Liberalisation and Industrial Policy · UPSC Civil Services

What the official syllabus says

Main Examination, Paper IV: General Studies III.

Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

Industrial Policy Resolutions of 1948 and 1956: the mixed economy and the commanding heights of the public sector
Industries (Development and Regulation) Act, 1951 and industrial licensing
Monopolies and Restrictive Trade Practices Act, 1969; reservation for small-scale industries
Import substitution, controls and the 'licence-permit raj'; partial liberalisation in the 1980s

The balance of payments crisis of 1991 and its causes
Liberalisation, privatisation and globalisation: meaning and main measures
New Industrial Policy, 1991: abolition of most licensing, fewer industries reserved for the public sector, removal of MRTP asset limits, automatic approval of foreign investment
Trade reforms: lower tariffs, removal of quantitative restrictions, current account convertibility of the rupee
Financial sector reforms: banking, capital markets, the Securities and Exchange Board of India
Disinvestment and strategic sale of public sector enterprises

Growth rates before and after 1991; the rise of services, especially IT and IT-enabled services
Foreign trade and investment, foreign exchange reserves
Competition, consumer choice and productivity
Concerns: jobless growth, informalisation, regional imbalance, agrarian distress, inequality
Second-generation reforms: factor markets (land, labour, capital), governance reforms

Competition Act, 2002 and the Competition Commission of India in place of the MRTP framework
Micro, Small and Medium Enterprises Development Act, 2006 and the revised definition of MSMEs (2020)
National Manufacturing Policy (2011) and manufacturing zones; industrial corridors
Make in India (2014), ease of doing business, single-window clearances
Production Linked Incentive schemes for manufacturing sectors
Insolvency and Bankruptcy Code, 2016 and the exit of firms
Labour codes and their expected effect on industry
Start-up policy, the de-reservation of small-scale items, phased manufacturing programmes

Measuring industrial growth: the Index of Industrial Production, the index of eight core industries
Share of manufacturing in GDP and employment; reasons for its stagnation
Capital-intensive versus labour-intensive industries
Problems: infrastructure gaps, cost of credit, land acquisition, regulatory burden, sickness of MSMEs
Deindustrialisation debates and premature shift to services
Regional concentration of industry and the need for balanced industrial development
Global value chains: India's integration, trade agreements and tariff policy
Role of the public sector after 1991: Maharatna, Navratna and Miniratna enterprises; the public sector enterprise policy

Post-independence economic policy is touched in General Studies I; government policies and their design and implementation are in General Studies II.