Economic policies

Economic policy of 1948

Nehru was fascinated by the Soviet Union's Piatiletka or 5-year plans. But he wrote after a visit there in the 1 !"s that 'the hu#an costs are unplayable'. $ believer in the '#i%ed econo#y' of &arold 'aski and influenced by the (abian Society) Nehru wished the econo#y of *ndia to be partially capitalist) but with the state occupyin+ a lar+e role) especially in the commanding heights of the econo#y. ,he -overn#ent of *ndia set out in their .esolution dated / $pril) 1 01 the policy which they proposed to pursue in the industrial field. ,he .esolution e#phasi2ed the i#portance to the econo#y of securin+ a continuous increase in production and its e3uitable distribution) and pointed out that the State #ust play of pro+ressively active role in the develop#ent of *ndustries. *t laid down that besides ar#s and a##unition) ato#ic ener+y and railway transport) which would be the #onopoly of the 4entral -overn#ent) the State would be e%clusively responsible for the establish#ent of new undertakin+s in si% basic industries-e%cept where) in the national interest) the State itself found it necessary to secure the cooperation of private enterprise. ,he rest of the industrial field was left open to private enterprise thou+h it was #ade clear that the State would also pro+ressively participate in this field. !. 5i+ht years have passed since this declaration on industrial policy. ,hese ei+ht years have witnessed #any i#portant chan+es and develop#ents in *ndia. ,he constitution of *ndia has been enacted) +uaranteein+ certain (unda#ental .i+hts and enunciatin+ 6irective Principles of State Policy. Plannin+ has proceeded on an or+ani2ed basis) and the (irst (ive 7ear Plan has recently been co#pleted. Parlia#ent has accepted the socialist pattern of society as the ob8ective of social and econo#ic policy. ,hese i#portant develop#ents necessitate a fresh state#ent of industrial policy) #ore particularly as the Second (ive 7ear Plan will soon be placed before the country. ,his policy #ust be +overned by the principles laid down in the 4onstitution) the ob8ective of socialis#) and the e%perience +ained durin+ these years.

9. ,he 4onstitution of *ndia) in its prea#ble) has declared that it ai#s at securin+ for all its citi2ens: ; <US,*45) Social) econo#ic and political= '*B5.,7 of thou+ht) e%pression) belief) faith and worship= 5>U$'*,7 of status and opportunity= and to pro#ote a#on+ the# all= (.$,5.N*,7 assurin+ the di+nity of the individual and the unity of the Nation? *n its 6irective Principles of State Policy) it is stated that;,he State shall strive to pro#ote the welfare of the people by securin+ and protectin+ as effectively as it #ay a social order in which 8ustice) social econo#ic and political) shall infor# all the institutions of the national life.? (urther that-;,he State shall) in particular) direct its policy towards securin+@aA that the citi2ens) #en and wo#en e3ually) have the ri+ht to an ade3uate #eans of livelihood= @bA that the ownership and control of the #aterial resources of the co##unity are so distributed as best to sub serve the co##on +ood= @cA that the operation of econo#ic syste# does not result in the concentration of wealth and #eans of production to the co##on detri#ent= @dA that there is e3ual pay for e3ual work for both #en and wo#en= @eA that the health and stren+th of workers) #en and wo#en) the tender a+e of children are not abused and that citi2ens are not forced by econo#ic necessity to enter vocations unsuited to their a+e or stren+th= @fA that childhood and youth are protected a+ainst e%ploitation and a+ainst #oral and #aterial abandon#ent.? 0. ,hese basic and +eneral principles were +iven a #ore precise direction when Parlia#ent accepted in 6ece#ber) 1 50) the socialistic pattern of society as the ob8ective of social and econo#ic policy.*ndustrial policy) as other policies) #ust therefore) be +overned by these principles and directions

Economic policy of 1956

,he concept of industrial policy is co#prehensive and it covers all those procedure) principles) policies rules and re+ulation which control the industrial under takin+ of a country and shape the pattern of industriali2ation it incorporate fiscal and #onetary policies)labour policy and +overn#ent attitude not only towards e%ternal assistance but the public and private sector also. Since the adoption 1 01 resolution si+nificant develop#ent took place in *ndia. 5cono#ic plannin+ had proceeded on or+ani2ed basis and the 1st five year plan had been co#pleted. @1 51-1 5/A Parlia#ent had accepted ;the socialist pattern of society as the basic ai# of social and econo#ic policy BB $ second industrial policy resolution was adopted in april 1 5/ replacin+ the resolution of 1 01.

Important provision of 1956 resolution were:@1A New classification of industries ,he resolution laid down three cate+ories which were a close rese#blance to the earlier classification Sc edule- ! *t includes those which were to be an e%clusive responsibility of the state Under schedule $ were listed 1C industries these are $r#s and $#unation)$to#aic ener+y) *ron and Steal ) heavy castin+ and heavy #achinery re3uired for iron and steel production for #inin+) for #achinery re3uired for iron and steel production for #inin+ )for #achine tool #anufacturer ) heavy electrical industry) air craft and air transport) railway transport) ship buildin+) telephone) tele+raph and wireless e3uip#ent) +eneration and distribution of electricity. Sc edule-" ,hose which were to be pro+ressively state own. but in which private enterprise would be e%pected only to supple#ent the effort of the state.

Under schedule b 1! industries were included. like other #inin+ industries alu#inu# and other #etals not included in schedule $) the che#ical industry) antibiotics and other essential dru+s)fertili2ers)sintechic rubber)carboini2ation of coal ) road and sea transport Sc edule-# $ll the re#ainin+ industry and their future develop#ent would in +eneral be left to the initiative and enterprise of the private sector. Under schedule 4 industries which consider of the rest had to fit into the fra#ework of social and econo#ic policy of the state and he sub8ected to control in ter#s of the industries act and other relevant le+islation. *n spite of this clear cut +roupin+ of industries under 9rd schedule these cate+ories were not water tide co#part#ents in appropriate case private unit #i+ht produce and ite# in cate+ory $ for #eetin+ the industries own re3uire#ent. or as by product further heavy industries in the public sector could obtain so#e of their re3uire#ent of hi+her co#ponents fro# the private sector beside this the state reserve the ri+ht to enter in the cate+ory 4. which would nor#ally be reserve for the private enterprises @!$ %air and non discriminatory treatment for private sector :*n order that the private sector #ay feel confident and function effetely. ,he state was encoura+ed to the develop#ent of the industries of private sector .in this develop#ent the #a8or sector were transport.power)and other services. the state would continue to faster institution to provide financial help to these industries and special assisience to be +iven to the or+ani2ation under corporative sector. @9AEncoura&ement to villa&e and small scale enterprise :,he state would support cotta+e and villa+e and s#all scale enterprise by districtin+ volu#e of production in a lar+e sector by differential ta%ation or by different subsidies. ,he state would concentrate on #easure desi+n to i#prove co#petitive stren+th of the s#all scale producer by constantly i#provin+ the techni3ue of production. @0A removin& re&ional disparities :,he resolution stressed the necessity of reducin+ the re+ional disparities in level of develop#ent in order that industriali2ation #ay benefit the country

as a whole. ,he resolution fully supported the idea that only by securin+ a balanced and 3uardinated develop#ent of the industrial and the a+ricultural econo#y in each re+ion. @5A !ttitude towards forei&n capital :,he +overn#ent reco+ni2e the need for securin+ the participation of forei+n capital and enterprise particularly as re+ards to industrial technical and knowled+e so as ,o faster the speed of the industriali2ation of the *ndian econo#y . ,he resolution #ade it clear that as a #a8or rule that as a #a8or rule the interest in ownership and effective control should always be *ndian hands .so we can say that while reco+ni2in+ the need for forei+n capital in the industriali2ation the need for forei+n capital in the industrli2ation of *ndian econo#y the +ovt instead upon the pro+ressive indiani2ation of forei+n concerns.

Economic policy of 19'(

,he *ndustrial 'icensin+ Policy of (ebruary 11) 1 C" had placed certain restrictions on undertakin+s belon+in+ to the lar+e industrial houses defined on the basis of assets e%ceedin+ to .s.95 crore. *n 1 C9) the definition of lar+e industrial houses for industrial licensin+ restrictions was adopted in confor#ity with that in the Donopolies and .estrictive ,rade Practices $ct @D.,P$A 1 / on the basis of assets e%ceedin+ .s.!" crore to provide #ore effective control on concentration of econo#ic power.. Preference would be +iven to s#all and #ediu# entrepreneurs over the lar+e industrial houses and forei+n co#panies in the settin+ up of new capacity. 4ooperatives) s#all and #ediu# entrepreneurs would also be encoura+ed to participate in the production of #ass consu#ption +oods. 5%e#ption fro# licensin+ provisions for substantial e%pansion and new undertakin+s of upto .s.1 crore by way of fi%ed assets in land) buildin+ and #achinery was specified thou+h for D.,P$ and forei+n co#panies this e%e#ption would not apply. 5%e#ption fro# licensin+ would also not apply to e%istin+ licensed or re+istered undertakin+s havin+ fi%ed assets e%ceedin+ .s.5 crore.

Economic policy of 19''

*n the 1 CC Policy State#ent it was noted that thou+h so#e ele#ents of the *ndustrial Policy .esolution of 1 5/ still re#ained valid) certain structural distortions had crept in the syste#. ,he new policies were hence directed towards re#ovin+ these distortions. *t provided for a closer interaction between the a+ricultural and industrial sectors) accorded the hi+hest priority to the +eneration and trans#ission of power and an e%haustive analysis of industrial products was #ade to identify products which are capable of bein+ produced in the s#all scale sector. ,he list of industries e%clusively reserved for the s#all scale sector was e%panded fro# 11" ite#s to #ore than 5"" ite#s. Special le+islation to protect cotta+e and household industries was also proposed to be introduced. *n order to secure balanced re+ional develop#ent it was decided that industrial licences would not be issued to new industrial units for location within certain li#its of lar+e #etropolitan cities havin+ a population of #ore than 1 #illion and urban areas with a population of #ore than 5 lakhs as per the 1 C1 census.

Economic policy of 198)

,he *ndustrial Policy State#ent of <uly 1 1") which is based as the *ndustrial Policy .esolution of 1 5/) spells out the followin+ socio-econo#ic ob8ectives: @iA Epti#u# utilisation of installed capacity= @iiA Da%i#u# production and achievin+ hi+her productivity= @iiiA &i+her e#ploy#ent +eneration= @ivA 4orrection of re+ional i#balances= @vA Stren+thenin+ of the a+ricultural base throu+h a+robased industries and pro#otion of opti#u# inter-sectoral relationship= @viA Pro#otion of e%port-oriented industries= @viiA Pro#otion of econo#ic federalis# throu+h e3uitable spread of invest#ent and dispersal of returns= and @viiiA 4onsu#er protection a+ainst hi+h prices and bad 3uality *ndustrial processes and technolo+ies ai#ed at opti#u# utilisation of ener+y or the e%ploitation of alternative sources of ener+y would be +iven special assistance) includin+ finance on concessional ter#s. Si#ilar benefits would be +iven to activities that contribute directly to the i#prove#ent of the environ#ent and reduce the deleterious effects on pollution of air and water

Economic policy of 1991

*+,I#- +".E#/I0ES Pandit <awaharlal Nehru laid the foundations of #odern *ndia. &is vision and deter#ination have left a lastin+ i#pression on every facet of national endeavour since *ndependence. *t is due to his initiative that *ndia now has a stron+ and diversified industrial base and is a #a8or industrial nation of the world. ,he +oals and ob8ectives set out for the nation by Pandit Nehru on the eve of *ndependence) na#ely) the rapid a+ricultural and industrial develop#ent of our country) rapid e%pansion of opportunities for +ainful e#ploy#ent) pro+ressive reduction of social and econo#ic disparities) re#oval of poverty and attain#ent of self-reliance re#ain as valid today as at the ti#e Pandit Nehru first set the# out before the nation. $ny industrial policy #ust contribute to the realisation of these +oals and ob8ectives at an accelerated pace. ,he present state#ent of industrial policy is inspired by these very concerns) and represents a renewed initiative towards consolidatin+ the +ains of national reconstruction at this crucial sta+e. !. *n 1 01) i##ediately after *ndependence) -overn#ent introduced the *ndustrial Policy .esolution. ,his outlined the approach to industrial +rowth and develop#ent. *t e#phasised the i#portance to the econo#y of securin+ a continuous increase in production and ensurin+ its e3uitable distribution. $fter the adoption of the 4onstitution and the socio-econo#ic +oals) the *ndustrial Policy was co#prehensively revised and adopted in 1 5/. ,o #eet new challen+es) fro# ti#e to ti#e) it was #odified throu+h state#ents in 1 C9) 1 CC and 1 1". 9. ,he *ndustrial Policy .esolution of 1 01 was followed by the *ndustrial Policy .esolution of

1 5/ which had as its ob8ective the acceleration of the rate of econo#ic +rowth and the speedin+ up of industrialisation as a #eans of achievin+ a socialist pattern of society. *n 1 5/) capital was scarce and the base of entrepreneurship not stron+ enou+h. &ence) the 1 5/ *ndustrial Policy .esolution +ave pri#acy to the role of the State to assu#e a predo#inant and direct responsibility for industrial develop#ent. 0. ,he *ndustrial Policy State#ent of 1 C9) inter alia) identified hi+hpriority industries where invest#ent fro# lar+e industrial houses and forei+n co#panies would be per#itted. 5.,he *ndustrial Policy State#ent of 1 CC laid e#phasis on decentralisation and on the role of s#all-scale) tiny and cotta+e industries. /. ,he *ndustrial Policy State#ent of 1 1" focussed attention on the need for pro#otin+ co#petition in the do#estic #arket) technolo+ical up+radation and #odernisation. ,he policy laid the foundation for an increasin+ly co#petitive e%port base and for encoura+in+ forei+n invest#ent in hi+htechnolo+y areas. ,his found e%pression in the Si%th (ive 7ear Plan which bore the distinct sta#p of S#t. *ndira -andhi. *t was S#t. *ndira -andhi who e#phasised the need for productivity to be the central concern in all econo#ic and production activities. C. ,hese policies created a cli#ate for rapid industrial +rowth in the country. ,hus on the eve of the Seventh (ive 7ear Plan) a broad-based infrastructure had been built up. Basic industries had been established. $ hi+h de+ree of self-reliance in a lar+e nu#ber of ite#s - raw #aterials) inter#ediates) finished +oods - had been achieved. New +rowth centres of industrial activity had e#er+ed) as had a new +eneration of entrepreneurs. $ lar+e nu#ber of en+ineers) technicians and skilled workers had also been trained. 1. ,he Seventh Plan reco+nised the need to consolidate on these stren+ths and to take initiatives to prepare *ndian industry to respond effectively to the e#er+in+ challen+es. $ nu#ber of policy

and procedural chan+es were introduced in 1 15 and 1 1/ under the leadership of Shri .a8iv -andhi ai#ed at increasin+ productivity) reducin+ costs and i#provin+ 3uality. ,he accent was on openin+ the do#estic #arket to increased co#petition and readyin+ our industry to stand on its own in the face of international co#petition. ,he public sector was freed fro# a nu#ber of constraints and +iven a lar+er #easure of autono#y. ,he technolo+ical and #ana+erial #odernisation of industry was pursued as the key instru#ent for increasin+ productivity and i#provin+ our co#petitiveness in the world. ,he net result of all these chan+es was that *ndian industry +rew by an i#pressive avera+e annual +rowth rate of 1.5F in the Seventh Plan period -overn#ent will continue to visualise new hori2ons. ,he #a8or ob8ectives of the new industrial policy packa+e will be to build on the +ains already #ade) correct the distortions or weaknesses that #ay have crept in) #aintain a sustained +rowth in productivity and +ainful e#ploy#ent and attain international co#petitiveness. ,he pursuit of these ob8ectives will be te#pered by the need to preserve the environ#ent and ensure the efficient use of available resources. $ll sectors of industry whether s#all) #ediu# or lar+e) belon+in+ to the public) private or cooperative sector will be encoura+ed to +row and i#prove on their past perfor#ance. 11. -overn#entBs policy will be continuity with chan+e. 1 . *n pursuit of the above ob8ectives) -overn#ent have decided to take a series of initiatives in respect of the policies relatin+ to the followin+ areas. $. *ndustrial 'icensin+. B. (orei+n *nvest#ent. 4. (orei+n ,echnolo+y $+ree#ents. 6. Public Sector Policy. 5. D.,P $ct.