Industrial Growth, Policy Reforms and LPG: RAS Prelims MCQs
91 RAS Prelims MCQs on industrial growth, policy reforms and the LPG reforms of 1991 cover the Industrial Policy Resolutions, the licensing system, the 1991 balance of payments crisis, privatisation and disinvestment. The MSME definition and Make in India are asked as facts and statements, and the explanations tie each policy to its year.
Practice questions based on the RPSC RAS Prelims syllabus. They follow the exam pattern but are not past-paper questions.
Showing 61–70 of 91 questions
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q61. Read the following statements regarding the Business Reforms Action Plan (BRAP): I. It is an exercise to rank States and UTs in India based on the implementation of business reforms. II. It is coordinated by the Department for Promotion of Industry and Internal Trade (DPIIT). III. The objective is to foster cooperative and competitive federalism. Which of the combinations given above is correct?
Explanation
The Business Reforms Action Plan is an annual exercise coordinated by the Department for Promotion of Industry and Internal Trade. Its primary purpose is to rank Indian States and Union Territories based on their effectiveness in implementing various business-friendly reforms. By highlighting best practices and encouraging healthy competition among states, the plan aims to foster both cooperative and competitive federalism across the country.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q62. Over the past decade, which country has consistently been among the top two sources of Foreign Direct Investment (FDI) inflows into India, often favored due to tax treaty benefits?
Explanation
Singapore has consistently emerged as one of the top two sources of Foreign Direct Investment inflows into India over the last decade. Its prominence is largely attributed to favorable tax treaties and its status as a global financial hub.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q63. Given below are two statements, one is labelled as Assertion (A) and the other is labelled as Reason (R). Assertion (A): The share of the manufacturing sector in India’s GDP has remained relatively stagnant at around 16-17% for several decades despite reforms. Reason (R): The rapid growth of the services sector and structural bottlenecks in infrastructure and labor markets hindered the proportional expansion of manufacturing. Which of the following is correct?
Explanation
Despite economic reforms, the manufacturing sector’s share in India’s GDP has remained relatively constant at about 16-17%. This stagnation is primarily explained by the exceptional growth of the services sector, which bypassed traditional industrial expansion. Furthermore, persistent structural bottlenecks, including inadequate infrastructure and rigid labor regulations, have hindered the manufacturing sector from achieving proportional growth seen in other developing industrializing economies.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q64. Which exception accurately reflects current industrial policy regarding environmental regulations?
Explanation
Current industrial policy in India emphasizes environmental sustainability alongside economic growth. While the government has delicensed most sectors to promote ease of doing business, it maintains strict mandatory environmental clearances for highly polluting industries. This ensures that industrial expansion does not come at the cost of ecological degradation. All enterprises, regardless of location, must comply with national environmental standards and obtain regulatory approvals.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q65. Match List I with List II and select the correct answer.
Reform Initiative
Associated Ministry/Department
A. Disinvestment
i. Ministry of Electronics and IT
B. PLI Scheme (Mobile manufacturing)
ii. Ministry of MSME
C. MSME Udyam Registration
iii. Department for Promotion of Industry and Internal Trade (DPIIT)
D. Startup India
iv. Department of Investment and Public Asset Management (DIPAM)
Explanation
Responsibility for various industrial and reform initiatives is distributed among specific government departments. Disinvestment is managed by the Department of Investment and Public Asset Management. The PLI scheme for mobile manufacturing falls under the Ministry of Electronics and Information Technology. The Ministry of MSME oversees the Udyam registration process, while the Startup India initiative is managed by the Department for Promotion of Industry.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q66. The "Make in India" initiative shifted the focus from merely ‘import substitution’ to which of the following?
Explanation
The Make in India initiative represents a strategic shift in economic policy from the traditional focus on import substitution toward proactive export promotion. It aims to integrate Indian manufacturing into global value chains by improving domestic competitiveness and attracting international capital. By encouraging production for both domestic and global stages, the policy seeks to transform India into a major exporter of high-quality goods.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q67. Read the following statements regarding the impact of Globalisation on the Indian economy: I. It led to an increase in the variety and quality of consumer goods available in the market. II. It resulted in the contraction of the Information Technology and ITES sectors. III. It exposed domestic small-scale industries to intense international competition. IV. It necessitated the establishment of the Competition Commission of India to prevent anti-competitive practices. V. It completely eliminated poverty and income inequality in the country. Which of the statements given above are correct?
Explanation
Globalisation has profoundly impacted the Indian economy by increasing the variety and quality of consumer goods through international trade. However, it also exposed domestic small-scale industries to intense competition from global players. To address market imbalances, the government established the Competition Commission of India to prevent anti-competitive practices. While sectors like IT flourished, globalisation did not completely eliminate complex social issues.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q68. Which of the following statements about the Foreign Investment Promotion Board (FIPB) is correct?
Explanation
The Foreign Investment Promotion Board was once the primary body responsible for processing FDI applications that required government approval. However, as part of its efforts to enhance the ease of doing business and eliminate unnecessary bureaucratic layers, the government abolished the FIPB in 2017.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q69. Consider the following outcomes of the pre- 1991 Industrial Policy: I. High cost of production and poor quality of goods II. Lack of technological modernization III. Phenomenal growth of global exports in manufactured goods IV. Delays in project implementation due to red tape Which of the combinations given above correctly identifies the negative outcomes (problems)?
Explanation
The industrial regime before 1991 was characterized by several negative outcomes that hindered economic growth. These included high production costs and poor product quality due to a lack of competition. Furthermore, strict regulations led to a lack of technological modernization and significant delays in project implementation caused by bureaucratic red tape. Unlike some nations, India’s share in global manufactured exports remained low.
RAS PrelimsIndian Economy · Industrial Growth, Policy Reforms and LPG
Q70. The policy of Liberalisation initiated in 1991 meant the removal of constraints in the economic system. In the industrial sector, this was most visibly marked by the abolition of:
Explanation
The policy of liberalisation initiated in 1991 sought to dismantle the restrictive regulatory framework that hampered industrial growth. The most visible and significant reform in the industrial sector was the abolition of the industrial licensing system for the vast majority of sectors. This allowed private entrepreneurs to make investment decisions based on market signals rather than seeking government permission, fostering competition.
Answer key for these questions
Q
Correct answer
61
(b) I, II and III
62
(a) Singapore
63
(a) Both A and R are true and R is the correct explanation of A.
64
(c) Strict clearances for highly polluting industries despite delicensing.
65
(a) A-iv, B-i, C-ii, D-iii
66
(d) Export promotion and integration into global value chains.
67
(a) I, III and IV
68
(a) Abolished in 2017, with approvals delegated to respective ministries.
69
(d) I, II and IV
70
(b) The industrial licensing system for most sectors
Key facts from Industrial Growth, Policy Reforms and LPG
The Industrial Policy Resolution of 1948 first introduced the mixed economy; the 1956 resolution divided industries into three schedules, with Schedule A reserved for the State.
The Industries (Development and Regulation) Act, 1951 governed industrial licensing, known as the Licence Raj; the Dutt Committee of 1967 inquired into it.
The IMF and the World Bank gave India structural adjustment loans in 1991.
Compulsory licensing today remains for some industries, such as electronic aerospace and defence equipment.
Transferring ownership and control of a public sector enterprise to the private sector is privatisation; DIPAM manages government investment and public asset management.
The MSME definition of 2020 uses investment in plant and machinery and annual turnover; Make in India was launched in 2014.
Frequently asked questions
How many RAS Prelims practice MCQs are there on Industrial Growth, Policy Reforms and LPG?
This page has 91 practice MCQs on Industrial Growth, Policy Reforms and LPG (Indian Economy). Each has the correct answer, and most have an explanation.
What did the Industrial Policy Resolution of 1956 do?
It classified industries into three categories: Schedule A for the exclusive responsibility of the State, Schedule B for the State and private sector together, and Schedule C for the private sector. It is called the Economic Constitution of India.
What is privatisation?
The transfer of ownership, management and control of a public sector enterprise to the private sector. It differs from partial disinvestment, where the Government sells only a part of its shares and keeps control.
Which Act governed industrial licensing in India?
The Industries (Development and Regulation) Act, 1951. It required industrial units to get a licence from the Government, and the system came to be known as the Licence Raj until it was dismantled in 1991.
