Which of the following statements regarding the Industrial Sector in India post the launch of the New Economic Policy in 1991 is/are NOT correct?
1. Compulsory licensing on several industries was abolished.
2. Many industries that were only reserved for the government were dereserved.
3. There was quota and price control for all the goods produced in the industrial sector.​

Correct option is A

The correct answer is (a) Only 3

• The New Economic Policy of 1991 brought major reforms in the industrial sector of India, marking the shift towards liberalization and globalization.

1. Compulsory Licensing was abolished:

   • True: Under the new policy, compulsory licensing was abolished for many industries. It allowed industries to grow and expand freely without the restrictions that were previously imposed.

   • The government also opened up several industries that were previously restricted to the public sector, allowing more private participation.

2. Many industries were dereserved:

   • True: Industries that were previously reserved for the government were dereserved under the new policy. The government allowed the private sector to participate in key sectors like telecommunication, power generation, and transport.

3. Quota and price controls were imposed on all goods:

   • False: The quota and price control system was not applicable to all industrial goods. The new policy focused on deregulation and market-driven pricing. The government moved towards free market principles by reducing price controls and licensing restrictions.

   • While some essential goods like food grains and essential commodities were still under government control, most goods were allowed to be priced based on market conditions.

Information Booster:

• New Industrial Policy of 1991:

• The 1991 policy aimed at liberalization, privatization, and globalization, marking a shift from a controlled economy to a market-oriented one.

• The policy focused on removing restrictions on industries, enhancing competition, and promoting foreign investment.

• Compulsory Licensing:

• Compulsory licensing was a system where industries had to get permission from the government to expand or set up new plants. It was abolished for many industries to facilitate their growth.

• Dereservation of Industries:

• Several industries previously reserved for the public sector were opened for private participation under the reforms. This led to the growth of private sector enterprises in areas like telecommunications, banking, and aviation.

• Price Controls:

• The government reduced its role in setting prices and quotas for most industrial goods, encouraging market-driven pricing and competition. However, essential goods continued to be regulated to ensure affordability and accessibility.