These Liberalisation, Privatisation and Globalisation Class 11 Notes explain the 1991 economic reforms introduced in India after the balance of payments crisis. The chapter discusses liberalisation, privatisation, globalisation, WTO, outsourcing, financial sector reforms, industrial reforms and the impact of reforms on the Indian economy. (NCERT Pages 39–52)
This chapter is highly important for UPSC, SSC, Railways, State PSC, CUET and CBSE examinations because questions related to LPG reforms, IMF, World Bank, WTO, disinvestment, outsourcing and economic reforms are frequently asked in competitive examinations. Exact NCERT page references are included throughout the notes for accurate revision and direct NCERT-based preparation.
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This chapter explains the economic crisis faced by India in 1991 and the reforms introduced under the New Economic Policy (NEP). It discusses liberalisation, privatisation and globalisation measures along with their impact on agriculture, industry, foreign trade and employment. (NCERT Pages 39–52)
(NCERT Pages 39–52)
These notes explain the need for economic reforms in India.
| Problem |
|---|
| External debt crisis |
| Falling foreign exchange reserves |
| Rising prices |
| Balance of payments crisis |
Foreign exchange reserves were sufficient for only two weeks of imports.
(NCERT Page 39)
These notes explain causes of the economic crisis.
| Cause |
|---|
| Excessive government expenditure |
| Large fiscal deficit |
| Growing imports |
| Low export growth |
| Heavy borrowings |
| Inflation |
Government expenditure exceeded government revenue.
| Institution |
|---|
| International Monetary Fund (IMF) |
| World Bank (IBRD) |
India borrowed 7 billion dollars from IMF and World Bank.
(NCERT Pages 39–40)
These notes explain the New Economic Policy.
| Component | Meaning |
|---|---|
| Stabilisation measures | Short-term corrective measures |
| Structural reforms | Long-term efficiency measures |
| Reform |
|---|
| Liberalisation |
| Privatisation |
| Globalisation |
(NCERT Page 40)
These notes explain liberalisation policies.
Removal of unnecessary government controls and restrictions on economic activities.
Liberalisation aimed to increase efficiency and competition.
(NCERT Page 41)
These notes explain industrial reforms under liberalisation.
| Reform |
|---|
| Industrial licensing abolished |
| Private sector entry increased |
| Small-scale industry dereservation |
| Market-based pricing introduced |
| Industry |
|---|
| Alcohol |
| Cigarettes |
| Hazardous chemicals |
| Aerospace |
| Drugs and pharmaceuticals |
Only atomic energy and railway core activities remained reserved for public sector.
(NCERT Page 41)
These notes explain reforms in banking and financial institutions.
| Institution | Function |
|---|---|
| RBI | Regulates banking system |
| Reform |
|---|
| Private banks allowed |
| Foreign investment increased |
| Reduced RBI control |
| FIIs allowed in Indian markets |
RBI’s role changed from regulator to facilitator.
| Concept | Meaning |
|---|---|
| FII | Foreign Institutional Investment |
(NCERT Pages 41–42)
These notes explain tax policy reforms.
| Tax Type |
|---|
| Direct taxes |
| Indirect taxes |
| Reform |
|---|
| Reduced income tax rates |
| Lower corporation tax |
| Simplified tax procedures |
| GST introduction |
GST introduced “One Nation, One Tax”.
| Event | Year |
|---|---|
| GST Constitutional Amendment | 2016 |
(NCERT Page 42)
These notes explain exchange rate reforms.
| Measure |
|---|
| Rupee devaluation |
| Market-determined exchange rate |
Rupee was devalued in 1991 to increase foreign exchange inflow.
(NCERT Page 42)
These notes explain reforms in foreign trade.
| Measure |
|---|
| Removal of quantitative restrictions |
| Reduction in tariffs |
| Removal of import licensing |
Quantitative restrictions removed fully in April 2001.
| Term | Meaning |
|---|---|
| Tariff | Tax on imports |
| Quantitative restriction | Limit on imports |
(NCERT Pages 42–43)
These notes explain privatisation and disinvestment.
Transfer of ownership or management from public sector to private sector.
| Method |
|---|
| Sale of public enterprises |
| Withdrawal of government ownership |
| Concept | Meaning |
|---|---|
| Disinvestment | Sale of part of government equity |
| Objective |
|---|
| Improve efficiency |
| Increase competition |
| Attract private investment |
(NCERT Pages 44–45)
These notes explain special status given to PSUs.
| Category | Example |
|---|---|
| Maharatna | Indian Oil Corporation |
| Navratna | Hindustan Aeronautics Limited |
| Miniratna | Airport Authority of India |
These PSUs received operational and managerial autonomy.
(NCERT Page 44)
These notes explain globalisation and its impact.
Integration of Indian economy with world economy.
| Feature |
|---|
| International interdependence |
| Free movement of goods |
| Cross-border investments |
| Global trade expansion |
Globalisation creates a borderless world economy.
(NCERT Pages 45–47)
These notes explain outsourcing and BPO services.
Hiring external services from other countries.
| Service |
|---|
| Call centres |
| Banking services |
| Accounting |
| Software services |
| Medical transcription |
India became major outsourcing destination because of:
• Skilled manpower
• Low wage costs
• IT growth
(NCERT Pages 45–46)
These notes explain WTO and its role.
| Feature | Details |
|---|---|
| WTO Established | 1995 |
| Predecessor | GATT |
| GATT Established | 1948 |
| Objective |
|---|
| Promote free trade |
| Remove trade barriers |
| Ensure rule-based trade |
India is an important member of WTO.
(NCERT Pages 46–47)
These notes explain the impact of reforms.
| Period | GDP Growth |
|---|---|
| 1980–91 | 5.6% |
| 2021–22 | 9.4% |
Service sector became major growth driver.
(NCERT Page 48)
These notes explain increase in FDI and reserves.
| Indicator | Growth |
|---|---|
| FDI and FII | US $100 million to US $23 billion |
| Forex reserves | US $6 billion to US $646 billion |
India became one of the largest holders of foreign exchange reserves.
(NCERT Page 48)
These notes explain advantages of LPG reforms.
| Benefit |
|---|
| Higher GDP growth |
| Increase in exports |
| Growth of IT sector |
| Rise in foreign exchange reserves |
| Increased competition |
| Better technology |
India became major exporter of:
• IT software
• Auto parts
• Pharmaceuticals
• Engineering goods
(NCERT Pages 48–52)
These notes explain criticisms of economic reforms.
| Problem |
|---|
| Slow employment growth |
| Agricultural slowdown |
| Industrial slowdown |
| Regional inequality |
| Public investment decline |
| Increased inequality |
| Issue |
|---|
| Reduced subsidies |
| Increased import competition |
| Decline in public investment |
| Issue |
|---|
| Cheap imports |
| Inadequate infrastructure |
| Competition from foreign goods |
(NCERT Pages 49–52)
These notes explain final assessment of reforms.
| Outcome |
|---|
| Faster economic growth |
| Global integration |
| Better foreign investment |
| Service sector growth |
| Outcome |
|---|
| Agriculture neglected |
| Employment concerns |
| Regional disparities |
| Rising inequality |
LPG reforms produced both positive and negative effects.
(NCERT Pages 51–52)
Class 11 Economics Chapter 1: Indian Economy on the Eve of Independence Notes
Class 11 Economics Chapter 2 Notes: Indian Economy 1950–1990
Class 11 Economics Chapter 4 Notes – Human Capital Formation in India
Class 11 Economics Chapter 5 Notes – Rural Development
Class 11 Economics Chapter 6 Notes – Employment: Growth, Informalisation and Other Issues
Class 11 Economics Chapter 7 Notes – Environment and Sustainable Development
Class 11 Economics Chapter 8 Notes – Comparative Development Experiences of India and Its Neighbours
These topics are highly important for UPSC, SSC, Railways, CUET and State PSC examinations.
| Important Topic | NCERT Page |
|---|---|
| 1991 Economic Crisis | 39–40 |
| New Economic Policy | 40 |
| Liberalisation | 41–43 |
| Financial sector reforms | 41–42 |
| Tax reforms | 42 |
| Privatisation | 44–45 |
| Disinvestment | 44 |
| Globalisation | 45–47 |
| Outsourcing | 45–46 |
| WTO | 46–47 |
| Impact of reforms | 48–52 |
These concepts are frequently asked in examinations.
| Concept | Explanation | NCERT Page |
|---|---|---|
| Liberalisation | Removal of restrictions | 41 |
| Privatisation | Transfer to private sector | 44 |
| Globalisation | Integration with world economy | 45 |
| Disinvestment | Sale of PSU shares | 44 |
| FDI | Foreign Direct Investment | 48 |
| FII | Foreign Institutional Investment | 42 |
| Tariff | Tax on imports | 43 |
| Quantitative Restriction | Import limit | 43 |
| Outsourcing | External hiring of services | 45–46 |
| WTO | International trade organisation | 46 |
These questions are useful for Boards, UPSC, SSC, CUET and State PSC exams.
These FAQs help in quick conceptual revision.
India introduced reforms due to balance of payments crisis, low forex reserves and rising inflation. (NCERT Pages 39–40)
LPG stands for Liberalisation, Privatisation and Globalisation. (NCERT Page 40)
Disinvestment means selling shares of public sector enterprises to private investors. (NCERT Page 44)
India has skilled manpower, low wages and strong IT services. (NCERT Pages 45–46)
WTO promotes international trade through rule-based trading system. (NCERT Pages 46–47)
These quick revision notes help in last-minute preparation.