(a) Explain briefly the rationale behind the 'License Raj' under the Industrial Policy Resolution, 1956. (b) Define Multilateral trade.

Question

Accepted Answer

(a) **Rationale behind 'License Raj' under Industrial Policy Resolution, 1956:**

1. **Control Private Sector:** License Raj was introduced to keep private sector under control. No new industry was allowed unless a licence was obtained from the government.

2. **Regional Equality:** Licences were easier to obtain if industrial unit was established in economically backward areas. Such units got concessions like tax benefits and electricity at lower tariff.

3. **Prevent Monopolies:** Licensing system prevented concentration of economic power in few hands.

4. **Planned Development:** Government could direct industrial development according to national priorities.

(b) **Multilateral Trade:**
- Trade (exchange of goods and services) between more than two nations
- Example: WTO agreements involving multiple countries
- Different from bilateral trade which is between two countries