Which policy included the abolition of industrial licensing for most sectors as a key step during the 1991 reforms?
Show answer & explanation
Correct answer: A
Explanation
Solution: The correct answer is Liberalisation.
Explanation:
☛ Under the New Economic Policy (NEP) initiated in July 1991, Liberalisation was introduced to remove unnecessary state controls, restrictions, and bureaucratic hurdles from the economy.
☛ A central component of industrial deregulation under liberalisation was the dismantling of the "License Raj", which abolished compulsory industrial licensing for almost all product categories.
☛ Licences were retained only for a select few industries related to security, strategic concerns, social causes, and hazardous chemicals.
☛ It also relaxed restrictions on business expansion under the MRTP Act and substantially reduced the number of industries exclusively reserved for the public sector.
Extra Exam-Relevant Facts:
☛ New Industrial Policy: It was formally announced on 24 July 1991 during the tenure of Prime Minister P. V. Narasimha Rao and Finance Minister Dr. Manmohan Singh.
☛ Privatisation: It involves the transfer of ownership, management, and control of public sector enterprises (PSEs) to private hands, primarily carried out through disinvestment.
☛ Globalisation: It refers to integrating the domestic economy with the global economy by encouraging foreign capital (FDI and FII), lowering import tariffs, and removing quantitative trade barriers.
☛ Nationalisation: The process of shifting private sector assets into government ownership, such as the historic nationalisation of 14 major commercial banks in 1969.
Important One-Liners for Upcoming Exams:
☛ Who was the Finance Minister of India when the 1991 economic reforms were introduced? → Dr. Manmohan Singh
☛ At present, how many industries require compulsory industrial licensing in India? → 5 industries
☛ Which Act was replaced by the Competition Act, 2002 to promote fair market competition? → Monopolies and Restrictive Trade Practices (MRTP) Act, 1969
☛ In which year were 14 major private commercial banks nationalised in India? → 1969
☛ What was the 1991 economic reform framework popularly known as? → Rao-Manmohan Model