Industrial Policy, Disinvestment & Service Sectors
Industrial development in India shifted from the state-led import-substitution regime under the Industrial Policy Resolution of 1956 to market-driven liberalization following the landmark New Economic Policy of 1991. The reforms dismantled industrial licensing ('License Raj'), opened key sectors to Foreign Direct Investment (FDI), and promoted privatization and strategic disinvestment of Central Public Sector Enterprises (CPSEs). High-performing public enterprises are granted operational autonomy under Maharatna, Navratna, and Miniratna classifications. Industrial output is tracked through the Index of Industrial Production (IIP) and Eight Core Industries. Concurrently, the services sector, led by IT, telecommunications, and financial services, has grown to contribute over 50 percent of India's Gross Value Added (GVA).
Key Concepts & Examination Highlights
- The Industrial Policy Resolution of 1956 classified industries into Schedule A (state monopoly), Schedule B, and Schedule C.
- The New Economic Policy of July 1991 introduced Liberalization, Privatization, and Globalization (LPG reforms) under Prime Minister P.V. Narasimha Rao.
- The Eight Core Industries (Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, Electricity) account for 40.27% of IIP weight.
- Maharatna status grants CPSE boards investment autonomy up to ₹5,000 crore without prior government approval.