The Indian economy performed impressively, even though not satisfactorily, during the period of first seven five-year plans. These plans spanned over a period from 1950 to 1990. Efforts taken during this period of first seven plans made our industries far more diversified. The policy of import substitution led to the protection of the domestic industries against the foreign producers but we failed to promote a strong export surplus. Since, the stress was being laid on the public investments in the industrial sector, public sector expanded to a large extent. But there was a lack of competition, innovation and modernization due to excessive government regulations. As a result, it could not bring desired level of improvement in the secondary sector. Many Public Sector Undertakings (PSU’s) incurred huge losses due to operational inefficiencies, red-tapism, poor technology and other similar reasons. On the Agricultural front, due to the measures taken under the Green Revolution, India, more or less became self-sufficient in the production of food grains. Due to above reasons and also change in the global economic scenario, the need for reform of economic policy was felt.

Read the following statements - Assertion (A) and Reason ( R)
Assertion (A): Many public sector undertakings incurred huge losses due to operational inefficiencies.

Reason (R): There was a lack of competition, innovation and modernization due to excessive government regulations.
From the given alternatives choose the correct one:

Both Assertion (A) and Reasoning (R) are true and Reasoning (R) is the correct explanation of Assertion (A).

Many Public Sector Undertakings (PSU’s) incurred huge losses due to operational inefficiencies, red-tapism, poor technology and other similar reasons. This in turn was a result of lack of competition, innovation and modernization due to excessive government regulations.