Role of the State in Industrial Development
Role of the State in Industrial Development
Lack of capital with the private entrepreneurs.
The requirement of capital for diversified industrial growth far exceeded its availability in the private sector.
The government was to undertake industrial investment through PSUs.
Private investors lacked incentives.
Industrial Policy Resolution–1956
IPR (Industrial Policy Resolution) – 1956
A.Industries were classified into three categories
i. Enterprises that would be established and developed by public sector
ii. Those which could be established both as private and public sector enterprises.
iii. All industries established and developed by private sector
B. Industrial licensing
i.Licensing policy of the government was to promote regional equality.
ii.Private entrepreneurs were expected to establish industry in backward regions of the country
iii. License were liberally issued for the backward regions compared to the relatively developed regions of the country
Focus on development of Small Scale Industry before 1990
Development of SSI (Small Scale Industry)
Growth of small scale industry is to foster the goals of employment and equity
SSI is generally considered to be labour-intensive,
SSI contributes to equality of growth and development across the different regions of the country.
TRADE POLICY of India before 1990
In the first seven plans, trade was characterized by what is commonly called an inward looking trade strategy, this strategy is called import substitution.
Its main objective was to save foreign exchange by encouraging domestic production of such goods which could be mported from rest of the world. The Government protected the domestic industries from competition through imposition of tariffs and quotas,.
• India gave a high priority to the policy of import substitution.
• Heavy tariffs on imports
• Import quotas implied a maximum limit on the import of a commodity by a domestic producer.
• Excessive regulations for obtaining a license came to be called as permit license raj.
