Match each regulatory mechanism used in India before 1991 (List-I) wi…

Match each regulatory mechanism used in India before 1991 (List-I) with what the reforms in and after 1991 did to it (List-II).

List-I	List-II
(A) Industrial licensing to start or close a firm	(I) The market allowed to determine the prices in most industries
(B) Private sector not allowed in many industries	(II) Still needed only for a few product categories such as alcohol, cigarettes and aerospace
(C) Some goods produced only in small-scale industries	(III) Large-scale industries now allowed to make many of them
(D) Controls on price fixation of industrial products	(IV) Only a part of atomic energy generation and some core railway activities reserved for the public sector

Choose the correct answer from the options given below:

Answer & explanation

Correct answer: option 3

The correct answer is Option (3) → (A)-(II), (B)-(IV), (C)-(III), (D)-(I)

Before 1991, industry was controlled in four ways. The reforms removed most of these controls, each in its own way.

List-I	List-II	Reason
(A) Industrial licensing to start or close a firm	(II) Still needed only for a few product categories such as alcohol, cigarettes and aerospace	Licensing was abolished for almost all products. A few, like hazardous chemicals and drugs, still need it.
(B) Private sector not allowed in many industries	(IV) Only a part of atomic energy generation and some core railway activities reserved for the public sector	Now only these industries are reserved for the public sector; others are open to private firms.
(C) Some goods produced only in small-scale industries	(III) Large-scale industries now allowed to make many of them	Many such goods have been dereserved, so large firms may also produce them.
(D) Controls on price fixation of industrial products	(I) The market allowed to determine the prices in most industries	Price control by the government gave way to prices set by the market.

NCERT (2026-27): “Deregulation of Industrial Sector: In India, regulatory mechanisms were enforced in various ways
(i) industrial licensing under which every entrepreneur had to get permission from government officials to start a firm, close a firm or decide the amount of goods that could be produced
(ii) private sector was not allowed in many industries
(iii) some goods could be produced only in small-scale industries, and
(iv) controls on price fixation and distribution of selected industrial products.”

“Deregulation of Industrial Sector: … The reform policies introduced in and after 1991 removed many of these restrictions. Industrial licensing was abolished for almost all but product categories — alcohol, cigarettes, hazardous chemicals, industrial explosives, electronics, aerospace and drugs and pharmaceuticals. The only industries which are now reserved for the public sector are a part of atomic energy generation and some core activities in railway transport. Many goods produced by small-scale industries have now been dereserved. In most industries, the market has been allowed to determine the prices.”