dbs- large scale industry analysis-1

8/7/2019 dbs- large scale industry analysis-1

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Large scale industries in IndiaEvolution and Transformation patterns


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Introduction

y After India became independent in 1947, the country embarked upon an

ambitious plan of industrial development and encouraged the setting up of

new industries and the expansion of existing industries.


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Since 1956, the industrial development in India took

place mainly in the four forms:Wide diversification of industrial base: production

of several new products.

Development of public sectorRestricted Imports and less dependence on them.

Globalization of industries and their progressive

privatization.


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First five year plan (1951-56)

Main emphasis was given on agricultural sector. Butattempts were made to lay foundation of future

industrial growth.

To encourage small scale industries a cess was

imposed on the products of large scale industries.Total expenditure on development of large scale

industries was Rs. 55 Crore.

5% of total plan outlay was allocated for the

industries.Growth rate of industrial production during the first

plan was 7.5%


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Projects directly under the Central Government - Rs.83 crores

The Chittaranjan Locomotive Factory- the total costRs. 15.0 crores (cost within the Plan period Rs. 4.73

crores)-Building of Rail Engines for Indian Railways.


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Second five year plan (1956-61)

It aimed at development of basic industries.Most of the capital goods industries were set up and developedin the public sector. e.g. three new steel plants were set up atBhilai, Durgapur and Rourkela.

There was good progress in village and small scale industries.The small businessmen were given technical, financial andmarketing facilities. 24% of total plan outlay was allocated for the industries.

Annual growth rate of industrial development was 6.6%.60 industrial estates were set up and 1000 small units werehoused therein.


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Third Five Year Plan (1961-66)

Aim was to expand heavy industries so as to meet the needof the industries within its own resources in the next tenyears.In this plan automobile, diesel engines, cement and heavy

chemical units made considerable progress.The production capacity of many industries like iron andsteel, machines etc. that were set up in the 2nd plan wasexpanded.

Total expenditure on development of large scale industrieswas Rs. 1,726 Crore and Rs. 241 Crore on small scaleindustries.23% of total plan outlay was allocated for the industries.

Growth rate of industrial production was 9% per annum


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4th Five Year Plan (1969-74):

The industrial development did not however match its targetduring the 4th plan.No worth while change in the industrial production structure

took place.Total expenditure on development of large scale industrieswas Rs. 2,864 Crore and Rs. 243 Crore on small scaleindustries.

19.7% of total plan outlay was allocated for the industries.Growth rate of industrial production was 4.5% per annum.Number of industries increased to 465


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Fifth Five Year Plan (1974-79):

y The main aim was the attainment of self sufficiency and growth withjustice.

y Increased development of basic industries.

y Development of export industries

y Increase in the supply of mass consumption goods.

y Development of industrially backward regions.

y Application of modern technology in the development of industries.

y Total expenditure on development of large scale industries andminerals was Rs. 8,989 Crore

y 24.3% of the total outlay was allocated to industries.

y

The industrial growth rate was 5.9% per annum.


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Sixth Five Year Plan (1980-85)

y The main objective was to make optimum utilization of existing capacity ofindustrial production and to increase productivity.

y To make maximum use of the existing industrial capacity and increasedproductivity.

y To increase considerably the installed capacity of industries in the publicand private sectors not only to produce mass consumption goods but alsointermediary and capital goods.

y To pay attention to the development of capital goods industry in general andelectronic industry in particular.


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Contd..

y

To realize the importance of superior technique for industrialprogress, import of foreign technology and technical know-how.

y To develop industrially backward regions.

y Total expenditure on development of large scale industries was Rs.

14,790 Crore and Rs. 1,945 Crore on small scale industries.y 26.5% of total plan outlay was allocated for the industries.

y Growth rate of industrial production was 6.4% per annum.


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Seventh Five Year Plan (1985-90):

y The main aim was to increase the production of consumer goods.

y Adequate supply of consumer goods.

y Maximum use of existing productive capacity. Industries were

restructured to increase their production capacity.

y Those industries were developed more which met the rising demand of the

domestic market or were necessary for export.


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Contd..

y A suitable policy has been adopted to achieve self-sufficiency in theimportant industries.

y Labourers were given proper training.

y Special attention was paid on the development of electronics andcomputer industry.

y 23.7% of total plan outlay was allocated for the industries.



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Annual Plans (1990-92):

y Liberalisation: it refers to procedural simplification, removal ofrestrictions, delicensing and removal of unnecessary bureaucratichurdles.

y Privatization: It refers to opening the economy for privatization. Inprivatization, the areas earlier reserved for public sector public sector

were made open for private sector. The private sector was given the mainimportance.

y Globalisation: It refers to opening of the domestic economy for foreign

enterprises. Import duties were reduced.y The average annual growth rate was 4.4% per annum.


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8th Five Year Plan (1992-97):

y Private sector was given more importance.

y Earlier capital goods were given priority but during this plan allindustries were given equal importance.

y Foreign companies were assign important roley Modernisation of Industries was given importance.

y Protection given to the domestic industries has been reduced toincrease their efficiency.

y Some areas reserved for public sector were opened for the privatesector.

y 18.8% of total plan outlay was allocated for the industries.



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Ninth Five Year Plan (1997-2002)

y Private sector was given more importance. More areas were opened forthe private sector.

y Special efforts were made for setting up new industries in backward areas.

It was done to reduce regional imbalances.y More stress was given on attracting foreign investments. The domestic

economy was open for the foreign companies.

y Modernization and import of capital goods were considered important forimproving the efficiency of the industrial sector.


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Contd..

y Companies under MRTP Act were given various concessions. E.g. suchcompanies need not to take special permission formergers, diversification, expansion etc

y Licensing policy was liberalised.

y In some industries, foreign equity participation was increased to100%.

y Total expenditure on development of large scale industries was Rs.33,587 Crore and on the development of small scale industries wasRs. 8,384 Crores.

y Growth rate of industrial production was 5% per annum. (due toslower growth of the world economy)


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Tenth Five Year Plan (2002-07)

y The industrial sector will have to grow at over 10% to achieve the target of8% growth for GDP.

y Special emphasis is given for the infrastructure development, powergeneration, development of roads, railways, air-ports etc. it was thought thatrapid industrial growth can be achieved through improving the quality ofinfrastructure.

y Special concessions were extended to ready-made garment industry likeliberal import of capital goods; tax-concessions etc. were extended. Apparel-parks have been established to promote the same.

y To make the industry more competitive, R&D, modernization and technologicalup gradation activities have been emphasized.


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0.00%

1.00%

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3.00%

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9.00%

10.00%

1st fiveyearplan

2nd fiveyearplan

3rd fiveyearplan

oneyearplans

4th fiveyearplan

5th fiveyearplan

6th fiveyearplan

7th fiveyearplan

annualplans

8th fiveyearplan

9th fiveyearplan

10thfive

yearplan

Indian Industrial Growth rate

Growth rate p.a.


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Achievements

y Growth Rate of Industrial Production

y Strong Industrial Base

y Modernisation

y Development of the Public Sector

y Building up of the Infrastructure

y Increasing Share of Industries in National Income & Export

y Increase in Foreign Collaborationy Increase in Industrial Production


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Weakness

y Unregulated Increase in the Industrial Production

y Excessive Capacity

y Much Increase in Monopoly Power

y Capital Investment in Low Priority Industries

y Inefficient performance of the Public Sector

y Growth of Regional Imbalance

y Less Development of the Small Scale Industriesy Industrial Sickness


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dbs- large scale industry analysis-1

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