Q) Each student will choose a public macro policy that they will critique

(15 marks and Min 1000 words). (Note: policy must be a comparative
between UPA and NDA government)
Indian Industrial Policies
At the time of Independence, the Indian economy was facing severe problems of
illiteracy, poverty, low per capita income, industrial backwardness, and unemployment.
After India attained its Independence in 1947, a sincere effort was made to begin an
era of industrial development. The government adopted rules and regulations for the
various industries. This industrial policy introduction proved to be the turning point in
Indian Industrial history.
The Industrial Policy specifies the relevant roles of the public, private, joint and co-
operative sectors; small, medium and large scale industries. It emphasises the
national significances and the financial development strategy. It also explains the
Government’s policy towards industries, their establishment, functioning, progress
and management; foreign capital and technology, labour policy, and tariff policy.
The Industrial Policy of India has determined the pattern of financial and industrial
development of the economy.
Industrial policy is a document that sets the tone in implementing, promoting the
regulatory roles of the government. It was an effort to expand the industrialization and
uplift the economy to its deserved heights. It signified the involvement of the Indian
government in the development of the industrial sector. When India’s industrial policy
chronicle is reviewed, it is found that the country has mainly followed three regimes
after independence. These are the planned or controlled period till the end of the
1970s, the limited liberalization period of the 1980s and the post-reform period
beginning in early 1990s. It is seen that the performance of the industrial sector as a
whole coupled with the manufacturing sector has witnessed substantial growth in
terms of output after the 1980s, which further stabilized in the 1990s. However,
mining and quarrying as well as electricity, gas and water supply sectors of industry
have decelerated in the post-reform period.

Period Features Details

1947~1965 Emphasis on heavy and
chemical industries
Promoting rapid
industrialization aimed at
the development of basic
industries Focusing
investment on steel,
machinery, heavychemical
and fertilizer industries.
The oversized public
sector, import control and
import substitution
industrialization
 1965-1980 Agricultural development Emphasis on agriculture
and the rise of populism resulting from political
instability, droughts and
uncertainty of U.S. aid
Adoption of new
agricultural strategy
(Green Revolution)
Economic concentration
control, protection for
small businesses and
nationalization policies
Competitiveness of
domestic industries
reduced by excessive
regulations and
protectionism
1980-1990 Economic liberalization Relaxation of regulations
to increase industrial
competitiveness Shift
from physical control to
financial control
Implemented import
liberalization under IMF
assistance in 1981
Increased efficiency of
state-owned companies;
limited effects of relaxed
regulations
1991- Present New economic era Second foreign currency
crisis in 1991; IMF
assistance Drastic
relaxation of regulations;
sales of shares of state-
owned companies Sharp
easing of regulations on
foreign investors

UPA I UPA II NDA

Overall GDP Growth % 8.9% 7.2% 7.3%

Industry GDP Growth % 10.3 6.4 7.1

Relatively high economic growth before the rise of UPA

The first period from 1947 to 1965 was a time when India pursued the development
of heavy and chemical industries. Upon considering ways to develop the economy of
his country which faced a shortage of capital, Prime Minister Jawaharlal Nehru
(1947-64) decided to adopt the USSR model of economic development. According to
this model, increasing the production of capital goods─at the expense of present
consumption─is necessary to accelerate economic growth. As a result, India focused
on investing in heavy and chemical industries rather than consumer goods
production during this period. Nehru’s government also restricted imports to protect
domestic manufacturers. However, these policies could not be continued for a
number of reasons, including political instability, droughts and uncertainty of U.S.
aid, following Nehru’s death in 1964. Starting in 1965, India invested its efforts in
the Green Revolution which focused on increasing agricultural productivity to solve
the food shortage problem. The government also began to adopt industrial policies
that protected small businesses─a shift from the policies under Nehru which had
been criticized for the excessive focus on large companies and heavy chemical
industries. These efforts achieved some success. However, excessive government
regulation of industry and economy continued, resulting in the decline of the overall
competitiveness of the domestic economy.
Unsatisfactory execution of the infrastructure investment policy
When the UPA government was formed in 2004, it inherited numerous infrastructure
projects from the previous administration under the National Democratic Alliance
(NDA). Most of them, however, have been either delayed or discontinued for a
number of reasons by 2012. India’s leading road construction project, the Golden
Quadrilateral Highway which connects Delhi, Mumbai, Kolkata and Chennai, had
been already 75% complete under the NDA government. However the UPA
government failed to complete it while they were in power for five years.
Large-scale projects delayed by constantly changing industrial policy
The Indian government drew up and announced a national steel industry
development policy to ensure a smooth supply of steel products necessary for
industrial development. However, the proclaimed goals have not been reached
repeatedly. According to the most recent version of the policy announced in 2012,
India plans to produce 145 million tons of steel products by 2015, but the recent
global economic slowdown casts doubt on whether the goal can be achieved. The
reason the steel production plans keep going awry is the insufficient land for steel
plants and inadequate supply of iron ore used in steel production.
To summarize, it can be reviewed that economy of country depends on
industrialization. Industrial policy is meant for all those principles, rules, regulations,
and procedures concerning the rate of growth, the ownership, location pattern, and
functions of industrial undertaking in the country in way to industrialization.
Deregulation, competitive efficiency and globalization are three major factors of new
industrial policy. It is well established that Indian economy is a vibrant economy that
exhibit remarkable potential of growth. Globalization, liberalization and privatization
are major strategic mandates for economic policies. Market oriented reforms are
sustainable and are gaining acceptance with resistance to privatization going down
due to the benefits like improved efficiency through target oriented management
and disposition of public funds into social and physical infrastructure of the nation.

Q) Elaborate on the ideas learnt and not learnt in Economics.

Solution:- The lectures started with the idea of regression which was very insightful.
And then we started with micro economics. While learning concept of demand we
understood how important responsiveness was and understood the idea of elasticity
of demand. In concept of production we learned about the law of production i.e.
short term and long term. We covered Laws of return to scale and law of return to
factor economies of scale. Then we studied the cost analysis (Cost of production)
and covered short term-long term cost. We also covered economies of scale in it. In
revenue analysis we studied perfect and imperfect competition. And towards the end
we did market analysis and studied concepts like monopoly, monopolistic
competition and oligopoly. In macro idea of Keynesian economics was very
interesting. We studied about nation al income, Business cycle, Price changes
(Inflation). IS-LM model was very insightful. And above all the examples discussed
about India and the rest of the world helped to understand the concept more clearly.
Would have definitely liked to learn more about macro economics and how world
bank/IMF play important role in world development.