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

 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

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

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

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 policy1991came into existence

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

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)

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

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