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BGE-3: Industrial Sector in India

During Pre-British period:

Rich in natural resources 92 % were agrarian

People were prosperous

Famous for Handicrafts industry Traded with Dutch, French & Portuguese

Self sufficient economy

During British Period: Broken trade with rest of the world

Britishers focused their own interest

Exported raw materials to UK

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Stagnant economy i.e. GDP growth was 0.5% to 1.0 %

Absence of industrialization initiatives

Down fall of handicraft industries

Post-Independence Period:

Partition of Pakistan

Paralyzed Transport system

License Permit Raj

Government Restrictions & controls

Private sector neglected

Lack of finance

Budget deficits

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BOPs deficits

Poor FDI

Highest defense spending

Droughts & famines in 1966,1971,1972

Devaluation of currency in 1966

World oil crisis in 1973,1975

Poverty

Malnutrition

Illiteracy

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Evolution of Industrial policy:

In 1948 Minister for Industries Dr.S.P.Mukherjee

convened a tri-partie conference Govt- Labourers- Industrialists

Realized for proper Industrial Policy

The 1948 IPR was evolved This is the first Industrial Policy Resolution

Three Schedule of Industrial classifications - A,B,C,

Schedule-A :Exclusively with the Govt

Schedule-B :Progressively to be owned by Govt

Schedule-C :Industries not included in A &B

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Changing ideals and goals of govt

Industrial policy was modified in 1956,1980,1985

Inefficiency of industries Growth rate was 3 4%

Economic stagnation nearly 3 decades

China war-1962 halted growth Pakistan wars-1965 & 1971 made jerk in industrial

development. So the New Industrial policy-

1991came into existence

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New Industrial Policy-1991

Meaning:It means the government measures and methods

to establish, function and manage more industries in India.Objectives:

Increase in Industrial production

Improve quality of products

Removal of restrictions

Liberalizations and competitiveness of industries

Increase in efficiency and industrial growth Balanced regional development

Innovation and modernization

Generation of employment opportunities

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Major Features:

Industrial licensing

Dilution of public sector

Foreign investment

Foreign technology

Industrial location

Mandatory convertibility clause

Infrastructural growth

Control monopoly

Healthy competition

Cordial industrial relations

Develop Small Scale Industries (SSIs)

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Achievements:

Recovery of growth rate

Reduction in project cost and time

Industrial competition

Minimum loop-holes and corruption

Higher investment

Non-interference of govt in private

More FDI

More foreign technology

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Failures:

Regional imbalance More FDI imbalances freedom

MNCs wipe-out domestic producers

Leads unemployment MNCs will produce elite class product

No linkage between agriculture and industry

Neglect of SSIs Absence of labour intensive technology