Class 12 Economics - TAMILNADU
Liberalisation Privatisation and Globalisation
This chapter explores the pivotal New Economic Policy (NEP) introduced in India in 1991 to overcome a severe balance of payments crisis. Class 12 Tamil Nadu Samacheer Kalvi students will learn about the three main pillars of economic reforms: Liberalisation, Privatisation, and Globalisation (LPG). The chapter details the dismantling of the License Raj, the entry of foreign direct investment, the disinvestments of public sector undertakings, and India's integration into the global economy. Understanding these reforms is crucial for board exams as it explains the transition of India's economy from a controlled regime to a market-driven one.
Start Learning FreeKey Concepts
New Economic Policy (1991)
A set of economic reforms introduced by the Government of India in July 1991 to rescue the economy from fiscal deficit and foreign exchange crisis, focusing on stabilization and structural adjustment.
Liberalisation
The process of removing unnecessary government controls, industrial licensing, and restrictions on private sector participation to foster a competitive business environment.
Privatisation
The transfer of ownership, management, and control of public sector enterprises (PSUs) to private entrepreneurs through outright sale or disinvestment.
Globalisation
The integration of the domestic economy with the world economy through the free flow of goods, services, capital, technology, and labor across international borders.
Outsourcing
A business practice where companies hire external agencies, often abroad, to perform regular business processes like IT services, customer support, and accounting to reduce costs.
World Trade Organization (WTO)
An international organization established in 1995 that sets rules for global trade, replacing GATT, to promote free trade and resolve trade disputes among member nations.
Important Formulas
Board Exam Info
In the Tamil Nadu (Samacheer Kalvi) Class 12 Economics board exam, this chapter typically carries around 8 to 12 marks. Questions frequently include objective-type multiple-choice questions, 2-mark definitions of LPG, 3-mark distinctions between internal and external trade or public and private sectors, and 5-mark essays explaining the merits and demerits of globalisation.
Frequently Asked Questions
Why were the 1991 economic reforms introduced in India?
India faced a severe economic crisis characterized by high inflation, depleting foreign exchange reserves (barely enough for two weeks of imports), a huge fiscal deficit, and an adverse balance of payments.
What is the difference between Liberalisation and Privatisation?
Liberalisation refers to the relaxation of government rules and industrial licensing, whereas Privatisation involves transferring the ownership and management of public sector companies to private individuals or entities.
What are the main advantages of Globalisation?
Globalisation increases foreign direct investment (FDI), provides access to global markets and advanced technologies, creates employment opportunities, and offers consumers a wider variety of quality goods at competitive prices.
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