Under the Industrial Policy Resolution of 1956, a private company wants to start a new unit in an industry of the second category. Which of the following is correct?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → It could only supplement the public sector, as starting new units was the government’s sole responsibility.
IPR 1956 put industries into three categories. In the second, the private sector could supplement the public sector, but the government alone took responsibility for starting new units.
Option (1) It could start the new unit freely, as industries of this category were left to the private sector. — Incorrect. That describes the third category, the industries left to the private sector.
Option (2) It could not take part at all, as industries of this category were owned only by the government. — Incorrect. That describes the first category, owned only by the government.
Option (3) It could only supplement the public sector, as starting new units was the government’s sole responsibility. — Correct. This is the rule for the second category.
Option (4) It could start the new unit freely, provided the unit was set up in an economically backward area. — Incorrect. Backward areas made a licence easier to get; they did not change the categories.
NCERT (2026-27): “2.4 Industry and Trade … Industrial Policy Resolution 1956 (IPR 1956): In accordance with the goal of the state controlling the commanding heights of the economy, the Industrial Policy Resolution of 1956 was adopted. This resolution formed the basis of the Second Five Year Plan, the plan which tried to build the basis for a socialist pattern of society. This resolution classified industries into three categories. The first category comprised industries which would be exclusively owned by the government; the second category consisted of industries in which the private sector could supplement the efforts of the public sector, with the government taking the sole responsibility for starting new units; the third category consisted of the remaining industries which were to be in the private sector.” |