The Second Five Year Plan spoke of the state controlling the ‘commanding heights’ of the economy. Which of the following correctly names the resolution adopted in line with this goal and the role it implied for the private sector?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → IPR 1956; private sector policies were to complement the public sector’s
The goal of the state controlling the commanding heights led to the Industrial Policy Resolution of 1956. Under it, private sector policies had to complement those of the public sector, which led the way.
Option (1) IPR 1956; private sector policies were to complement the public sector’s — Correct. Both parts match: the right resolution and the private sector’s supporting role.
Option (2) IPR 1948; the private sector was kept out of the plan effort entirely — Incorrect. IPR 1948 came before the Second Plan, and the private sector was encouraged to join the plan effort.
Option (3) IPR 1956; private firms could start new units in the second category on their own — Incorrect. In the second category, the government alone could start new units.
Option (4) IPR 1956; the private sector was barred from every category of industry — Incorrect. The third category was left to the private sector.
NCERT (2026-27): “2.4 Industry and Trade … In addition, the decision to develop the Indian economy on socialist lines led to the policy of the government controlling the commanding heights of the economy, as the Second Five Year plan put it. This meant that the government would have complete control of those industries that were vital for the economy. The policies of the private sector would have to be complimentary to those of the public sector, with the public sector leading the way.” “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.” |