This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
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The New Industrial Policy of 1991 in India aimed at liberalizing the economy, reducing government controls, and promoting private sector growth. The Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, which previously imposed restrictions on the expansion and diversification of large firms, was seen as a barrier to this new economic direction. Option a is incorrect because the 1991 policy moved away from strict controls, not towards them. Option c is incorrect because the policy aimed to promote private firm growth, not prevent it. Option d is incorrect because the policy focused on privatization and reducing state control, not nationalization. The 1991 policy significantly reduced the scope of the MRTP Act by removing the requirement for large companies to seek prior government approval for expansion, establishment of new undertakings, mergers, and amalgamations. This change provided private firms with greater freedom to expand and diversify, aligning with the liberalization goals. The MRTP Act was eventually replaced by the Competition Act, 2002, which focused on preventing anti-competitive practices rather than controlling the size of firms. Therefore, the correct option is b. The Monopolies and Restrictive Trade Practices (MRTP) framework was altered by the New Industrial Policy of 1991 as follows: b. Its scope was reduced, allowing private firms more freedom to expand and diversify. The final answer is b Send me the next one 📸