SSC CGL 2025 Tier-II · Paper-I, 19 January 2026 · General Awareness · Question 16 of 150

We transcribed this text from the pictures of a candidate's response sheet for this paper; the answer is the key SSC marked with a green tick on that sheet. Solution last reviewed 11 September 2026.

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Which of the following was a primary objective of 'Liberalization' within the New Economic Policy (NEP) of 1991?

(a)Strengthening the MRTP Act to restrict the expansion of large business houses.
(b)Expanding the list of industries reserved exclusively for the public sector.
(c)Increasing the peak customs duty on imports to protect domestic industries.
(d)Abolishing industrial licensing for most industries to encourage private entry.

Answer

Why

Correct — D. NCERT's Indian Economic Development (Class 11) says the reforms begun in 1991 abolished industrial licensing for almost all industries.
The exceptions it lists are alcohol, cigarettes, hazardous chemicals, industrial explosives, electronics, aerospace, and drugs and pharmaceuticals.

Freeing entry from government permission is what liberalisation meant, so option (d) states its objective.

Why the others are wrong

(a)
Strengthening the MRTP Act to restrict the expansion of large business houses. — Reversed. The 1991 reforms scrapped the concept of an MRTP company, under which firms with assets above a set value came under government supervision. The MRTP Act was later replaced by the Competition Act, 2002.
(b)
Expanding the list of industries reserved exclusively for the public sector. — Reversed. NCERT says the industries now reserved for the public sector are only part of atomic energy generation and some core railway activities. The reforms shrank the reserved list; they did not expand it.
(c)
Increasing the peak customs duty on imports to protect domestic industries. — Reversed. NCERT lists reduction of tariff rates among the aims of the trade reforms. Very high tariffs and import quotas were the pre-1991 way of protecting domestic industry.

Concept

NCERT groups the 1991 reforms under three heads: liberalisation, privatisation and globalisation.

Liberalisation meant removing controls under which every entrepreneur needed government permission to start a firm, close one, or decide how much to produce.

It brought the end of most industrial licensing, a much shorter list of public-sector-only industries, dereservation of many small-scale goods, and lower tariffs.

The three wrong options are pre-1991 controls presented as objectives: MRTP curbs on big business, public-sector reservation and high customs duty.

Liberalisation is defined by removing exactly these, which is why each wrong option is a reversal rather than a near-miss.

Key facts

The 1991 reforms were launched under Prime Minister P. V. Narasimha Rao, with Manmohan Singh as Finance Minister.
Manmohan Singh presented the reform budget on 24 July 1991.
NCERT: only part of atomic energy generation and some core railway activities remain reserved for the public sector.
The MRTP Act, 1969 was replaced by the Competition Act, 2002.

Study next

The 1991 balance-of-payments crisis and India's IMF loanPrivatisation and disinvestment of public sector enterprisesThe Competition Act, 2002 and the Competition Commission of India

Common traps

Reading 'liberalisation' as protection for domestic industry and choosing the higher customs duty.
Taking the MRTP Act, a 1969 curb on big business, for a 1991 reform measure.

Here the reform is tested by its content, not its year. 24 Sep 2024, 16:00, GA Q.17 asks which industrial policy began liberalisation (1991), and 19 Jan 2026, 11:00 AM, GA Q.2 covers the Second Plan's emphasis on basic and heavy industries.

Related PYQs

No directly related past PYQ was found.

Topic: General Policy — all 225 SSC CGL questions on it, every solved shift.