(a) Critically examine the impact of the New Economic Policy on the Indian corporate sector. Discuss its effects on…

How this answer will be evaluated

Evaluation rubric

Each sub-part is marked on its own, against the marks and word limit printed on the paper.

1. (a) 'Critically examine' the effect of the New Economic Policy of 1991 on the Indian corporate sector, and then discuss three named consequences separately: privatisation, the surge in foreign direct investment, and the impact on domestic industry of the entry of multinational corporations. All three must be covered and the treatment must weigh gains against costs. 20 marks

   Must cover

   • New Industrial Policy, 24 July 1991; delicensing except 18 industries; removal of MRTP pre-entry scrutiny
   • abolition of the Controller of Capital Issues (1992); SEBI Act, 1992
   • disinvestment versus privatisation: minority stake sales from 1991-92; strategic sales 1999-2004 (BALCO, VSNL, Hindustan Zinc, Maruti, Modern Foods)
   • Air India to the Tata group (January 2022); New Public Sector Enterprise Policy, 2021
   • 51 per cent automatic FDI approval in 34 industries (1991), later 100 per cent in most sectors; FEMA, 1999
   • MNC entry: consumer gains versus the Bombay Club's 'level playing field' (1993); differentiated outcome
   • critical balance: twin balance sheet problem and IBC, 2016; weak employment growth; manufacturing stuck around 15-17 per cent of GVA

   Loses marks

   • Writing a general essay on liberalisation and never addressing the corporate sector, which is the stated subject.
   • Omitting one of the three named sub-parts - privatisation, FDI, or MNC entry and domestic industry; each carries marks and all three are compulsory.
   • Treating disinvestment and privatisation as synonymous; most Indian disinvestment has been minority stake sale without transfer of control, and noting the distinction is a mark of a strong answer.
   • Presenting MNC entry as either pure benefit or pure destruction; the examiner expects the differentiated outcome and the Bombay Club debate.
   • Quoting FDI figures without stating the year or the measure (gross inflows, total inflows including reinvested earnings, or net FDI).
   • Ignoring the critical dimension altogether - jobless growth, the twin balance sheet problem and stagnant manufacturing are the standard criticisms expected.

   Earns more

   • Multinational entry and its impact on domestic industry, argued both ways: entry and competition produced large consumer gains in price, quality, variety and technology - conspicuously in passenger cars, consumer durables, telecommunications and fast-moving consumer goods - and forced domestic firms to raise productivity, invest in brands and technology and specialise; the contrary case was pressed at the time by the group of leading Indian industrialists known as the Bombay Club, which in 1993 demanded a level playing field before full opening, arguing that domestic firms faced higher capital costs, infrastructure deficits and legacy obligations; in the event the outcome was differentiated - some domestic firms were acquired or reduced to junior joint-venture partners and segments such as consumer electronics were largely lost, while others became globally competitive, in information technology, pharmaceuticals, automotive components, steel and telecommunications, and several Indian groups themselves became multinationals through large overseas acquisitions in the 2000s.
   • Corporate restructuring, capital markets and governance: the end of licensing triggered a wave of mergers, demergers and divestment of non-core businesses as diversified family houses refocused on core competencies, and the composition of India's largest business groups changed substantially; capital markets deepened with the National Stock Exchange from 1994, dematerialisation and depositories, rolling settlement and the growth of private equity and venture capital; and corporate governance was rebuilt through the Kumar Mangalam Birla Committee (1999) and the resulting listing-agreement code, the Narayana Murthy Committee (2003), the Companies Act, 2013 with mandatory corporate social responsibility, and the SEBI listing obligations regulations of 2015; competition regulation moved from the MRTP Act to the Competition Act, 2002 and the Competition Commission of India.
   • The critical balance: against the gains must be set the evidence that corporate growth has been weakly employment-generating, that the investment boom of 2003-08 ended in the twin balance sheet problem of over-leveraged firms and non-performing bank assets requiring the Insolvency and Bankruptcy Code, 2016, that the corporate tax reduction of 2019 was not matched by a commensurate rise in private investment, that manufacturing's share of value added has stayed around 15-17 per cent despite Make in India and the production-linked incentive schemes, and that concerns about market concentration and the closeness of business and government remain live.

   Extra mark

   • Narasimham Committee (1991); Chelliah Committee (1991)
   • Rangarajan Committee (1993); Disinvestment Commission (1996); LIC listing (2022)
   • Competition Act, 2002 and the Competition Commission of India replacing the MRTP Act
   • Kumar Mangalam Birla Committee (1999) and Narayana Murthy Committee (2003); Companies Act, 2013
2. (b) 'Examine the implications' of the WTO agreements for Indian agriculture under three specified heads - food security, subsidies and market access. The Agreement on Agriculture must be the analytical frame, and each of the three heads must be addressed with the relevant provisions and India's negotiating position. 15 marks

   Must cover

   • Agreement on Agriculture (1 January 1995): market access, domestic support, export competition
   • Amber, Blue and Green Boxes; AMS; 10 per cent de minimis for developing countries; Article 6.2
   • MSP procurement counted as market price support against a fixed 1986-88 external reference price
   • Bali Peace Clause (December 2013), made open-ended in November 2014; permanent solution on public stockholding pending
   • removal of quantitative restrictions by April 2001; high bound versus low applied tariffs
   • Nairobi decision (2015) eliminating export subsidies; SPS and TBT barriers to Indian exports
   • G-33: special products and the special safeguard mechanism

   Loses marks

   • Writing a general critique of globalisation and Indian agriculture without using the Agreement on Agriculture's actual categories - the boxes, the de minimis and the external reference price.
   • Omitting the public stockholding issue, which is the single most important implication for India and the core of its negotiating position.
   • Claiming India's agricultural subsidies violate WTO rules outright; most are notified under the Green Box or Article 6.2, and only market price support for rice has breached the de minimis.
   • Confusing the Bali Peace Clause with a permanent solution, or dating it to Doha or Nairobi.
   • Getting the de minimis wrong - it is 10 per cent of the value of production for developing countries, against 5 per cent for developed members.
   • Ignoring market access barriers faced by Indian exports (SPS, TBT, tariff escalation) and treating market access as only an import question.

   Earns more

   • Market access: non-tariff barriers had to be converted into tariffs and bound; India, having no tariffication obligation because it maintained quantitative restrictions on balance of payments grounds, bound its agricultural tariffs at high ceiling levels - broadly 100 per cent for primary products, 150 per cent for processed products and 300 per cent for edible oils, later renegotiating the bindings on a few items - but had to remove the quantitative restrictions themselves by April 2001 after losing the dispute brought by the United States; since applied duties are usually far below the bound rates, India retains headroom to raise duties against import surges, which it has used for edible oils, pulses and sugar, but Indian exports in turn face high tariff peaks, tariff escalation and sanitary and phytosanitary and technical barriers in developed markets.
   • Export competition and the other agreements: the Nairobi Ministerial Decision of December 2015 required the elimination of agricultural export subsidies, developed members immediately and developing members over a transition, with limited flexibility for marketing and internal transport subsidies - a discipline under which India's sugar export support was successfully challenged; the SPS and TBT Agreements shape non-tariff access for Indian exports through pesticide residue, aflatoxin and contaminant standards; and the TRIPS Agreement bears on seeds, to which India responded with its own sui generis Protection of Plant Varieties and Farmers' Rights Act, 2001 preserving the farmer's right to save, use, exchange and sell farm-saved seed rather than joining UPOV; India pursues its demands through the G-33 coalition on special products and a special safeguard mechanism, the collapse of the 2008 mini-ministerial over the safeguard trigger being the key precedent.

   Extra mark

   • National Food Security Act, 2013
   • Protection of Plant Varieties and Farmers' Rights Act, 2001 as the sui generis response to TRIPS
   • India's invocation of the Peace Clause for rice (since 2020)
3. (c) Two linked tasks: (i) elaborate on indicative planning in India - what it means, how and when India adopted it, and what its objectives are; (ii) explain the role NITI Aayog plays within this new framework. Both must be covered in about 250 words. 15 marks

   Must cover

   • indicative versus imperative planning; French planification as the model
   • Eighth Five Year Plan (1992-97) as India's first explicitly indicative plan
   • objectives: strategic direction, coordination, targets as signals, an enabling environment
   • Planning Commission (Cabinet Resolution, 15 March 1950) replaced by NITI Aayog (1 January 2015); Twelfth Plan (2012-17) the last
   • NITI Aayog: Prime Minister as Chairperson, Governing Council of Chief Ministers; no fund allocation
   • cooperative and competitive federalism; indices such as the SDG India Index; Aspirational Districts Programme (2018)

   Loses marks

   • Defining indicative planning only as 'flexible planning' without contrasting it with imperative planning and without identifying the mechanism - information, targets and incentives rather than directives.
   • Failing to name the Eighth Plan as the point of adoption, which is the standard examinable fact.
   • Describing NITI Aayog as a renamed Planning Commission; the decisive difference is that it has no fund-allocating power.
   • Attributing the Planning Commission or NITI Aayog to a constitutional or statutory provision; both were created by Cabinet Resolutions.
   • Listing NITI Aayog's schemes without connecting them to the indicative framework - coordination, benchmarking and knowledge rather than allocation.

   Earns more

   • NITI Aayog's functions within the framework: it acts as the Government's think-tank and knowledge and innovation hub, formulating strategy documents and model laws (such as the model agricultural land leasing and agricultural marketing laws); it is the platform of cooperative federalism through the Governing Council and of competitive federalism through published rankings and indices - the SDG India Index, the Composite Water Management Index, the Health Index, the School Education Quality Index, the Export Preparedness Index and the India Innovation Index; it runs targeted convergence programmes, notably the Aspirational Districts Programme launched in January 2018 and its later extension to blocks; it publishes the National Multidimensional Poverty Index using the Alkire-Foster method; it houses the Atal Innovation Mission; and it monitors and evaluates programmes through the Development Monitoring and Evaluation Office.
   • Critical appraisal: because NITI Aayog has no financial powers, its leverage over States is reputational and analytical rather than fiscal, which some see as the essence of genuine cooperative federalism and others as a loss of the Planning Commission's ability to steer long-term public investment and to negotiate with States; the National Development Council has become dormant; and the framework leaves open who now performs the long-horizon investment planning that infrastructure and energy transition require.

   Extra mark

   • Eleventh Plan 'faster and more inclusive growth'; Twelfth Plan 'faster, more inclusive and sustainable growth'
   • three-year Action Agenda, seven-year Strategy, fifteen-year Vision
   • Atal Innovation Mission; Development Monitoring and Evaluation Office; National Multidimensional Poverty Index
   • end of the plan / non-plan distinction

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