Which of the following was a major criticism of the industrial policy followed in India during 1950-1990?
Show answer & explanation
Correct answer: B
Explanation
Answer: Creation of a protected market leading to inefficiency and lack of innovation
Explanation
India’s industrial policy during 1950–1990, often called the pre-liberalization or license-permit era, was characterized by heavy regulation, licensing, and protection of domestic industries.
A major criticism of this period was that it created a highly protected and controlled market, which led to:
Lack of competition
Low efficiency in industries
Weak innovation and technological stagnation
This system is associated with the License Raj, where businesses required government permission for most economic activities.
Additional Key Points
Heavy state control over industries
Limited foreign competition due to import restrictions
Dominance of public sector enterprises
Potential Questions & Answers
Q. What was a major drawback of India’s pre-1991 industrial policy?
Ans: Lack of efficiency and innovation
Q. What replaced the controlled industrial system after 1991?
Ans: Liberalization, Privatization, and Globalization (LPG model)