Unit-10
Industrial policy since 1956,1977,1980,1991
In the broader sense, an industrial policy is any government action which is aimed toward affecting the economic sector. As an instrument of industrialization, any country should formulate industrial policies. Further, during a country like India, where the private sector co-exists in business, it's important to regulate and regulate the world . During this article, we'll specialise in the economic policies of India.
Factors affecting productivity of Frames in India
Industrial Policies of India
India features a economy which suggests that the overall public and personal sector exist together.
Therefore, it's important that the govt declares industrial policies which clearly indicate the sphere of the State and therefore the private enterprises.
On April 30, 1948, the govt of India passed a policy resolution – the economic Policy Resolution, 1948 (IPR, 1948)
It divided the economic sector into four broad groups:
1. Group 1 – Basic and strategic industries like arms and ammunition, nuclear energy , railways, etc. Further, these were within the exclusive monopoly of the State.
2. Group 2 – Key industries like coal, iron and steel, shipbuilding, manufacture of telegraph, telephone, oil s, etc. The State took over the exclusive responsibility of all future developments in these industries. Also, the prevailing industries were allowed to function for 10 years. After the top of the tenure, the State would review and take adequate decisions.
3. Group 3 – a complete number of 18 industries including automobiles, tractors,
Machine tools, etc. The private sector was allowed to open these industries subject to government regulation and supervision.
4. Group 4 – All the remaining industries. However, the govt can participate or intervene
If the necessity arises.
The IPR, 1948 also emphasized the importance of small-scale and cottage industries in India. To implement the IPR, 1948, the govt passed the Industries (Development and Regulation) Act in 1951.
The following are the most features of commercial Policy of 1948:
(i) Category of Industries:
Large scale industries were divided into four categories.
(a) Public sector:
It includes industries owned and managed by Govt. Viz. Arms and ammunitions nuclear energy and railways.
(b) Public-cum-Private sector:
It included six basic industries coal, iron and steel, aircraft manufacture, ship building, mineral oil, telephones, cable and wireless industry. The new ventures concerning these industries are going to be established by Govt. And already existing units will still be managed and developed for next 10 years by Private Sector.
(c) Controlled private sector
In includes 18 important industries viz. Automobiles , heavy machine tools, cotton textiles, cement, sugar, paper, shipping material and tractor. These industries will still remain under private sector but Central Govt. Will have overall control over them.
(d) Private and co-operative sector:
The rest of the industries are going to be run under private ownership or on co-operative basis Govt. Can keep check on these.
(ii) Cottage and little scale industries:
Rapid development of those industries was emphasized so as to use local resources generating employment avenues and production of commodity .
(iii) Employee-employer relation:
It was aimed that employee- employer relations should be congenial. The worker should get fair wages and Social Security .
(iv) Control over Foreign Capital:
The role of foreign capital for industrial development was recognised. But Govt. Took full control over foreign capital to observe the interests of nation.
(v) Development of infrastructure:
Special stress was laid on development of roads, railways, electricity and irrigation.
On April 30, 1956, the govt revisited the IPR, 1948 and announced the economic Policy Resolution, 1956 (IPR, 1956). There have been three reasons behind the revision:
i. The introduction of the Constitution of India
Ii. The adoption of a planning system
Iii. The Parliament‘s declaration of adopting a socialist pattern of the society
According to the IPR, 1956, the industries were classified within the followingcategories:
1. Schedule A – an inventory of 17 industries because the exclusive responsibility of the State. Of these, four industries, namely arms and ammunition, nuclear energy , railways, and also air transportation become Central Government monopolies and therefore the rest under State Governments.
2. Schedule B – an inventory of 12 industries hospitable both the general public and personal sectors. However, these industries are progressively State-owned.
3. Schedule C – All the remaining industries. The private sector had the first initiative of development. However, they needed to suit within the economic and social priorities and policies of the govt . Further, they were subject to the provisions of the Industries (Development and Regulation) Act, 1951.
The IPR, 1956 also stressed the importance of small-scale and cottage industries for expanding employment opportunities.
A Statement within the Parliament in December 1977 modified the economic Policy. The most thrust was in favor of the small-scale sector. Further, this was classified into three
Sub-sectors:
• Household and Cottage industries which provided large-scale self-employment.
• Tiny sector industries, if the investment amount was below a specified limit.
• Small-scale industries, which were larger than the primary two categories but had investment within certain limits.
Apart from recognizing the necessity to enhance the management of the general public sector, the IPR, 1980 provided certain clarifications and extensions.
• Optimum utilization of installed capacity
• Higher productivity and more employment
• Preferential treatment for industrially backward units to get rid of regional disparities
• Promotion of export-oriented and also import-substitution industries
• Extending a preferential treatment to agro-related industries to extend the agriculture base of the economy.
On July 24, 1991, the govt of India announced a replacement , liberalized industrial policy. This policy scrapped the asset limit for Monopolies and Restrictive TradePractice (MRTP) companies.
Further, it abolished industrial licensing of all projects with a couple of exceptions. It also raised the limit for foreign participation within the country’s industrial sector. Here are the highlights:
• The policy abolished industrial licensing for all projects with the exception of a couple of selected sectors. Further, the exemption from licensing applied to all or any substantial expansions of existing and new units.
• It provided for the automated clearance for import of capital goods.
• With reference to the Monopolies and Restrictive Trade Practice (MRTP) Act, the policy stated that the pre-entry scrutiny of investment decisions by the MRTP companies was not needed.
• The policy also scrapped the asset limit of the Monopolies and Restrictive Trade Practice (MRTP) companies.
• It envisaged the divestment of state equity publicly sector to mutual funds, financial institutions, the general public, and also the workers. As of 2008, the reservation for the general public sector was very limited.
• There were only two sectors covering the manufacture of certain substances relevant to nuclear energy (along with the assembly of atomic energy) and also the supply of railway transport.
• The policy provided approval for direct foreign investment of up to 51 percent in certain high-priority industries. The govt made these changes so as to extend foreign investment in those sectors.
• There was an existing locational policy for industries. The IPR, 1991 as long as in locations aside from cities with a population of quite a million , the industries don't require any approval.
• Further, the sole exception is those industries which require compulsory licensing.
BOOKS
1. Indian Economy – Rudra Dutt & Sundarram
