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Major Industrial Policies in India from 1947 to 1991

Major Industrial Policies in India from 1947 to 1991

Industrial Policy Resolution, 1948 (IPR 1948)

  • It showed significant continuity in thinking between the pre-independence and post-independence government.

On the basis of ownership, the industries were divided into four categories:

  • Industries solely under the control of the central government. It included arms and ammunitions, atomic energy and railways.
  • Mixed sector: Six industries viz. coal, iron and steel, aircraft manufacture, ship building, manufacture of telephone, telegraph and wireless apparatus (excluding radio) and mineral oils were put in this category.
  • The new production units in this sector were to be set up by the central or state governments but existing private undertakings were allowed to continue for 10 years after which the government was to review the situation.  Major Industrial Policies in India from 1947 to 1991
  • 18 industries were grouped into the third category. The government did not undertake the responsibility of developing these industries but considered them of such importance that their regulation and direction was necessary. Some of these industries were automobiles, heavy chemicals, fertilizers, heavy machinery, sugar, paper, cement etc.
  • All the industries not included in the above three sectors, were left open to the private sector.

IPR 1948 also recognized the importance of small and cottage industries as they are particularly suited for utilization of local resources and creation of employment opportunities.

The Industries Development and Regulation Act, 1951 (IDRA, 1951)

  • IDR Act 1951 was passed by the Parliament in the beginning of the First Five Year Plan.
  • Its main provision was the requirement of industrial licenses by all industries included in the schedule of the Act.
  • Out of about 70 industries included under the Act, only those units were required to follow the rule where capital employed was Rs. 1 lakh or more.
  • Even if the existing undertakings intended to expand their activities, prior permission of the government was needed.
  • Apart from granting licenses, the government was also empowered to set up an enquiry into the affairs of undertakings if they did not function satisfactorily and also to cancel the license if it was gained by giving wrong information or if the undertaking was not set up within the stipulated period.
  • The government could also take over the management and control of a unit not performing satisfactorily. The government also had control over the price distribution and supply of the products manufactured by these units.  Major Industrial Policies in India from 1947 to 1991
  • The rationale given for state intervention was that private enterprise may not be either willing or capable of investment in certain sectors, due to lack of resources or higher level of risk involved.

Industrial Policy Resolution, 1956 (IPR 1956)

  • IPR 1956 was adopted at the beginning of the Second Five Year Plan reiterating its intention to give a socialist direction to the economy.
  • It divided the industries into three categories.

Schedule-A

  • included 17 industries whose future development was to be the exclusive responsibility of the State. Four industries of the schedule viz. arms and ammunition, atomic energy, railway and air transport were to be government monopolies.
  • In the remaining 13 industries, new units were to be established by the State but exiting private units were allowed to subsist and expand.

Schedule-B

  • included 12 industries which were to be progressively State —owned and in which the State would therefore, generally take initiative in building new units, but in which private enterprise was also expected to supplement the effort of the State.

Schedule-C

  • included all the remaining industries and their future development was supposed to be undertaken by the private sector.  Major Industrial Policies in India from 1947 to 1991
  • Thus IPR 1956 considerably enlarged the area of operation of the public sector vis-à-vis IPR 1948 as the State acquired significant power in the operations of both Schedule A and Schedule B industries.

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