Aspirant Academy

Economy

Key Points at a Glance

Industry: Policy, Reforms, Globalization, Liberalization, Privatization, MSMEs

Paper I · Unit 2 Section 1 of 11 0 PYQs 26 min
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Key Points at a Glance

  1. Industrial Policy of 1991 — LPG Reforms

    • Abolished industrial licensing for most sectors
    • Reduced reserved public-sector industries from 17 to 2 (defence and atomic energy)
    • Opened FDI and dismantled trade barriers
    • Architect: Finance Minister Dr. Manmohan Singh under PM Narasimha Rao

  2. Liberalisation — Removing Controls

    • Licence Raj ended: industrial licensing abolished
    • MRTP Act restrictions eased; import licensing dismantled
    • Quantitative restrictions replaced by tariffs
    • GDP growth rose from ~3.5% (Hindu rate) to 6–8% post-1991

  3. Make in India — Launched September 25, 2014

    • Target: raise manufacturing to 25% of GDP by 2025 (from ~16%)
    • Aims to create 100 million additional manufacturing jobs
    • Covers 27 sectors with online investment facilitation and task forces
    • Nodal ministry: DPIIT

  4. PLI Schemes — Production Linked Incentive

    • Launched 2021 for 14 sectors; total outlay: Rs 1.97 lakh crore over 5–7 years
    • Mechanism: 4–6% incentive on incremental sales above a base year
    • Key sectors: mobile phones, pharma APIs, medical devices, automobiles, telecom, solar PV
    • Goal: build manufacturing capacity, attract FDI, boost exports

  5. MSME Definition — Revised 2020

    • Micro: investment ≤ Rs 1 crore + turnover ≤ Rs 5 crore
    • Small: investment ≤ Rs 10 crore + turnover ≤ Rs 50 crore
    • Medium: investment ≤ Rs 50 crore + turnover ≤ Rs 250 crore
    • MSMEs employ ~11.1 crore persons; contribute ~30% of GDP and ~45% of exports

  6. Privatisation — Disinvestment and NMP

    • Air India privatised and transferred to Tata Sons in January 2022 — first major airline privatisation
    • BPCL, Shipping Corporation, Pawan Hans in disinvestment pipeline
    • National Monetisation Pipeline (NMP): target Rs 6 lakh crore by monetising infrastructure (2021–25)
    • Mechanism: leasing/concessioning roads, pipelines, power lines to private operators

  7. Atmanirbhar Bharat Abhiyan — Announced May 2020

    • COVID-response package of Rs 20 lakh crore (~10% of GDP)
    • Key components: PLI schemes, defence import substitution (509 items banned), ECLGS for MSMEs
    • Five pillars: Economy, Infrastructure, System, Vibrant Demographics, Demand
    • Target: shift from supply-chain dependence (especially on China) to self-sufficient manufacturing

  8. India's Industrial Structure (2024–25)

    • Manufacturing: ~16% of GDP; services: ~54%; agriculture: ~17–18%
    • India lags manufacturing targets — China's manufacturing is ~28% of GDP
    • Largest employer: textiles (4.5 crore workers)
    • Other key sectors: steel, automobiles, chemicals, pharmaceuticals, IT hardware

  9. Globalisation — India's Integration

    • FDI flows exceeded $70 billion in 2023–24; India is the 5th largest FDI destination globally
    • Import tariffs reduced from ~300% (pre-1991) to average ~13% (2024)
    • Exports grew from $18 billion (1991) to $776 billion (goods + services, 2023–24)
    • India is 5th largest FDI recipient (UNCTAD 2023)

  10. India's Industrial Policy History

    • IPR 1956: Classified industries into Schedule A (public monopoly), B (mixed), C (private)
    • Licence Raj prevailed until 1991; required industrial, import, and forex licences
    • MRTP Act 1969: Curbed monopoly capital; barred large firms from expanding without approval
    • Replaced by Competition Act 2002 (enforced by CCI from 2009)

  11. Industrial Corridors and PM Gati Shakti

    • PM Gati Shakti National Master Plan (2021): Digital platform integrating 16 ministries for infrastructure
    • Coordinates multi-modal planning for 5 industrial corridors
    • DMIC (Delhi-Mumbai Industrial Corridor): 1,483 km, spans 6 states, planned investment Rs 1 lakh crore+
    • Logistics cost target: reduce from ~13% of GDP to 8% by 2030

  12. Ease of Doing Business

    • India improved from rank 142 (2014) to 63 (2019–20) in World Bank's EoDB index
    • EoDB index discontinued 2021; replaced by B-READY Index (launched 2024)
    • DPIIT's State Reform Action Plan drives state-level EoDB improvements
    • Key reforms: single-window clearance, e-filing, reduced inspection burden