Read the following passage carefully and answer the questions given below it. Certain words are printed in bold to help you to locate them while answering some of the questions.
It is difficult to imagine the extraordinary number of controls on Indian industry before 1991. Entrepreneurs needed permission to invest and could be penalised for exceeding production capacity. Even with the given investment capacity they had, entering certain areas was prohibited as these were reserved for the public sector. If they had to import anything, they required licences. To get these licences was tough. They had to persuade a bureaucrat that the item was required but even so permission was unavailable if somebody was already producing it in India. The impact of the reforms was not instantaneously and permanently wonderful. In India’s case it began to show after about a year-and-a-half. After 1993 there came three years of rapid industrial growth of about 8% or so. But, in the second half of the 90s, there was a tapering of industrial growth and investment. After 1997 and the East Asian crisis there was global slowdown, which had an impact on the Indian industry. But, in the last few years there has been a tremendous upturn. With the rise of investment industrial growth has reached double digits or close.
However even during the period when industrial growth was not that rapid, there is a lot of evidence that positive results of the reforms were seen. There were companies that didn’t look at all internally but instead performed remarkably in the highly competitive global market. For instance, the software sector’s performance was outstanding in an almost totally global market. Reliance built a world-class refinery. Tatas developed an indigenously designed car. The success of the software sector has created much higher expectations from and much higher confidence in what Indian industry can do. On the government’s side it’s a vindication that liberalisation of both domestic and external policies, including the increased inflow of Foreign Direct Investment, has created an environment in which industry can do well, has done well and is preparing to do even better. What they need is not sops, but good quality infrastructure. For the 11th Plan an industrial growth rate of around 12% isprojected. It will have methods of developing infrastructure, which will close the deficit. This can be done through increased investment in public sector for those infrastructure areas, which cannot attract private investment, and through efforts to improve private participation in different ways of public-private participation.
In the early stages of reforms, the liberalisation of trade policies and a shift to a market-determined exchange rate had the effect of removing constraints on agriculture in terms of depressed prices. The removal of protection on industry helped to produce a more level playing field, because the earlier system was extremely unfair to agriculture. The lesson to be learnt from the reforms process is to persevere in reforming the strategic parts of the economy, which will lead to even higher growth rate. India has to do better than its current average growth rate of 8% and ensure that benefits from this higher growth go beyond industry and urban areas and extend to agriculture.
Which of the following factors was responsible for the fall in India’s growth rate in the late 1990s?