growth'?
Although India's Gross Domestic Product (GDP) growth rate increased after 1991, the growth did not generate a proportionate number of employment opportunities, leading to the phenomenon known as jobless growth.
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