Industry: Policy and liberalisation

Statements 1 and 2 are correct. The National Manufacturing Policy (2011) set the goals of raising manufacturing to 25 per cent of GDP by 2022 and creating 100 million jobs. Its main instrument was the National Investment and Manufacturing Zone (NIMZ), a large, integrated industrial township with world-class infrastructure and simpler regulation. Statement 3 is wrong: the policy was prepared by the then Department of Industrial Policy and Promotion (now DPIIT); NITI Aayog was created only in January 2015.

The Industries (Development and Regulation) Act, 1951 (IDR Act) required a licence from the Central Government to set up a new unit, expand capacity substantially, change location or make a new article in a scheduled industry. Together with the 1956 Resolution it created the licence-permit system. The MRTP Act of 1969 added a separate scrutiny of large business houses, and FERA of 1973 regulated foreign exchange and foreign companies, but neither was the licensing statute itself.

Statements 1 and 2 are correct. The Raghavan Committee (2000) found the MRTP Act, built around the size of firms, unsuited to a liberalised economy and recommended a modern competition law. The Competition Act, 2002 set up the Competition Commission of India; its provisions on anti-competitive agreements and abuse of dominance came into force in 2009, when the MRTP Act was repealed and the MRTP Commission dissolved (pending cases went to the CCI and the appellate tribunal). Statement 3 is wrong: the Act prohibits the abuse of dominance, not dominance as such; a firm may grow big through efficiency.

The Industrial Policy Resolution of 1948, the first after Independence, set out a mixed economy with four categories. Arms and ammunition, atomic energy and railway transport were a State monopoly. In six basic industries, including coal, iron and steel, aircraft manufacture and shipbuilding, new units were to be set up by the State, while existing private units were allowed to continue for ten years. The three schedules came with the 1956 Resolution, and District Industries Centres with the 1977 Statement.

Statements 1 and 2 are correct. The Industrial Policy Resolution of 1956, adopted to suit the Second Plan's heavy-industry strategy, divided industries into three schedules. Schedule A listed 17 industries whose new units were to be set up only by the State. Schedule B listed 12 industries that would be progressively State-owned, with private firms supplementing the State. Statement 3 is wrong: Schedule C industries were left to private initiative, but private units still needed a licence under the Industries (Development and Regulation) Act, 1951, which is how the licence-permit system grew.

Reservation of items for the small-scale sector began in 1967 with a short list, and grew to 873 items by 1984. The Abid Hussain Committee (1997) argued that reservation kept small units technologically backward and recommended its abolition with support for affected units. Items were dereserved in stages, and the last 20 items were dereserved on 10 April 2015. No item is reserved now. Statements 1 and 2 are correct.

Statements 1, 2 and 3 are correct. The New Industrial Policy of 1991 kept compulsory licensing for only 18 industries at the time (the list was cut further later). It amended the MRTP Act so that the pre-entry scrutiny of investment by large 'MRTP companies' was no longer needed. It also cut the industries reserved for the public sector from the 17 of Schedule A to 8, a list later reduced again. Statement 4 is wrong: small-scale reservation continued after 1991 and was phased out item by item; the last items were de-reserved only in 2015.

The Prime Minister's Task Force on MSMEs (chaired by T. K. A. Nair, 2010) recommended these lending goals, and the RBI's Master Direction on MSME lending (para 3.2) advises banks to achieve all three: 20 per cent annual growth in MSE credit, 10 per cent annual growth in micro accounts, and 60 per cent of MSE lending to micro enterprises. These are separate from the priority sector sub-target of 7.5 per cent of ANBC for micro enterprises.

The Labour Bureau compiles this data (c). The Labour Bureau, under the Ministry of Labour and Employment, with offices at Shimla and Chandigarh, collects statistics on industrial disputes, closures, retrenchments and lay-offs. It also compiles the Consumer Price Index for Industrial Workers (CPI-IW), used to set dearness allowance. Option (a) is wrong: the Central Statistics Office, now part of the NSO, handles national accounts and GDP. Option (b) is wrong: DPIIT compiles the Wholesale Price Index and the index of eight core industries. Option (d) is wrong: NTMIS tracked technical manpower supply.

Notice that the Labour Bureau now also runs the Quarterly Employment Survey. The Periodic Labour Force Survey (PLFS), by contrast, comes from the NSO.

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Statements 2 and 3 are correct (b). Statement 1 is wrong: the EPF scheme covers only establishments with 20 or more workers, and members earning within the wage ceiling (₹15,000 a month), so not every casual worker is covered. Statement 2 is right: labour laws on working hours and overtime apply to all workers, including casual ones. Statement 3 is right: the Code on Wages, 2019 lets the government notify that an establishment or industry must pay wages only by cheque or into the worker's bank account.

Notice the four labour codes: Wages (2019), Industrial Relations, Social Security, and Occupational Safety, Health and Working Conditions (2020). They merged 29 central labour laws and came into force in November 2025. The e-Shram portal registers unorganised workers.

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Only statement 2 describes the lender of last resort (b). As lender of last resort, the RBI gives emergency funds to a basically sound bank that faces a sudden shortage of cash, so that panic does not spread to other banks and the system stays stable. The Marginal Standing Facility is one such window. Statement 1 is wrong: the RBI does not lend directly to trade or industry bodies. Statement 3 is wrong: lending to governments through ways and means advances is its role as banker to the government, not as lender of last resort.

Notice the idea came from Walter Bagehot's Lombard Street (1873): lend freely to solvent banks, against good collateral, at a penalty rate.

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Both statements are correct (c). The Quality Council of India, set up in 1997, is an autonomous body formed jointly by the Government of India and industry bodies ASSOCHAM, CII and FICCI (1). It works as India's national accreditation system, through bodies such as NABL (laboratories), NABH (hospitals) and NABCB. Its chairman is appointed by the Prime Minister on the industry's recommendation (2). DPIIT (formerly DIPP) is its nodal department.

QCI also runs ZED certification for MSMEs and checks cleanliness rankings under Swachh Survekshan. Notice how it differs from BIS: QCI accredits the bodies that check quality, while BIS sets standards and issues product marks.

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Indian coal has a high ash content, so steel plants import most of their coking (metallurgical) coal, mainly from Australia, and also from the USA, Russia and others (c). Saltpetre (a) is used for explosives and fertilisers, and rock phosphate (b) for phosphatic fertilisers; neither is needed for steel, so (d) also fails.

India is the world's second-largest steel producer and aims for 300 million tonnes of capacity by 2030 under the National Steel Policy 2017. Notice how this import dependence links steel, trade and energy security, which is why coal washeries and Mission Coking Coal matter.

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Purchase and sale of government securities by the RBI is correct (c). Open Market Operations are the RBI's buying and selling of government securities in the market to manage liquidity. Buying securities pays out money and adds liquidity; selling them absorbs money. (a) is wrong: banks borrowing from the RBI happens through the repo window or Marginal Standing Facility. (b) is wrong: bank lending to industry is ordinary credit, not OMO. (d) fails because (c) is correct.

Notice the variants: 'Operation Twist' (2019–20) bought long-term and sold short-term bonds at the same time, and G-SAP (2021) was a pre-announced bond-buying programme. OMOs are part of quantitative monetary tools, with CRR and SLR. Trap: (a) is a liquidity tool too, but not OMO.

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