Following the Industrial Policy _______ of India the government has set up a special board known as Foreign Investment Promotion Board.
- AOption (a)
1948
- BOption (b)
1956
- COption (c)
1977
- DOption (d)
1991
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Correct answer
1991
Why this answer is correct
The correct answer is 1991.
Key Points
- The Industrial Policy of 1991 marked a significant economic reform in India aimed at liberalizing the Indian economy and integrating it into the global market.
- This policy introduced measures such as abolition of industrial licensing for most industries, reducing the role of the public sector, and encouraging private investment.
- To boost foreign direct investment (FDI), the government established the Foreign Investment Promotion Board (FIPB). The FIPB was a special body created to facilitate and attract foreign investments into India.
- The primary function of FIPB was to evaluate and approve proposals for FDI that did not fall under the automatic route and required government approval.
- The Industrial Policy of 1991 played a pivotal role in transforming India's economy from a protectionist model to a more market-oriented and globally connected economy.
Additional Information
- Industrial Policy of 1991:
- The policy was introduced by the then Finance Minister Dr. Manmohan Singh under the leadership of Prime Minister **P.
V. Narasimha Rao**.
- It aimed to reduce the bureaucratic control over industries and boost private sector participation in industrial development.
- The policy also emphasized globalization, privatization, and liberalization to enhance India's economic growth.
- It allowed foreign equity participation up to a certain percentage in various sectors and permitted FDI in key industries.
- Foreign Investment Promotion Board (FIPB):
- The FIPB was established under the Ministry of Finance to promote foreign investments in India.
- It acted as a single-window clearance system for FDI proposals requiring approval.
- The FIPB was abolished in 2017 as part of the government's effort to simplify the FDI process, and its functions were transferred to concerned ministries and departments.
- Features of Industrial Policy 1991:
- Delicensing: Most industries were exempted from licensing except for a few sectors like defense and hazardous chemicals.
- Disinvestment: It reduced the role of the public sector by allowing privatization of public enterprises.
- Trade Liberalization: The policy removed restrictions on imports and exports, making the Indian economy more open to global markets.
- Technology Transfer: It encouraged the adoption of advanced technologies and collaboration with foreign firms.
- Impact of 1991 Reforms:
- The policy led to a higher GDP growth rate, improved infrastructure, and increased employment opportunities.
- It boosted foreign exchange reserves and reduced India's dependency on external borrowings.
- The private sector emerged as a key player in driving economic growth and innovation.
Important Points
- Historical Context: Prior to 1991, the Indian economy operated under a protectionist regime characterized by heavy state control and limited private sector involvement.
- The economic crisis of 1991, marked by low foreign exchange reserves and a balance of payments deficit, necessitated these reforms.
- The World Bank and International Monetary Fund (IMF) provided financial assistance on the condition that India would liberalize its economy.
- The 1991 policy reforms became a turning point in India's economic history, paving the way for sustained economic growth and development.