CBSE 2024, Set 1

Question

Read the following statements- Assertion (A) and Reason (R). Choose the correct alternative given below:
Assertion (A): The excessive regulation of permit license raj prevented certain private firms from becoming fairly competitive.
Reason (R): Private sector wasted huge amounts in obtaining licenses rather than on improving the product quality and international competitiveness. A). Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A). B). Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A). C). Assertion (A) is true, but Reason (R) is false. D). Assertion (A) is false, but Reason (R) is true.

Edvaya · Accepted Answer

The correct answer is Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).. During the pre-1991 regime, the industrial licensing system forced the private sector to spend enormous time and money simply acquiring and maintaining licenses (rent-seeking behavior). Because of this, resources that could have been used to innovate, improve quality, and enhance competitiveness were wasted. Both statements are true, and the Reason correctly explains the Assertion.

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Economics > Indian Economic Development > Economic Reforms 1991

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