Class 12 Economics - HARYANA
Liberalisation Privatisation and Globalisation
This chapter explores the major economic crisis of 1991 in India and the New Economic Policy (NEP) introduced to overcome it. Students will learn about Liberalisation, Privatisation, and Globalisation (LPG policies), understanding how India transitioned from a controlled economy to a market-driven one. It covers financial sector reforms, tax reforms, foreign exchange reforms, trade policy reforms, disinvestment, outsourcing, and the role of the World Trade Organisation (WTO). This is a high-scoring and crucial chapter for Haryana (BSEH) board exams, frequently featuring analytical questions on the impact of globalisation and distinctions between the three pillars of NEP.
Start Learning FreeKey Concepts
Liberalisation
The process of releasing the economy from state-imposed restrictions, controls, and regulations to encourage private sector participation.
Privatisation
The transfer of ownership, management, and control of public sector enterprises (PSUs) to the private sector.
Globalisation
The integration of the domestic economy with the world economy through trade, capital flows, technology transfer, and free movement of labour.
Outsourcing
A business practice where a company hires external agencies (often in other countries like India) to perform regular business services.
World Trade Organisation (WTO)
An international organization established in 1995 to administer multilateral trade agreements and provide a platform for negotiating trade liberalization.
Disinvestment
Selling off a part or whole of the equity shares of Public Sector Undertakings (PSUs) to the private sector or public.
Important Formulas
Board Exam Info
In the Haryana (BSEH) Class 12 Economics board exam, this chapter typically carries around 6 to 8 marks. Questions usually include very short-answer questions (1 mark), short-answer questions (3-4 marks) on distinguishing between liberalisation and privatisation, and long-answer descriptive questions (5-6 marks) regarding the merits and demerits of globalisation or the background leading to the 1991 economic crisis.
Frequently Asked Questions
Why was the New Economic Policy introduced in 1991?
It was introduced to tackle a severe balance of payments crisis, mounting inflation, falling foreign exchange reserves, and poor performance of public sector undertakings.
What is the main difference between Liberalisation and Privatisation?
Liberalisation refers to removing government controls and restrictions on economic activities, whereas privatisation involves transferring the ownership and management of public sector enterprises to the private sector.
Is outsourcing beneficial for a developing country like India?
Yes, outsourcing provides employment opportunities, brings in advanced technology, enhances skill development, and boosts foreign exchange earnings for developing countries like India.
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