Class 12 Economics - MP
Liberalisation Privatisation and Globalisation
This chapter explores the major economic reforms introduced in India in 1991, commonly known as the LPG policy. MPBSE Class 12 students will learn how India shifted from a regulated economy to a market-driven one due to a severe Balance of Payments crisis. The chapter covers the three pillars: Liberalisation (removing government controls), Privatisation (transferring ownership to the private sector), and Globalisation (integrating the domestic economy with the world economy). Understanding this transformation is crucial for board exams as it forms the foundation of modern Indian economic development and regularly features in short and long-answer questions.
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 financial crisis and promote rapid economic growth.
Liberalisation
The process of releasing the economy from unnecessary state controls and restrictions, making it easier for private enterprises to operate.
Privatisation
The shifting of management and ownership of public sector undertakings (PSUs) into the hands of 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 borders.
Outsourcing
A business practice where a company hires external organizations, often abroad, to perform regular business services like call centers, accounting, and IT support.
World Trade Organisation (WTO)
An international organization established in 1995 to oversee international trade agreements and ensure smooth, predictable, and free global trade.
Important Formulas
Board Exam Info
In the MPBSE Class 12 Economics board exam, this chapter typically carries around 6 to 8 marks. Questions usually include objective-type questions (MCQs/fill in the blanks), short-answer questions explaining differences between liberalisation and globalisation, and long-answer questions detailing the need for 1991 reforms or the merits and demerits of globalisation.
Frequently Asked Questions
Why were economic reforms introduced in India in 1991?
Reforms were introduced due to a severe Balance of Payments crisis, high inflation, mounting fiscal deficits, poor performance of Public Sector Undertakings, and depletion of foreign exchange reserves.
What is the difference between Outsourcing and Globalisation?
Outsourcing involves contracting out specific business functions to external companies (often for cost efficiency), whereas globalisation is the broader integration of a country's entire economy with the global market.
What is meant by Disinvestment?
Disinvestment is the process by which the government sells a part or all of its equity shares in Public Sector Undertakings (PSUs) to private investors to raise funds and improve efficiency.
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