Which policy document is known as the Economic Constitution of India?

The correct answer is C, three. The Industrial Policy Resolution of 1956 placed every industry in one of three schedules. Schedule A listed seventeen industries whose future development was the exclusive responsibility of the state, Schedule B listed twelve industries that the state would progressively own while private units continued, and Schedule C covered all the rest, left to private enterprise under licensing.

Option B, four, is the number of groups in the earlier Industrial Policy Resolution of 1948, and that is the trap in this question. Options A and D, five and two, correspond to no classification in either resolution. The resolution of 1956 is called the Economic Constitution of India because this three-fold division settled the shape of Indian industry until the New Industrial Policy of 1991 cut the reserved list from seventeen industries to eight.

The correct answer is A, iron and steel. The Industrial Policy Resolution of 1948 made only three fields an exclusive monopoly of the central government: arms and ammunition, the production and control of atomic energy, and the ownership and management of railway transport. Iron and steel was placed in the next group, of six industries in which new units would in future be set up by the state while existing private units continued.

Option B, atomic energy, option C, railways, and option D, arms and ammunition, are exactly the three monopoly fields, so each of them is wrong as an answer to a question asking what was not a monopoly. The other industries in the second group with iron and steel were coal, aircraft manufacture, shipbuilding, mineral oils and telegraph and telephone equipment. Remembering the three monopolies is enough to answer most questions on the 1948 resolution.

The correct answer is B, the Industries (Development and Regulation) Act, 1951. Under this Act a company needed a licence to start a new undertaking, to expand capacity substantially, to make a new article or to change its location, and the schedule to the Act listed the industries covered. This power was the centre of what critics called the licence-permit raj, and most of it was abolished by the New Industrial Policy of 1991.

Option A, the Companies Act, 1956, governs the incorporation and management of companies, not entry into an industry. Option C, the MRTP Act, 1969, dealt with monopolistic and restrictive trade practices and with the size of large houses, and was replaced by the Competition Act, 2002. Option D, the Capital Issues (Control) Act, 1947, controlled the raising of capital from the public and was repealed in 1992 when SEBI took charge of the capital market.

The correct answer is B, 1991 and 1992. In that financial year, following the balance of payments crisis and the New Industrial Policy, the government began selling small blocks of shares of selected enterprises to financial institutions and mutual funds. These were minority sales that raised money without giving up control.

Option A, 1980 and 1981, belongs to an era of expansion of the public sector, not of sale. Option C, 1999 and 2000, is the year of the first strategic sale, of Modern Food Industries to Hindustan Lever, and also the year the Department of Disinvestment was created, which makes it the most tempting wrong answer. Option D, 2004 and 2005, is when the National Investment Fund was set up to receive the proceeds. Disinvestment began in 1991 and 1992; privatisation proper began at the end of that decade.

The correct answer is B, the Department of Investment and Public Asset Management, known as DIPAM. It was created as the Department of Disinvestment in 1999, was a separate Ministry of Disinvestment from 2001 to 2004, returned as a department and was given its present name in April 2016. It works under the Ministry of Finance, NITI Aayog recommends which enterprises should be taken up and the Cabinet Committee on Economic Affairs approves each case.

Option A, the Department of Public Enterprises, frames policy for the enterprises themselves, including the Maharatna, Navratna and Miniratna scheme. Option C, the Department of Economic Affairs, handles the Budget, markets and external finance. Option D, the Department for Promotion of Industry and Internal Trade, handles industrial policy and foreign direct investment policy, not the sale of government shareholding.