Assertion (A) : In 1991 Government decided to allow all foreign investments to any industry without any restrictions. Reason (R) : Government has enhanced the investment limit of small scale industrial units. Codes :
(A) is false but (R) is true.
Assertion (A) is false. The New Industrial Policy of July 1991 liberalised foreign investment but did not open every industry without restriction. It allowed automatic approval for foreign equity up to 51 percent in a specified list of high-priority industries, while other proposals still needed approval of the FIPB, and sectors such as defence, atomic energy and railways remained reserved or capped.
Reason (R) is true. Alongside the 1991 reforms, the government raised the investment ceiling in plant and machinery for small scale industrial units (to ₹60 lakh in 1991, later ₹3 crore in 1997) so that these units could modernise and grow.
Since the assertion overstates the extent of foreign investment liberalisation while the reason correctly states a policy change for small scale units, A is false and R is true.
Hence, (A) is false but (R) is true.
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From the following, identify the tools of fiscal policy :
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