# Class 12 Economics Chapter 3 Notes | SwaVid NCERT Class 12 Economics notes: key ideas, definitions, common mistakes and 3 quick checks with worked answers, written by SwaVid from the NCERT textbook. Canonical: https://www.swavid.com/cbse/class-12/economics/chapter/liberalisation-privatisation-and-globalisation-an-appraisal Source: https://www.swavid.com/cbse/class-12/economics/chapter/liberalisation-privatisation-and-globalisation-an-appraisal # Liberalisation, Privatisation and Globalisation: An Appraisal ## Definitions, formats and formulas ## Key ideas ## Common mistakes ## Quick checks ## Keep going ## Questions parents ask ## Class 12 Economics on SwaVid ### Background and economic crisis of 1991 ### Liberalisation and domestic reforms ### Foreign trade and investment deregulation ### Privatisation and disinvestment ### Globalisation and outsourcing ### World Trade Organisation and appraisal ### Next chapter ### Related chapter ### Related chapter ### Related chapter ### All chapters SwaVid › CBSE › Class 12 › Economics › Liberalisation, Privatisation and Globalisation: An Appraisal Notes written by SwaVid from the NCERT textbook. Class 12 Economics, Chapter 3. Key ideas, definitions and common mistakes. CBSE does not print marks for a single chapter. Short answer. This chapter examines the economic crisis of 1991 in India and the resulting New Economic Policy reforms centered on liberalisation, privatisation, and globalisation. It evaluates how these structural and stabilising measures reshaped industrial licensing, foreign trade, the financial sector, and overall economic growth. Source: NCERT Indian Economic Development (Reprint 2026-27) , Chapter 3, Liberalisation, Privatisation and Globalisation: An Appraisal India faced severe fiscal deficits, mounting external debt, and high inflation by the late 1980s. Foreign exchange reserves dropped to a level barely sufficient to finance two weeks of imports, forcing the government to borrow from the IMF and World Bank and initiate the New Economic Policy in July 1991. Liberalisation lifted controls across industries, financial markets, taxes, and external trade. Industrial licensing was abolished for almost all goods, the Reserve Bank of India transitioned from a regulator to a facilitator of commercial banks, and direct tax rates were simplified. The government devalued the rupee to encourage exports and removed import quotas and quantitative restrictions. Import duties were reduced sharply to allow domestic firms access to international technology and raw materials. Privatisation transferred ownership or management of public sector enterprises to private hands. The government sold equity shares of central public sector enterprises to the private sector through disinvestment and granted functional autonomy to profit-making firms known as Navratnas and Miniratnas. Globalisation integrated the domestic economy with the world market through trade flows, technology transfer, and capital movement. India became a premier destination for business process outsourcing due to low wages and a large pool of skilled English-speaking personnel. The World Trade Organisation replaced GATT in 1995 to establish rule-based multilateral trade, though developing nations argued that market access remained tilted toward developed countries. While the reforms accelerated GDP growth and foreign exchange reserves, they neglected agriculture and failed to generate sufficient formal employment. Try each question first. Then tap it to see the answer. Disinvested amount = Total equity × Fraction sold Disinvested amount = 500 × 0.20 = 100 ₹100 crore Reduction in tariff = Old tariff rate - New tariff rate Reduction = 150 - 30 = 120 120 percentage points Pre-reform RBI fixed interest rates and operational approvals directly for commercial banks. Post-reform guidelines allowed commercial banks to decide interest rates and open branches autonomously within set prudential norms. This shift expanded private decision-making without eliminating central oversight. To allow commercial banks greater managerial autonomy in operations and interest rates Human Capital Formation in India . Indian Economy 1950-1990 . Open Economy Macroeconomics . Employment: Growth, Informalisation and Other Issues . The 13 chapters of Class 12 Economics . CBSE does not give marks to one chapter. It prints marks for units or parts, and the chapter list page shows them all. No. They are written by SwaVid from the NCERT textbook. The CBSE curriculum is the reference for what is assessed. Human Capital Formation in India. SwaVid is an AI tutor for Indian students in Classes 6 to 12. It finds the earlier ideas a child missed, then teaches today’s chapter. Start free to see how it works. - Ch 3 NCERT book - 80 marks, theory paper - 3 quick checks - Treating stabilisation measures and structural reform measures as identical policies . Classify stabilisation measures as short-term actions to fix inflation and reserves, and structural reforms as long-term adjustments to enhance productivity and remove industrial bottlenecks. - Confusing disinvestment with complete privatisation . Disinvestment involves selling a fraction of public sector enterprise equity to raise revenue, whereas complete privatisation transfers over 50 percent ownership or management control to private entities. - Assuming post-1991 agricultural growth accelerated alongside service sector growth . Recognise that public investment in agriculture declined after 1991, input subsidies were curtailed, and growth in the farm sector actually slowed down despite rapid service sector expansion. - Believing GATT and WTO operated simultaneously after 1995 . Note that the World Trade Organisation replaced the General Agreement on Tariffs and Trade in 1995 as a permanent international trade body with wider coverage including services and intellectual property. ## Key Links - [CBSE](https://www.swavid.com/cbse) - [Class 12](https://www.swavid.com/cbse/class-12) - [Economics](https://www.swavid.com/cbse/class-12/economics/chapters) - [Start free →](https://www.swavid.com/signup) - [All 13 chapters](https://www.swavid.com/cbse/class-12/economics/chapters) - [NCERT Indian Economic Development (Reprint 2026-27)](https://ncert.nic.in/textbook.php) - [Open notes](https://www.swavid.com/cbse/class-12/economics/chapter/human-capital-formation-in-india) - [Open notes](https://www.swavid.com/cbse/class-12/economics/chapter/indian-economy-1950-1990) - [Open notes](https://www.swavid.com/cbse/class-12/economics/chapter/open-economy-macroeconomics) - [Open notes](https://www.swavid.com/cbse/class-12/economics/chapter/employment-growth-informalisation-and-other-issues) - [Class 12 Economics](https://www.swavid.com/cbse/class-12/economics/chapters) - [Start free →](https://www.swavid.com/signup)