How did the government redefine the role of the public sector in the New Industrial Policy of 1991?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Reducing the role of the public sector and giving a greater role to the private sector
Option (1) Giving the public sector a lead role in infrastructure industries — Incorrect. A lead role for the public sector in infrastructure was the policy before 1991, under economic planning. The 1991 reforms moved away from it.
Option (2) Reducing the role of the public sector and giving a greater role to the private sector — Correct. Privatisation aimed at a greater role for the private sector in nation building and a reduced role for the public sector. For this, the government redefined the role of the public sector in the New Industrial Policy of 1991.
Option (3) Control by the State of key industries through central planning — Incorrect. Control by the State of certain industries and central planning were steps taken after Independence to solve economic problems. The reforms of 1991 reversed this strategy.
Option (4) Limiting the private sector to the development of consumer goods industries — Incorrect. Before 1991, the private sector was broadly given the job of developing consumer goods industry. The reforms removed such limits on it.
NCERT (2026-27 Edition): “Economic Environment in India … In accordance with the economic planning, the government gave a lead role to the public sector for infrastructure industries whereas the private sector was broadly given the responsibility of developing consumer goods industry. At the same time, the government imposed several restrictions, regulations and controls on the working of private sector enterprises. …” “Privatisation: The new set of economic reforms aimed at giving greater role to the private sector in the nation building process and a reduced role to the public sector. This was a reversal of the development strategy pursued so far by Indian planners. To achieve this, the government redefined the role of the public sector in the New Industrial Policy of 1991, adopted the policy of planned disinvestments of the public sector and decided to refer the loss making and sick enterprises to the Board of Industrial and Financial Reconstruction. …” |