Ramesh Singh Test: Industry & Infrastructure- 1 - UPSC MCQ

1. The Industrial Policy Resolution of 1948 established the mixed economic system in India.
This statement is correct. The Industrial Policy Resolution of 1948 was the first industrial policy statement of India and decided on the mixed economy model.

2. The Industrial Policy Resolution of 1956 introduced the concept of 'Licence-Quota-Permit' regime.
This statement is correct. The Industrial Policy Resolution of 1956 cemented the provision of compulsory licensing for industries, leading to the establishment of the 'Licence-Quota-Permit' regime in the Indian economy.

3. Schedule B under the Industrial Policy Resolution of 1956 listed industries solely reserved for private sector investment.
This statement is incorrect. Schedule B under the Industrial Policy Resolution of 1956 included industries where the state government was supposed to take initiatives, with private sector participation following up more expansively. It did not reserve these industries solely for private investment.

Therefore, the correct answer is Option C

The Industrial Policy Resolution of 1948 was a pivotal moment for India as it not only introduced the mixed economy model but also categorized industries into the Central List, State List, and those open for private sector investment. This policy laid the foundation for economic development and set the tone for industrial growth post-independence.

Statement 1 is correct. The Udyog Aadhaar Memorandum (UAM) scheme, introduced in September 2015, indeed simplifies the registration process for MSMEs, allowing entrepreneurs to file an online memorandum and obtain a unique Udyog Aadhaar Number (UAN). This marked a significant improvement over the previous complex and cumbersome registration procedure.

Statement 2 is also correct. The Production-Linked Incentive (PLI) scheme was introduced in March 2020 with the goal of boosting domestic manufacturing and reducing import bills. It provides incentives to companies based on their increased sales over a 5-year period, thus encouraging higher production and investment in various sectors.

Statement 3 is incorrect. While the Employment Exchange for Industries was indeed set up to facilitate matchmaking between job seekers and employers, it was established in June 2015, not as part of the Make in India initiative but in line with the Digital India initiative.

Therefore, the correct answer is Option B: 1 and 2 Only.

Statement 1 is correct. The Industrial Policy Resolution of 1969 was indeed aimed at solving the shortcomings of the licencing policy started by the Industrial Policy of 1956. It was essentially a licensing policy that sought to address the issues raised by experts and new industrialists regarding the previous policy.

Statement 2 is incorrect. The Foreign Exchange Regulation Act (FERA) of 1973 was enacted to regulate foreign exchange and was considered a 'draconian' act that hampered the growth and modernization of Indian industries, rather than promoting foreign investments by MNCs.

Statement 3 is incorrect. The Industrial Policy Statement of 1977, which had a different political fervor, prohibited foreign investment in unnecessary areas, contrary to the 1973 policy that promoted foreign investment via technology transfer in areas lacking capital or technology.

Thus, only Statement 1 is correct, making Option A the right choice.

1. Industrial Policy Resolution, 1948 - Mixed Economy Model: Correct. The Industrial Policy Resolution of 1948 indeed decided the model of the economic system for India, which was the mixed economy model.

2. Schedule A (1956) - State Governments Monopoly: Incorrect. Schedule A included industries where the Central Government had complete monopoly, not the state governments.

3. Schedule B (1956) - Central Public Sector Undertakings (CPSUs): Incorrect. Schedule B included industries where state governments were to take initiatives, with private sector follow-up, not CPSUs.

4. Provision of Licensing (1956) - Licence-Quota-Permit Regime: Correct. The provision of compulsory licensing established the Licence-Quota-Permit regime in the economy.

So, only pairs 1 and 4 are correctly matched.

Statement-I correctly highlights the essence of the New Industrial Policy of 1991, which aimed to transform the nature and structure of the Indian economy. Statement-II accurately mentions that disinvestment in Government-owned firms, particularly PSUs, was a key component of the economic reforms initiated in 1991. The disinvestment process was part of the broader restructuring efforts to redefine the role of these firms in the evolving economic landscape. Hence, both statements are correct, and Statement-II appropriately explains the context set by Statement-I.

1. Industrial Policy Resolution, 1969: Introduced the concept of 'core industries' - Incorrect. - The concept of 'core industries' was introduced in the Industrial Policy Resolution of 1973.

2. Industrial Policy Resolution, 1973: Passed the Foreign Exchange Regulation Act (FERA) - Correct. - The Foreign Exchange Regulation Act (FERA) was indeed passed in 1973 as part of the Industrial Policy Statement.

3. Industrial Policy Resolution, 1977: Emphasized village industries - Correct. - The Industrial Policy Resolution of 1977 emphasized village industries and redefined small and cottage industries with a focus on decentralised industrialization.

4. Industrial Policy Resolution, 1980: Abolished industrial licencing - Incorrect. - The Industrial Policy Resolution of 1980 simplified industrial licencing but did not abolish it.

Thus, only pairs 2 and 3 are correctly matched.

Statement 1: Correct. The New Industrial Policy of 1991 indeed led to the de-reservation and de-licensing of industries, which was part of the broader economic reform measures to liberalize the Indian economy.

Statement 2: Correct. The New Industrial Policy of 1991 replaced the Foreign Exchange Regulation Act (FERA) with the Foreign Exchange Management Act (FEMA) as part of the reforms to encourage foreign investment and improve the balance of payments situation.

Statement 3: Incorrect. The New Industrial Policy of 1991 actually abolished the compulsion to convert loans into shares, rather than mandating it.

Hence, the correct answer is Option B: 1 and 2 Only.

1. Udyog Aadhar Memorandum (UAM) - Promotes ease of doing business

This pair is correctly matched. UAM was introduced to simplify the registration process for MSMEs and promote ease of doing business.

2. ASPIRE - Focuses on urban entrepreneurship and start-ups

This pair is incorrectly matched. ASPIRE (A Scheme for Promotion of Innovation, Rural Industries and Entrepreneurship) focuses on rural entrepreneurship and start-ups in agriculture-based industries.

3. Aluminium Industry - India is the third largest producer globally

This pair is incorrectly matched. India is the second largest producer of aluminium globally, after China.

4. PLI Scheme - Aims to boost domestic manufacturing and reduce import bills

This pair is correctly matched. The Production-Linked Incentive (PLI) scheme was introduced to enhance domestic manufacturing and reduce dependence on imports.

Correctly matched pairs: 1 and 4.

Thus, only two pairs are correctly matched.

1. De-reservation of the Industries : Abolition of restrictions on certain industries reserved exclusively for the public sector - Correct. De-reservation refers to removing certain industries from the list of industries reserved for the public sector, thus allowing private sector participation.

2. De-licencing of the Industries : Removing the requirement of obtaining industrial licenses for all sectors - Incorrect. De-licencing does not mean removing the requirement for all sectors but for many sectors, making it easier for them to operate without needing licenses.

3. MRTP Limit : Abolition of restrictions under the Monopolies and Restrictive Trade Practices Act - Correct. The MRTP Act restrictions were removed, which earlier imposed various restrictive measures on large companies.

4. FERA Replaced by FEMA : Replacing the Foreign Exchange Regulation Act with the Foreign Exchange Management Act - Correct. FERA, which was more restrictive, was replaced by FEMA to facilitate external trade and payments and promote the orderly development and maintenance of the foreign exchange market in India.

Hence, three pairs are correctly matched.