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Table of Contents
INDUSTRIAL POLICY AND LICENCING CLASS 12 NOTES
MULTIPLE CHOICE QUESTIONS
1. Which of the following was an obstacle in the development of industries after independence?
(a) Lack of economic infrastructure
(b) ack of inducement to invest
(c) Lack of capital
(d) All of the these
Ans. d
2. Public sector enterprises are driven largely by considerations of:
(a) Profit
(b) Social welfare
(c) Either (a) or (b)
(d) None of these
Ans. b
3. Which of the following statements is incorrect?
(a) Industry is the epicentre of growth
(b) Industry is an important source of employment
(c) Industry imparts dynamism to the process of growth
(d) Income elasticity of demand is higher in case of agriculture goods than the industrial goods.
Ans. d
4. What is important for Balanced and alround development for India?
(a) Industrialisation
(b) Technicality
(c) Agriculturisation
(d) Mechanisation
Ans. a
5. Rourkela, Durgapur, Bhillai, Bokaro steel plants are established under the assistance of:
(a) Indigenous
(b) Foreign
(c) Technical
(d) All of the three
Ans. b
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6.Industrial Policy Resolution, 1956 laid emphasis on the role of:
(a) Public sector
(b) Private sector
(c) Joint sector
(d) None of these
Ans. a
7. Strategy of growth between the period 1951-90 focused on:
(a) Import substitution
(b) Export promotion
(c) Leading role of public sector enterprises
(d) Both (a) and (c)
Ans. d
8. Five industrial policies have been announced since independence. Choose the correct years
(a) First-1948, second-1956
(b) Third-1977, Fourth-1980
(c) Fifth-1991
(d) All of the above
Ans. d
9. Industry which is run by the craftman with the help of family members is known as:
(a) Cottage Industry
(b) Rural
(c) House Industry
(d) All of the above
Ans. a
10. What are the major objectives for adopting licensing system?
(a) Industrial Development
(b) To promote equality
(c) Rational exploitation of available resources
(d) All of above
Ans. d
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11. The industries established and owned by Public sector, are known as:
(a) Public Industry
(b) Reserve Industry
(c) Private Industry
(d) Small Industry
Ans. b
12. Which of the following is a typical characteristic of small-scale industry?
(a) SSI is labour-intensive
(b) SSI shows locational flexibility
(c) SSI is capital-intensive
(d) Both (a) and (b)
Ans. d
13. Investment limit for small scale industries was:
(a) ₹ 1 crore
(b) ₹ 2 crore
(c) ₹ 3 crore
(d) ₹ 5 crore
Ans. d
14. The strategy of growth between 1951-90 gradually lost its significance, owing to:
(a) Inefficiency of public sector enterprise
(b) Inefficiency of private sector enterprise
(c) Inefficiency of the government administrative departments
(d) All of these
Ans. a
15. When New Industrial Policy (NIP) was announced?
(a) 1991
(b) 1990
(c) 1992
(d) 1995
Ans. a
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16. In New Industrial Policy 1991, Foreign Direct Investment (FDI) limit was raised from 40% to:
(a) 51%
(b) 49%
(c) 53%
(d) 41%
Ans. a
17. How many reserve industries are there at present?
(a) 2
(b) 5
(c) 6
(d) 8
Ans. a
18. What was the share of industry in GDP in India in 2015-16?
(a) 15%
(b) 23%
(c) 29%
(d) 22%
Ans. c
19. Who said, PSUs are “Temples of Modern India”
(a) Mahatma Gandhi
(b) Jawahar Lal Nehru
(c) Lal Bhadur Shastri
(d) Indira Gandhi
Ans. b
20. How many industries were included in public sector in second Industrial Policy, 1956?
(a) 16
(b) 15
(c) 17
(d) 6
Ans. c
FILL IN THE BLANKS
1. A predetermined course of action which is followed to industrialise a country is called …………..
Ans. Industrial Policy
2. ………….industries were included in public sector under schedule A of IPR, 1956.
Ans. 17
3.First industrial policy was announced in …………..
Ans. 1948
4. New economic policy was announced in …………..
Ans. 1991
5. .…………. policy was abolished in new economic policy, 1991.
Ans. Industrial licencing
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TRUE OR FALSE STATEMENTS
1. No economy can develop itself without adequate industrial growth.
Ans. True
2. Industrial development is not essential for agricultural development.
Ans. False
3. Indian economy is imbalanced. Industrial development is the need of the hour for its balanced growth.
Ans. True
4. During plan period industrial production has not increased manifold.
Ans. False
5. The percentage share of industries in GDP increased from 17% in 1951-52 to 25% in 1989-90.
Ans. True
6. The congress Government headed by Sh. Narshimha Rao announced the new industrial policy on July 24, 1991.
Ans. True
7. Investment limit of already fixed capital had been abolished.
Ans. True
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ONE WORD TO ONE SENTENCE QUESTIONS ANSWERS
Q.1. When was the first industrial policy announced?
Ans. In 1948.
Q.2. Which industrial policy formed the basis of 2nd Five-year Plan?
Ans. Second industrial policy of 1956.
Q.3. What was the name of village and small-scale industries committee formed in 1955?
Ans. Karve Committee.
Q. 4. In which five year plan the basis for socialist pattern of society was tried to build?
Ans. Second Plan.
Q.5. At present what is the limit of capital investment of small-scale industry in India?
Ans. ₹ 5 crores recently it is increased to ₹ 10 crores.
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Q. 6. What type of problem can be solved with the help of cottage and small-scale industries?
Ans. Solution for the problem of unemployment.
Q. 7. What do you mean by industrial policy?
Ans. It is a policy in which the industries can be set only after the permission of the Government.
Q. 8. What is mean by industrial policy?
Ans. Industrial policy means the declarations of the government through which it explains its policy towards the industries.
Q. 9. Define small scale industry.
Ans. Small scale industry is that in which the total investment deployed in machines and equipments (excluding land and value of building) lies between ₹ 25 Lakh to ₹ 5 crore. Now this limited is increased to ₹ 10 crores plus turnover up to ₹ 50 crores.
Q. 10. What do you mean by cottage industry?
Ans. Cottage or rural industries are domestic industries which are run by the help of family members in their own houses.
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Q. 11. What was the purpose of second industrial policy of India or IPR-1956?
Ans. The purpose of the 2nd industrial policy was to promote regional equality.
SHORT ANSWER TYPE QUESTION
Q1. How industrialisation is important for a country?
Ans. The progress of any nation depends upon its strong industrial base. Hence industry becomes very important to achieve the target of high economic growth and development. Following points highlight the importance of industry in a developing country like in India:
1. Structural Change: Structural transformation i.e. shift from primary sector to secondary and tertiary sector is very important for economic development of the country. In order to solve the problem of disguised unemployment in agricultural sector, it is very urgent and necessary to go for industrialisation in the country.
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2. Expansion of Employment Opportunities: To generate more employment opportunities, country has to expand industrial base so that excess labour can be absorbed. Industrial sector provides more stable employment opportunities than the agriculture sector. Setting up of new industrial units can create job opportunities for millions of unemployed persons. This will lessen the burden of unemployment problem.
3. Balanced Sectoral Development: Due to more dependence on agriculture, Indian economy has been facing unbalanced sectoral development. The growing industrialisation in the country can attain balanced sectoral development and thereby can reduce much dependence of the economy on the agriculture sector.
4. Increase in Growth Rate of Economy: Industrialisation promotes modernisation, growth, high national income and per capital income. The development of industrial sector plays an important role in the gross domestic capital formation of the country.
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Q2. Explain three features of First Industrial Policy of 1948.
Ans. The first industrial policy was announced on April 8, 1948, by then Industrial Minister, S.P. Mukherjee. Its historic importance lies in the fact that it ushered in the system of ‘Mixed Economy’ in the country. It entrusted the task of industrial development on both private and public sectors.
Salient features of IPR, 1948
(i) Development of India as Mixed Economy.
(ii) Some of the important industries were put under Central List such as coal, power, railways, civil aviation, arms and ammunition, defence etc.
(iii) Some other industries were put under State List such as paper, medicines, textiles, cycles, two-wheelers etc.
(iv) Rest of the industries (not covered by either Central or State Lists) were left open for private sector-with many of than having the provision of compulsory licencing.
(v) Promotion of small scale and cottage industries.
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Q3. What are the main features of industrial policy of 1956.
Ans. It was announced on April 30, 1956. This was the most comprehensive industrial policy, which build the basis for a socialistic pattern of society. This policy was described as the ‘Economic Constitution of India’ as it outlined the basic framework of the future industrial policies (especially upto 1991), but also the general economic policies.
Salient features of IPR, 1956:
This policy had following elements:
1. This policy classified the industry into three categories:
(i) Schedule A (Public Sector): Seventeen industries were exclusively reserved for the public sector. This number went to 254 by 1990.
(ii) Schedule B (Mixed Sector): Twelve industries were placed in mixed sector of state public and private sector.
(iii) Schedule C (Private Sector): All industries left out of schedule A and B were put under this in which private enterprises had the provision to set up industries.
2.Industrial Licencing: The Industries Development and Regulation (IDR) Act, 1951 empowered the government to issue licences for the setting up of new industries, expansion of existing ones and for diversification of products. This provision established ‘Licence-Quota Permit’ raj in the economy
3.Industrial Concessions: The private entrepreneurs were offered several industrial concessions such as tax benefits and electricity at a lower tariff to encourage establishing their units in the backward regions of the country. It was done to promote regional equality.
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Q4. Discuss four important roles of small-scale industries.
Ans. 1. Employment-oriented: SSIS are more labour intensive. They use more labour than large scale industries and therefore, they generate more employment. The small-scale sector accounts for over 80% of the manufacturing sector’s employment.
2.Contribution in Economic Growth: Small scale manufacturing sector contributed significantly towards the economic growth of nation, with over 39% of the industrial production.
3. Conducive for Economic Development: SSIS are conducive for the economic development of the country. Such industries are relatively labour intensive, so they make economical use of the scarce capital.
4. Regional Equality: Small scale industries bring about regional dispersal of industries and alleviates regional imbalances.
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Q5. Briefly explain main features of New Industrial development of India.
Ans. ROLE OF PUBLIC SECTOR (STATE) IN INDUSTRIAL DEVELOPMENT OF INDIA:
At the time of independence, the country was predominantly agrarian and lacked basic industries and infrastructural facilities. It was felt by policy makers that the objective of industrial development could not be left to the free play of market forces of demand and supply or to the private sector. So, the role of public sector become imperative because of following reasons:
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1. Lack of Capital to Undertake Investment: For economic development, the economy needed a big push. This push cannot come from the Indian private sector which was starved of funds and lacked technical and managerial abilities. Because of lack of capital investments by the private entrepreneurs, government has to undertake capital investment through Public Sector Undertakings (PSUs).
2. Low Inducement to Investment: The Indian market was not big enough to encourage industrialists to undertake major projects. There was low level of aggregate demand because of limited size of market. In simple words. There was no inducement to invest because of low profitability.
3. Growth with Social Justice: The objective of socialistic pattern of society could be achieved only through direct participation of the government in the process of industrialisation. The expansion of public sector in the field of industries took place in a big way with the launching of The Second Five Year Plan (1956-61).
Q6. Briefly explain main features of New Industrial Policy 1991.
Ans. NEW INDUSTRIAL POLICY, 1991 (NIP):
The Government of India announced the New Industrial Policy (NIP) on July 24, 1991. The main objective of this policy was to unshackle the Indian industrial economy from administrative and legal controls. Its main aim is to raise industrial efficiency to the international level through substential deregulation of the industrial sector of the economy.
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SALIENT FEATURES OF NIP, 1991:
1. Dereservation of Industries: The industries which were reserved for Central Government by the IPR, 1956, were cut down to only eight. At present there are only two industries (Atomic energy and nuclear research and railways) which are fully or partially reserved for the central government.
2. Delicencing of Industries: The industrial licencing was abolished except for 18 specified industries. Presently there are only five industries which carry the burden of compulsory licencing.
3. Foreign Investment: Foreign capital investment limit was raised from 40% to 51% in high technology and high investment priority industries.
4. Foreign Technology: Automatic approval was granted for foreign technology agreements upto limit of 200 crore subject 65% royality on domestic sales and 8% on exports.
5. Foreign Investment Promotion Board (FIPB): It was established to clear foreign investment proposals quickly. It serves as a single window clearing agency for FDI (Foreign Direct Investment) proposals.
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ALSO VISIT : BASIC CONCEPTS OF ECONOMICS
METHODS OF CALCULATING NATIONAL INCOME CLASS 12
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