To study the problems of India in the year 1995 ________ committee was formed under the chairmanship of Dr. Abid Hussain.

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Correct — option (4), Small Industry. The committee constituted under the chairmanship of Dr Abid Hussain in December 1995 was the Expert Committee on Small Enterprises, and it submitted its report on 27 January 1997. Its subject was the small-scale sector and the whole apparatus of protection built around it since Independence. India had promoted small industry through two main instruments: a definition based on a ceiling on investment in plant and machinery, which conferred eligibility for concessional credit, excise relief and other assistance; and a reservation policy under which a long list of products could be manufactured only by small-scale units. The committee's terms of reference asked it to examine the promotional and protective policies and the direct assistance programmes for small industry, to review the definition, the legal framework and the very heterogeneous composition of the sector, and to assess what the reservation policy had actually done to the growth of small enterprises. Its central conclusion was that protection had outlived its usefulness. Reservation, it found, had become irrelevant in a liberalising and globalising economy, had left protected units small, technologically backward and uncompetitive rather than helping them grow, and should be withdrawn in a phased manner. The report accordingly argued for a shift from protecting small firms to enabling them — better credit, better technology and a policy environment that let a successful small unit expand rather than penalising it for crossing the investment ceiling. The timing is what makes the question answerable: 1995 places the committee squarely in the post-1991 liberalisation period, when the protective structures of the earlier decades were being reviewed one by one, and the small-scale sector's reservation list was among the most conspicuous of them.

Why the other options are wrong — (a) Dr Abid Hussain's public career lay in trade, industry and economic administration — he served as a member of the Planning Commission and as India's Ambassador to the United States, and he chaired an earlier committee on trade policies in 1984. He is not associated with education policy, which in this period was being reviewed through a quite different set of bodies working on the National Policy on Education and school curriculum load. Attaching a committee to the wrong subject because the chairman's name is only half-remembered is precisely the error this option is set to catch.  (b) No agriculture committee was constituted under Abid Hussain in 1995, and nothing in his record connects him to farm policy. The confusion is understandable in a general way, since the mid-1990s saw a great deal of committee activity across sectors as the post-1991 reforms worked outward from trade and industry, but the specific body chaired by Abid Hussain in December 1995 was the Expert Committee on Small Enterprises, and its report of January 1997 dealt with the definition, protection and competitiveness of small industrial units, not with agriculture.  (c) This inverts the committee's subject. Large industry was not what the committee studied; it was, in effect, the competition from which the small-scale sector had been shielded by the reservation of products and by concessional treatment. The whole question the committee was asked to answer was whether that shielding still made sense, and it concluded that it did not and that reservation should be phased out. An option naming large industry therefore names the other side of the very policy debate the committee was appointed to settle, which is what makes it a plausible-looking but clearly wrong choice.

Concept: India's policy towards small industry rested for four decades on protection rather than competition. A small-scale industrial unit was defined by a ceiling on its investment in plant and machinery, and units below that ceiling received concessional credit, excise concessions, priority in government purchase and other support. Alongside this ran the reservation policy: a schedule of products, at its height running to several hundred items, that only small-scale units were permitted to manufacture. The rationale was employment — small units are labour-intensive and geographically dispersed — and the protection of a sector that could not have withstood competition from larger firms. The difficulty, which became acute after the liberalisation of 1991, was that the same structure discouraged growth: a unit that succeeded and wanted to expand would cross the investment ceiling and lose its eligibility, so the incentive was to stay small, and reserved products faced no competitive pressure to improve in technology or quality. The Abid Hussain committee of 1995-97 is the landmark statement of that critique, and the dereservation it recommended was carried out in stages over the following years, with the sector eventually redefined and re-legislated as micro, small and medium enterprises.

State PCS 2024 Q38 — Economy PYQ with Answer

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