SSC CGL Economics · National Income, Growth and Development Indicators
Industrial Policy and Reforms
India's industrial policies from 1948 to 1980, the 1991 reforms with licensing, foreign investment and disinvestment, and the schemes and zones that promote manufacturing.
Why this matters
Thirty-three questions in the bank, the most on any page in this chapter, and 17 come from the 2025 shifts, many of them assertion-reason pairs. Learn the 1956 and 1991 policies side by side: most statements describe one of them and get one detail wrong.
Concept 1 of 3: Industrial policies, 1948 to 1980
Definition
In order:
- 1948: the first Industrial Policy Resolution of independent India.
- 1956: the socialist pattern of society, aiming at growth with equity. Industries were sorted into three schedules: A (17 industries reserved for the state), B (mixed) and C (private). The public sector held the commanding heights, and licences kept private production under government control.
- 1977: a tiny sector, with an investment limit of Rs 1 lakh. 1980: raised to Rs 2 lakh; aims included employment, exports and consumer protection.
Background: at independence the main obstacle was a lack of capital; the well-run industries were steel and cotton. Small units are told from large ones by their investment.
Practise this conceptself-check · 3 quick reps
The same idea in a real exam question:
Example 1 · National Income, Growth and Development Indicators · Industrial Policy and Reforms
1980 did not seek maximum foreign investment
Concept 2 of 3: The 1991 reforms and after
Definition
The New Industrial Policy of July 1991:
- Liberalisation, privatisation and globalisation. It touched all three sectors.
- It abolished licensing for nearly all industries. A short list kept it: alcohol, cigarettes, explosives, defence and hazardous chemicals.
- It opened India to foreign investors; automatic approval of foreign investment followed (up to 74% in nine categories by 1997). Its aim was not to raise domestic savings.
After 1991:
- Disinvestment: selling government shares in public firms. A minority sale passes part of a firm to private hands. Critics call it selling the family silver.
- Navratnas (1997): public enterprises given more autonomy to perform better.
Practise this conceptself-check · 3 quick reps
The same idea in a real exam question:
Example 2 · National Income, Growth and Development Indicators · Industrial Policy and Reforms
Disinvestment is not criticised for monopoly
Concept 3 of 3: Ownership, zones and schemes
Definition
Ownership: public (BHEL), private (TISCO), joint (public and private together).
Zones and schemes:
- Special Economic Zones (Act of 2005): tax and duty concessions for businesses.
- Make in India (2014): manufacturing.
- Production Linked Incentive (PLI): incentives on extra sales, to boost domestic manufacturing and investment.
- PM MITRA parks (Budget 2021-22): the textile industry.
- MSMED Act, 2006: to promote micro, small and medium enterprises.
Practise this conceptself-check · 3 quick reps
The same idea in a real exam question:
Example 3 · National Income, Growth and Development Indicators · Industrial Policy and Reforms
TISCO is private
Summary — formulas & gotchas at a glance
A revision cheat-sheet for the formulas and gotchas above. Click any concept name to jump back to its full explanation.
Reference tables (3)
Watch out for (3)
- 1980 did not seek maximum foreign investment→ Industrial policies, 1948 to 1980
- Disinvestment is not criticised for monopoly→ The 1991 reforms and after
- TISCO is private→ Ownership, zones and schemes
Test yourself on National Income, Growth and Development Indicators
20 past SSC CGL questions from this chapter, timed at 12 minutes and marked the way the exam marks it. You see your score and every answer the moment you finish. Free to start.