Q.The pre-1991 Indian economic system, in which a private firm needed government licences and permits for most major business decisions, is popularly known as:

This term refers to the informal but widely used name for India's pre-1991 regulatory system, where licences, permits, and quotas governed nearly every major private business decision.

Options describing the post-1991 reforms (such as a market economy) describe what India moved toward, not the earlier system being asked about here.

This question tests recall of the specific name given to India's pre-1991 regulatory system.

Option (A) New Economic Policy — this refers to the 1991 policy that REPLACED the earlier system, not the earlier system itself. Not the answer.

Option (B) Licence-Permit-Quota Raj — this is the correct term: it describes the pre-1991 system in which private firms needed government licences and permits for setting up or expanding industry, and imports were restricted through quotas. This is the correct answer.

Option (C) Balance of Payments crisis — this refers to the 1990-91 foreign-exchange crisis that triggered the reforms, not the earlier regulatory system itself. Not the answer.

Option (D) Free Market Economy — this describes an economy with minimal government control, essentially the opposite of the system being asked about. Not the answer.

Students sometimes confuse the name of the pre-1991 controlled system with the name of the 1991 reform that replaced it — remember that the Licence-Permit-Quota Raj is the OLD system, and the New Economic Policy of 1991 is what dismantled large parts of it.