📑 Topics on this page (Jump to Topic):
📌 1. Industrial Policies
| Policy | Key point |
|---|---|
| Industrial Policy Resolution 1948 | Foundation of the mixed economy; 4 categories of industries |
| Industrial Policy Resolution 1956 | "Economic constitution"; Schedule A (17 industries for the state), B (12, state and private), C (rest private) |
| Industries (Development and Regulation) Act 1951 | Industrial licensing — the "licence-permit raj" |
| New Industrial Policy, 24 July 1991 | Licensing ended (except a few industries), public-sector reservation cut, FDI liberalised, MRTP limits removed |
- Only 2 areas are reserved for the public sector today: atomic energy and railway operations.
- The MRTP Act 1969 was replaced by the Competition Act 2002; regulator: Competition Commission of India (CCI).
- FERA 1973 (criminal) was replaced by FEMA 1999 (civil).
📌 2. The 1991 Crisis & LPG Reforms
- Causes: huge fiscal deficit, costlier oil after the Gulf War, forex reserves enough for only about 2-3 weeks of imports; gold was pledged to raise loans and an IMF programme followed.
- Prime Minister P. V. Narasimha Rao, Finance Minister Manmohan Singh; the rupee was devalued in July 1991.
| LPG | Meaning |
|---|---|
| Liberalisation | Reducing controls and licences |
| Privatisation | Private role in the public sector, disinvestment |
| Globalisation | Integration with the world economy — lower import duties, FDI |
- Narasimham Committee (banking) and Chelliah Committee (tax reform) — key reform committees.
📌 3. PSUs, Disinvestment & MSMEs
| Status | Introduced | Main criterion |
|---|---|---|
| Maharatna | 2010 | Average annual net profit above ₹5,000 crore over 3 years (plus other conditions) |
| Navratna | 1997 | Miniratna Category-I with a good performance score |
| Miniratna | 1997 | Consistent profits (Category I and II) |
- Disinvestment is handled by the Department of Investment and Public Asset Management (DIPAM), Finance Ministry.
- MSME classification (from 1 April 2025): micro — investment up to ₹2.5 crore and turnover up to ₹10 crore; small — ₹25 crore and ₹100 crore; medium — ₹125 crore and ₹500 crore.
- MSME registration: Udyam portal (2020). Make in India (25 September 2014), PLI scheme (2020), SEZ Act 2005.
📌 4. IIP & Core Industries
- Index of Industrial Production (IIP): released by NSO, MoSPI; new base year 2022-23 (June 2026); three sectors — mining, manufacturing (largest weight), electricity.
- Eight core industries (ICI, Office of the Economic Adviser, DPIIT): coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity.
⚠️ Exam Traps:
- The 1956 Resolution is called the "economic constitution", not the 1991 policy.
- FEMA 1999 replaced FERA (not the other way round).
- Only atomic energy and railway operations are reserved for the public sector — not defence.
- IIP is released by NSO (MoSPI); the core industries index by DPIIT.
💡 Memory Tip: Core industries: "coal-oil-gas, refinery-fertiliser, steel-cement-power".
📌 5. Practice MCQs
📝 Practice MCQs (prepared by SF Prep — not PYQs)
Q1. Which industrial policy is called India's "economic constitution"? Practice
Correct answer: (A)
The 1956 Resolution divided industries into Schedules A, B and C and set the lead role of the public sector.
The 1956 Resolution divided industries into Schedules A, B and C and set the lead role of the public sector.
Q2. How many industries were reserved for the state in Schedule A of the 1956 Resolution? Practice
Correct answer: (C)
Schedule A reserved 17 industries wholly for the state; Schedule B had 12.
Schedule A reserved 17 industries wholly for the state; Schedule B had 12.
Q3. On what date was the New Industrial Policy announced? Practice
Correct answer: (D)
The New Industrial Policy was announced on 24 July 1991, the same day as the budget.
The New Industrial Policy was announced on 24 July 1991, the same day as the budget.
Q4. Who was Finance Minister at the time of the 1991 reforms? Practice
Correct answer: (B)
Under PM Narasimha Rao, Manmohan Singh carried out the 1991 reforms.
Under PM Narasimha Rao, Manmohan Singh carried out the 1991 reforms.
Q5. In LPG reforms, "G" stands for: Practice
Correct answer: (B)
LPG = Liberalisation, Privatisation, Globalisation.
LPG = Liberalisation, Privatisation, Globalisation.
Q6. What was the immediate cause of the 1991 crisis? Practice
Correct answer: (C)
Reserves covered only a few weeks of imports; gold had to be pledged to borrow.
Reserves covered only a few weeks of imports; gold had to be pledged to borrow.
Q7. Which areas are now reserved for the public sector? Practice
Correct answer: (D)
After 1991 reservation shrank to just atomic energy and railway operations.
After 1991 reservation shrank to just atomic energy and railway operations.
Q8. Which Act replaced the MRTP Act? Practice
Correct answer: (A)
The Competition Act 2002 replaced the MRTP Act 1969; CCI is the regulator.
The Competition Act 2002 replaced the MRTP Act 1969; CCI is the regulator.
Q9. Which Act replaced FERA? Practice
Correct answer: (D)
The Foreign Exchange Management Act (FEMA 1999) replaced the Foreign Exchange Regulation Act (FERA 1973).
The Foreign Exchange Management Act (FEMA 1999) replaced the Foreign Exchange Regulation Act (FERA 1973).
Q10. In which year was "Maharatna" status introduced? Practice
Correct answer: (A)
Navratna and Miniratna began in 1997; Maharatna in 2010.
Navratna and Miniratna began in 1997; Maharatna in 2010.
Q11. Which department manages disinvestment in government companies? Practice
Correct answer: (B)
The Department of Investment and Public Asset Management (DIPAM), Finance Ministry.
The Department of Investment and Public Asset Management (DIPAM), Finance Ministry.
Q12. From 1 April 2025, what is the investment limit for a micro enterprise? Practice
Correct answer: (C)
Micro: investment up to ₹2.5 crore and turnover up to ₹10 crore (earlier ₹1 crore and ₹5 crore).
Micro: investment up to ₹2.5 crore and turnover up to ₹10 crore (earlier ₹1 crore and ₹5 crore).
Q13. Which portal is now used for MSME registration? Practice
Correct answer: (C)
Since 2020 MSMEs register on the Udyam portal.
Since 2020 MSMEs register on the Udyam portal.
Q14. When was the "Make in India" campaign launched? Practice
Correct answer: (D)
Make in India was launched on 25 September 2014 to boost manufacturing.
Make in India was launched on 25 September 2014 to boost manufacturing.
Q15. Who releases the Index of Industrial Production (IIP)? Practice
Correct answer: (A)
IIP is released by NSO (MoSPI); the eight core industries index by DPIIT.
IIP is released by NSO (MoSPI); the eight core industries index by DPIIT.
Q16. What is the base year of the new IIP series? Practice
Correct answer: (B)
In June 2026 the IIP base was changed from 2011-12 to 2022-23.
In June 2026 the IIP base was changed from 2011-12 to 2022-23.
Q17. Which sector has the largest weight in IIP? Practice
Correct answer: (A)
Of IIP's three sectors (mining, manufacturing, electricity), manufacturing has the largest weight.
Of IIP's three sectors (mining, manufacturing, electricity), manufacturing has the largest weight.
Q18. Which of these is NOT one of the eight core industries? Practice
Correct answer: (C)
Core industries: coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity.
Core industries: coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, electricity.
Q19. Which Act brought in industrial licensing (the "licence raj")? Practice
Correct answer: (D)
IDRA 1951 made licences compulsory to set up or expand industries.
IDRA 1951 made licences compulsory to set up or expand industries.
Q20. In which year was the Production Linked Incentive (PLI) scheme launched? Practice
Correct answer: (B)
The PLI scheme began in 2020 with mobiles and electronics and later spread to many sectors.
The PLI scheme began in 2020 with mobiles and electronics and later spread to many sectors.