Social Science (087) — AI-generated practice question

No, this is not a contradiction. The two policies were appropriate for different economic conditions at different times.

Why restrictions were imposed (post-Independence):

• Industries were just coming up in the 1950s and 1960s.
• Competition from imports at that stage would not have allowed these new industries to survive and grow.
• So the government used trade barriers (taxes, quotas) to protect domestic producers from foreign competition.
• Only essential items like machinery, fertilisers, and petroleum were allowed to be imported.

Why liberalisation was introduced (from 1991):

• By 1991, Indian industries had matured sufficiently.
• The government felt competition would improve the quality and performance of Indian producers.
• Barriers on foreign trade and investment were removed, allowing easier import/export and entry of foreign companies.

Thus, protection was needed to build the economy; liberalisation was introduced to strengthen it further through competition. Each policy suited its time.

Source: Liberalisation of foreign trade and foreign investment policy, Chapter 4

---

The examiner wants students to show understanding that protection and liberalisation are not opposing ideas but context-driven policies. Key points to score full marks: (1) state clearly it is NOT a contradiction, (2) explain the early-stage industry argument for restrictions, (3) explain the maturity/competition argument for liberalisation, (4) link each policy to its historical period. Avoid just defining the terms — the question specifically asks for justification with conditions.