Journey of India’s Industrial Policy from 1948 – 1991


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Journey of India’s Industrial Policy from 1948 – 1991

 

Introduction

 

In a mixed economy the industrial policy of the government reflects the thinking of the community on the spheres earmarked for the public sector and the private sector. There was nothing like an Industrial Policy in India in the pre-independence period. At the outset of independence there was confusion and misconceptions in the minds of the industrialists about the fate of their businesses. It was necessary to remove the confusion and give a clear cut direction to the industries to invest and expand. Hence a conference of industrialists was held in February 1948 and based upon the deliberations in the conference the 1st industrial policy resolution was adopted by the parliament on 6th April 1948.

 

The main provisions of the IPR April 1948

 

The industries were divided in to four categories as follows:

 

  1. Exclusive Monopoly of the State :

 

It included three industries namely the production of arms and ammunitions, production and control of atomic energy and railway transport. The private sector would not get any entry in these three industries.

 

  1. State Initiative

 

This sector included six industries namely Coal, Iron n Steel, Aircraft Manufacture, Shipbuilding, Manufacture of telephone, Telegraph and wireless apparatus and mineral oil. New units in these six industries would be setup by the state but the existing units would get a life of 10 years after which the government would take final decision in respect of them.

 

  1. Government Control

 

This category included 18 industries such as Automobiles, Heavy Chemicals, Heavy Machinery, Machine Tools, and Fertilizers etc. These industries would continue to be in the private sector but they will be subject to an extensive control by the government.

 

Thus a clear cut demarcation line was drawn between the private sector and the public sector. That gave a confidence to the private sector.

 

 

2nd Industrial Policy of Sep 1956

 

After the 1st resolution was passed, two important developments took place

 

  1. The Indian Constitution was passed conferring the right to property on the people.
  2. The parliament adopted resolution declaring “Socialistic Pattern of Society “as our goal.

 

It was necessary to pass the 2nd resolution in the light of these two developments, besides the industries in the 2nd category which were in the private sector were given a lease of ten years from 1948. It was necessary to take a final decision in respect of them before 1958; hence the 2nd IPR was passed in Sep 1956.

 

The objectives of the 1956 resolution:

 

  1. To accelerate the pace of Industrialization by creating an appropriate atmosphere
  2. To develop the heavy industries including machine making industries
  3. To expand the public sector in conformity with the goal of the socialistic pattern of society.
  4. To reduce inequalities in the distribution of incomes and wealth by providing more employment opportunities.
  5. To prevent the growth of monopolies.

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