The correct option is 1 and 3 only.
Explanation
Post-independence, Indian economic planning was guided by the objective of establishing a "socialist pattern of society." The Industrial Policy Resolution of 1956 explicitly gave the state a leading role in industrial development, controlling the "commanding heights of the economy."
Statement-wise Analysis:
- Statement 1 is Correct: At the time of independence, Indian private industrialists did not possess sufficient capital to undertake the massive investments required for the development of heavy industries and infrastructure. Consequently, the government had to step in to facilitate these investments.
- Statement 2 is Incorrect: The market size was not large enough to incentivize private industrialists to undertake major projects. Due to low per capita income and widespread poverty, the demand for industrial goods was limited. This lack of demand discouraged private investment in large-scale projects.
- Statement 3 is Correct: The public sector was designed to prioritize social welfare over profit maximization. The objective was to ensure balanced regional development, generate employment, and prevent the concentration of wealth, aligning with the goals of the Five-Year Plans.
Key Takeaway:
The dominance of the public sector during 1950-1990 was necessitated by the lack of private capital, the limited size of the market (low demand), and the constitutional mandate to promote social welfare through state intervention.