Indian Economy: Economic Reforms and Development

The
proportion of GDP contributed by the industrial sector increased in the
period from 11.8 per cent in 1950-51 to 24.6 percent in the year
1990-1991.

Small scale industrial committee was set up in the year 1955. It was also called a Karve committee. It was named after Dattatreya Gopal Karve who was an Indian economist and professor who contributed to the fields of economics, public administration, and the cooperative movement in India. Karve committee was set up in the year 1955 for the growth of small scale industries.

Economic liberalization of India was initiated in the year 1991. The main goal of liberalization is to make economy more market oriented with expanded role of private and foreign investment. The former prime minister P V Narasimha Rao spearheaded economic liberalization policies in the early 1990s.

New Industrial Policy, 1991 aimed to liberalise the economy by removing the hurdles in industrial growth. An important step taken in this context is that the public sector's portfolio will be reviewed with greater realism. The focus will be on strategic high technology and essential infrastructure industries. This would improve the performance of the public sector units.

Thus, the correct answer is C.

In 1991, India met with an economic crisis relating to its external debt. India approached the International Bank for Reconstruction and Development (IBRD)  and the International Monetary Fund (IMF). 

Second plan was in action from the year 1956 to 1961. The Second Plan was particularly in the development of the public sector and "rapid industrialisation". The architect of the second plan and supporter of rapid was P. C. Mahalanobis.

Economic liberalization of India was initiated in the year 1991. The main goal of liberalization is to make economy more market oriented with expanded role of private and foreign investment. The former prime minister P V Narasimha Rao spearheaded economic liberalization policies in the early 1990s. During 1991 economic reforms Dr. Man Mohan Singh was the finance minister.

J.C. Kumarappa was one among the many eminent economists of India.  Kumarappa is credited for developing economic theories based on Gandhism. He was a pioneer of rural economic development theories. He proposed blueprint that put greater emphasis on rural industrialisation.

Prior to the 1991 economic liberalisation,India was a closed economy due to the average tariffs exceeding 200 percent and the extensive quantitative restrictions on imports. Foreign investment was strictly restricted to only allow Indian ownership of businesses. Since the liberalisation, India's economy has improved mainly due to increased foreign trade.

Following are highlights of the Liberalisation, Privatisation and Globalisation Policy in India :-

• Foreign Technology Agreements
• Industrial Licensing
• Abolition of License-Permit Raj

The Government of India took some measures in 1991 for rapid industrialisation. The measures include:-

• Abolition of industrial licensing
• Allowing foreign investment
• Encouragement to private sector
• Co-existence of public and private sectors.

The term Liberalisation means movement towards a free market system. It is also known as the withdrawal of regulation and restrictions of private sectors. Private sectors are encouraged to enter into core industries that are reserved for the public sector. It is one of the notable aspects of the economic reforms 1991 of India.

Privatisation can refer to the act of transferring ownership of specified property or business operations from a government organization to a privately owned entity, as well as the transition of ownership from a publicly traded, or owned, company to a privately owned company. For a company to be considered privately owned, it cannot secure funding through public trades on a stock exchange.

The economy of India had undergone significant policy shifts in the beginning of the 1990s. This new model of economic reforms is commonly known as the LPG or Liberalisation, Privatisation and Globalisation model. The primary objective of this model was to make the economy of India the fastest developing economy in the globe with capabilities that help it match up with the biggest economies of the world.

Globalisation refers to the
integration of markets in the global economy.  Markets where globalisation
is particularly common include financial markets, such as capital markets, mone
and credit markets, and insurance markets, commodity markets, such as markets
for oil, coffee, tin, and gold, and product markets, such as markets for motor
vehicles and consumer electronics.

Nationalisation was not included in the Industrial Policy of 1991. The policy envisaged disinvestment of government equity in public sector to mutual funds, financial institutions, the general public, and workers.

EXIM Bank (Export-Import Bank) of India is the leading export finance institution in the county. The bank was set up in the year 1982 under the Export-Import Bank of India Act, 1981. The Government of India launched the Export-Import Bank of India with an aim to augment exports from India and also to combine the county's foreign trade and investment with the overall economic growth. The bank began its operations as a supplier of export credit, but has over the period evolved into an institution that plays a major role in partnering with Indian industries including small and medium enterprises. It is the apex institution for coordinating the working of institutions in India engaged in financing exports and import of goods and services.

The National Co-operative Development Corporation (NCDC) focuses on the development of cooperatives in the agricultural and allied sectors, not on financing foreign trade.

Portuguese were the first Europeans to start trade with India. After the fall of Ottoman Empire and capture of Constantinople in 1453 it became difficult for Europeans to trade with India via land route.  The first successful voyage to India was by  Vasco da Gama in 1498, when after sailing around the Cape of good hope  he arrived in Calicut  now in Kerala. Having arrived there, he obtained from Saamoothiri Rajah permission to trade in the city. The navigator was received with traditional hospitality, but an interview with the Saamoothiri (Zamorin) failed to produce any definitive results. Vasco da Gama requested permission to leave a factor behind in charge of the merchandise he could not sell; his request was refused, and the king insisted that Gama should pay customs duty like any other trader, which strained their relations.

Mostly fine cotton and silk were exported from India to markets in Europe, Asia, and Africa; by the second quarter of the 19th century, raw materials, which chiefly consisted of sugar, raw cotton, opium, and indigo, accounted for most of India's exports.

From the time of Pre-Independence India has been one of the important trading countries, exporting primary items like cotton, raw silk, sugar, wool, jute, and indigo, etc. and importer of finished consumer goods like woollen clothes, cotton, silk, and capital goods like light machinery manufactured in Britain.

Scarce resources in Indian domestic market was because the British exported manufactured goods in surplus because selling manufactured goods means making more money as a state. Having more money as a state in return means that it can reinvest and can help its citizens better.

Britain held the monopoly of over India's imports and exports. Most of the foreign trade was restricted only to Britain, while the rest half was allowed to trade with other countries like Ceylon (Sri Lanka), China, and Persia (Iran).

The reason why the British wanted to export manufactured goods is because selling manufactured goods means making more money as a state. Having more money as a state in return means that it can reinvest and can help its citizens better, or spend the money in any other way it had to, to keep the country going .The Britishers utilized the wealth earned from export not for India's development but to  purchase expensive  and materials from Britain for their own use.

In the context of the Indian economy during the post-independence period, many essential goods, including food grains, clothes, and kerosene, were in short supply, leading to rationing and government intervention.

The Suez Canal was important to the British because of the fact that they had such a large overseas empire. By the time that the canal was built, the most important part of their empire was India. The Suez Canal made it much easier for them to transport goods to and from India.  it is the shortest trade link between Europe and countries on the Indian and Pacific Oceans. Because the majority of the world's goods are transported via sea, the Suez Canal greatly reduces the time and cost of transporting goods.

They exported raw materials from India at cheap rates and imported finished goods from Britain which adversely affected the Indian industries and economy as a whole.The British imposed heavy duties on exportation of Indian goods and no duties were levied on British goods which benefited them. The British ruled India to drain its resources and thus turned India into a colonial economy. They adopt various policies and methods which adversely affected the Indian Economy. 

Based on historical economic data for India around 2013-14, oil and lubricants accounted for a significant portion of the import bill, typically around 35%.

“Deemed exports” classically refer to those transactions under which provide of goods do not leave the country, and payment for such requirements is innermost in Indian Rupees shall be treated as 'deemed exports', provided that supplies are artificial or formed in India. 

The Deemed export advantage consists of refund on duty on expenses on imports or excisable substance used in the manufacture of goods which are supplied to the suitable projects. 'Deemed Export Benefit' method profits are availed of by units in Power, Petroleum plant, manure and Nuclear Power Projects.

Thus, the correct option is A.

This has been the case of the developed economies of the world whose over had surplus in its trade accounts.

Dual pricing is a system where the government fixes a price for a portion of a commodity (often for public distribution) while allowing the remainder to be sold at a higher price in the open market.

EPCG stands for Export Promotion Capital Goods. This is a scheme provided by the government of India for importers and exporters to promote exports.