Revision: Economic Policy of India since 1991 Economics HSC Science (General) 11th Standard Maharashtra State Board

Liberalisation means removing unnecessary government restrictions and controls on business activities so that trade and industries can grow freely and compete globally.

Integration of national economies and societies through cross-country flows of information, ideas, technologies, goods, services, capital, finance, and people.

• Liberalisation helps markets run freely with less government control.
• Boosts investment, competition, and technology use.
• Protects investor interests and makes trade easier.
• Liberalisation (from 1991) reduced government controls and licensing and opened more sectors to private competition.
• Industrial licensing removed for most industries; only a few areas reserved for public sector and small‑scale reservations reduced.
• Financial sector: private and foreign banks allowed; FIIs (foreign investors) permitted in markets; RBI became more of a facilitator.
• Tax reforms: income and corporate tax rates cut, procedures simplified; GST introduced to create one national market and reduce evasion.
• Foreign exchange: rupee devalued in 1991; exchange rate mostly determined by market demand and supply.
• Trade & investment: import licensing and quantitative restrictions removed, tariffs reduced, export duties scrapped to make Indian industry more competitive globally.

• Privatisation refers to the transfer of a business from government to private ownership.
• It brings efficiency, accountability, better service, and profit focus.
• Indian examples include Air India, Maruti Suzuki, and Hindustan Zinc.
• Methods include disinvestment, outright sale, and private management contracts.
• Privatisation = government reduces or gives up ownership/management of public sector enterprises.
• Disinvestment = sale of government shares in PSUs to improve discipline, modernisation and efficiency using private capital and management.
• Aims: attract FDI and make PSUs more efficient by giving autonomy.
• Efficient PSUs get Maharatna / Navratna / Miniratna status for greater autonomy and global expansion.

• Globalisation means integrating a country’s economy with the world economy and treating the world as one single market.
• It involves free flow of goods, services, capital, technology, information, and people across national borders.
• Globalisation goes beyond trade and includes worldwide coordination in production, marketing, finance, and human resources.
• It increases economic integration and interdependence among countries.
• A global company views the entire world as one market and does not differentiate between domestic and foreign markets.
• Globalisation promotes free-market competition and benefits businesses and consumers, but also increases dependence among nations.
• Outsourcing is a result of globalisation, where foreign companies hire Indian firms for services like IT and BPO due to low cost and skilled labour.