Five Year Plans and Industrial Growth in India:

Pre Reforms period--1950-90

Nikhat Khalid
M.A. (Economics)
Department of Economics
Panjab University Chandigarh

India became independent of British rule after about 300 years on August
15, 1947. Politically it became a self-governing, sovereign nation but its
economy was in a bad shape at the eve of freedom. Almost 85% of Indias
population was dependent on agriculture. Agriculture sector was not allowed to
grow during the British Rule. Productivity was stagnant rather deteriorating.
The total increase in agriculture output was just 0.5% per annum before
independence. Lack of fertilizers, inferior quality of seeds and less use of
modern technology were also responsible for the murky state of agriculture.
During the British rule no importance was given to the development of
Industries. The British had reduced India to just an exporter of raw materials for
the major industries in Britain and turned it into a consumer of finished British
goods and products. Industry amounted to a very small percentage in Indias
economy. Only small scale businesses were permitted by the British colonial
government.

After the adoption of a new Constitution in January 1950, the

Government of India set up the Planning Commission in March 1950 to assess
the countrys material, capital and human resources and to formulate a plan for
their effective and balanced utilization. India made Five-Year Plans (FYPs) as
central to its integrated national economic programmes. The Plans were
launched with an objective to maximise the national income, rapid
industrialization, provide employment and achieve self-sufficiency. The central
purpose was to develop the country, raise the standard of living and opening out
more opportunities to people. This paper is an attempt to understand the
industrial growth in India under the Five Year Plans during the pre-Reforms
period of 1950 to 1990.

First Five Year Plan (1951 to 1956)

India launched its First Five Year Plan in 1951. The Plan was important
because it was to play a great role in launching Indian development after the

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Independence. Thus, it not only strongly supported agriculture production; it
also focussed on the industrialization of the country. With the launch of this
Plan, India also sought to build a particular system of mixed economy, with a
great role for the public sector, as well as a growing private sector.

On the eve of the First Five Year Plan, the industrial development in India
was confined largely to the consumer goods sector, the important industries
being cotton textile, sugar, salt, soap, leather goods and paper. Thus the
industrial structure in India exhibited the features, of an undeveloped economy.
The goal on the Industrial front was to make better utilisation of existing
capacity and to go in for some renovation and modernisation. With an overall
increase of 38% in industrial production during 1st plan, important heavy
industries were also set up in the public sector.

Industrial development in the First Five Years Plan:

Though predominantly devoted to agriculture, First Plan also made

efforts to lay the foundation of future industrial development in India. In this
Plan only 5% of the total plan expenditure was made on industries. Of this, Rs.
74 crore was on large industries in public sector whereas Rs. 43 crore was spent
on small industries. As a result industrial production increased at the rate of 6.68
per cent per annum. The production of capital goods increased by about 70 per
cent while the production of consumer goods was recorded to be 34 per cent.

Major industries set up in the First Plan period included Sindri Fertilizer
Factory, Chittaranjan Locomotive Factory, Indian Telephone Industries, Integral
Coach Factory, Cable Factory and Penicillin Factory, Hindustan Machine Tool,
UP Cement, and Bihar Superphosphate Factory. Apart from these, industries
were set up to manufacture Intermediate products like coal, cement, steel,
power, alcohol, non-ferrous metals, and chemicals etc., but their production was
small as productive capacity was considerably below the requirements.

Total gross investment in fixed capital in the private sector during the
plan period was about Rs. 340 crores. The largest investment was in cotton
textile (Rs. 80 crores), petroleum refining (Rs. 45 crores), iron & steel (Rs. 49
crores) followed by heavy and light engineering industries (Rs. 25 crores),
chemical, fertilizer, pharmaceuticals, dyestuffs and plastics (Rs. 18 crores),
paper and paper board (Rs. 11 crores), sugar (Rs. 15 crores), electric power
generation (Rs. 32 crores), jute textile (Rs. 15 crores) electric power generation

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(Rs. 32 crores), rayon and staple fibre (Rs. 8 crores) and others (Rs. 27 crores).
Electric power generation involved an expenditure of Rs. 16 crores which had
generated 1,76,000 KW additional electric power during the plan period.MN

During the Plan period, the village and small industries sector, production
of handloom increased from 742 million yards in 1950-51 to 1354 million yards
in 1954-55. Four Regional Small Industries Service Institutes with a large
number of branch units were set up to provide technical services, advice and
assistance. Twelve State Finance Corporations were also established.

To give a new direction to industrial sector, Government of India

announced a new Industrial Policy. This policy not only directed Indias
industrial growth but also worked for a long time as its guiding light.

Industrial Policy Resolution of 1956

In April 1956 Indian Parliament passed a resolution as Countrys first

comprehensive statement on industrial development. According to this
resolution the objective of the social and economic policy in India was the
establishment of a socialistic pattern of society. It provided more powers to the
governmental machinery and laid down three categories of industries. These
were:

(a) Schedule A: those industries which were to be an exclusive responsibility

of the state.

(b) Schedule B: those which were to be progressively state-owned and in

which the state would generally set up new enterprises, but in which private
enterprise would be expected only to supplement the effort of the state; and

(c) Schedule C: all the remaining industries and their future development
would, in general be left to the initiative and enterprise of the private sector.

The Second Five Year Plan (1956 to 1961)

Launched in 1956, Second FYP accorded top priority to industrialisation.

Emphasis was to set up Basic and Heavy Industries so as to establish a strong
base for rapid industrialisation, self-reliance, technological development.
During this period some Public Sector Steel Plants were established .
Hydroelectric power projects and five steel plants at Bhilai, Durgapur, and
Rourkela were established with the help of Soviet Union, Britain (the U.K) and

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West Germany respectively. Coal production was increased. More railway lines
were added in the North East. During this Plan period, Tata Institute of
Fundamental Research and Atomic Energy Commission (AEC) were
established as research institutes. The investment in the public sector was Rs.
870 crore. During the Second Plan Industrial Production Index in the country
rose from 139 in 1955-56 to 194 in 1960-61.

Industrial Development in Second Five Years Plan:

In the Second Plan 24% of the total plan was directed to industrial
development. On large scale industries total expenditure was recorded to be Rs.
938 crore and on small scale industries it was Rs. 187 crore. Industrial
production gathered momentum during 1959 with the utilisation of new
capacity and better availability of raw materials. Industrial Production Index
scaled new heights. The production of steel reached 3.5 million tonnes and
finished steel 2.2 million tonnes. In coal sector the production was recorded
54.6 million tonnes. Production of nitrogenous fertilizer reached 1,80,000
tonnes. The organised industries in the private sector like textiles, automobiles,
cement, paper, sugar etc. showed satisfactory progress. Major industrial projects
laid in this period included Hirakud Smeltor of the Indian Aluminium Company,
Polythene Plant of Alkali and Chemical Corporation, Soda Ash plant of
Dharangadhra, Tata Locomotive and Engineering Company, etc. Ammonium
Chloride Plant of new Central Jute Mills, Varanasi, Sodium Hydro-sulphite,
Plant of J.K. A number of projects with foreign capital participation were
approved. They were Aluminium Project (Kaiser Birla Collaboration), Premier
Tyres (Dayton Rubber Co. and National Rubber Manufacturer), Synthetic
Rubber project (Kila Chand Fire Stone Collaboration). During the Plan period
petroleum was discovered in the Sibsagar area in Assam and in the Cambay-
Aukleshwar area in Gujarat as a result of the explorations organised by ONGC.
The coal production was recorded to be 47.03 million tonnes in 1959 and total
expenditure on mineral development during 1956-60 was about Rs. 97 crores.

In the small scale sector, production of the handloom cloth in 1959-60

was recorded 1,873 million yards. The production of Khadi was placed at about
46 million square yards. The additional employment provided by traditional
khadi was estimated to be about 83,000 spinners, 3,000 weavers and 5,000
others engaged in ancillary jobs like manufacturing of charkhas. The Industrial
Extension Service comprising 15 small industries service institutesone in

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each state and one at Delhi and 39 extension centres were set up till the end of
March, 1960.

Third Five Year Plan (1961 to 1966)

Third Plan aimed at beginning of long term perspective planning as an

instalment to achieve the objective of an Integrated Growth of Industry and
Agriculture. The basic strategy was the development of public sector and heavy
industries so as to attain self sustaining growth. Third Plan placed great
emphasis on building up the capital goods industries and basic industries. As a
result the Industrial Structure built up over these plans was heavily biased in
favour of these industries. The total proposed outlay for the Third Plan was Rs.
11,600 crore, of which Rs. 7,500 crore was for the public sector. The actual
public sector outlay was however, Rs. 8,577 crore.

Three Annual Plans (1966-69)

In view of the severe drought conditions during 1966-, there was a great
setback to the economic and industrial development of the Country. Over and
above severe shortfalls in the planned production during the Third Plan forced
the Government of India to postpone the formulation and implementation of the
Fourth Five Year Plan and to adopt Annual Plans.

Industrial Development in Third Five Years Plan:

In the Third Five Year Plan, total expenditure on large scale industries
was Rs. 1726 crore. In the private sector, the expenditure was Rs. 1,300 crore,
while Rs. 241 crore were spent on the development of small industries.

The increase in industrial output considering 1960 as base year stood at

8.2 per cent in 1961-62; 9.6 per cent in 1962-63; 9.2 per cent in 1963-64 and 8.3
per cent in 1964-65. Thereafter, there was sharp deterioration in the rate of
growth of output. It fell to 4.3 per cent in 1965-66. The capital goods industries
registered the highest annual growth rate of 19.7 per cent. In the case of
consumer goods industries, it was recorded to the extent of 5.0 per cent per
annum which was the highest rate ever achieved during the plan periods.
However, the share of consumer goods industries in the manufacturing sector
was 38 per cent ending 1965 against its share of 68 per cent in 1951.

The highest rate of growth of industrial investment was due to: (i)
Encouraging government policy of heavy investments in new industries; (ii)

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Development expenditure generated demand for consumer goods; (iii) Rapid
growth of agricultural output i.e. better provision of raw material; and (iv) Inter-
industry linkages lead to make investments in heavy industries.

The production of some basic industries like Aluminium, Petroleum

products, Automobiles, Electric transformers, Machine tools, Textile machinery
and Power driven pumps, were almost satisfactory, whereas, electric machinery
showed 71 per cent increase in production while 82 per cent in non-electrical
machinery 57 per cent in metal products and 48 per cent in petroleum products.

The hostilities of 1962 and 1965, the shortage of raw materials and
various other reasons slowed down the progress, which was quite encouraging
during the first two years of the plan. The production of handloom and power
loom increased from 2013 million in 1960 to 3056 million metres in 1965. The
total share in production of cloth was 30.4 per cent in 1960 and 40.0 per cent in
1965. The value of exports of handloom fabrics and products increased from Rs.
5 crores to about Rs. 12.6 crores over the same period. In industrial estate, about
8000 sheds were allotted with employment opportunities for about 70,000
persons. Similarly, production of all varieties of khadi including woolen and silk
increased from 53.76 million sq. metres in 1960-61 to 84.85 million sq. metres
in 1965-66. The industry provided employment of nearly 2 million persons
mostly part time including about 1.7 million spinners. During this period, the
production of coir fibre increased from 1,52,000 ne to 1,62,000 tonnes, coir
yarn from 1,42,000 tonnes to 1,43,000 tonnes, coir products from 24,200 tonnes
to 24,500 tonnes and coir rope from 14,250 tonnes to 15,000 tonnes.

Fourth Five Year Plan (1969-74)

In the Fourth Plan, as against the planned increase of 8% in industrial

production per annum, actual rate achieved was only around 5% per annum.
Nearly 75% of the total investment was in the core sector, viz., Iron and Steel,
Non-Ferrous metals, Fertilisers, Petrochemicals, Coal and Iron Ore etc. There
were widespread shortage of power and Agricultural Raw Materials for
Industry. Industrial production during this plan increased only by 4% per annum
against the target of 8-10% per annum. Sluggishness of demand, shortage of
basic inputs, labour unrest and low capacity utilisation were mainly responsible
for poor performance of the industrial sector during this plan. It was during this
Plan period that the country was fighting with population explosion, increased
unemployment, poverty and a shackling economy. In addition, the situation in

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East Pakistan (now independent Bangladesh) was becoming dire as the Indo-
Pakistani War of 1971 and Bangladesh Liberation took place. India was reeling
under pressure to tackle the problem of Bangladeshi refugees. Nationalization
of 14 major Indian Banks was a key event during this Plan that boosted the
confidence of the people in banking system and started greater mobilization of
private savings into banking system.

Industrial Development in Fourth Five years Plan:

In the 4th Plan a sum of Rs. 2864 crore were spent on the large industries
and minerals. The outlay on the development of small scale industries was
recorded to be Rs. 234 crore. During the Plan period, the growth rate of
industrial production declined from 6.8 per cent in 1969-70 to 3.7 per cent in
1970-71 but increased to 4.5 per cent in 1971-72 and at about 5 per cent during
1972-73. An investment of approximate Rs. 5,200 crores in organised industry
and mining Rs. 2,800 crores in the public sector and Rs. 2,400 crores in private
and cooperative sector was made.

The capital goods industries showed only 5.9 per cent growth rate against
its target of 17.1 per cent. Consumer goods industries like sugar, soap and
cotton recorded normal growth. The other industries i.e. machine tools, cotton
textile machinery, nitrogenous fertilizer, agricultural tractors and petroleum
products showed a comparatively high growth rate. Out of Rs. 290 crores
allotted in public sector for the development of different small industries, Rs.
250 crores were spent. The advances by the State Financial Corporation to small
industries increased from Rs. 7 crores in 1969-70 to Rs. 20 crores in 1971-72.
During the period 1969-72, the National Small Industries Corporation supplied
machines on hire-purchase terms valued at Rs. 20.81 crores including Rs. 10.7
crores in 1971-72. The production and export of certain industries considerably
increased.

The number of units registered on voluntary basis with the Industries

Directorates of the States and Union Territories increased from nearly 2 lacs in
1969 to about 3.18 lacs in 1972 and total employment in these units was
estimated at 41.4 lac persons. A further list of 77 items was added to those
reserved for exclusive development in the small sector bringing total to 124. A
total of 183 credit institutions including all the major commercial and co-
operative banks and the State Financial Corporations joined the scheme up to
the end of 1972. The value of purchases from small industries by the Directorate

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General of Supplies and Disposals rose from Rs. 30 crores in 1968-69 to Rs. 86
crores in 1971-72. The production of all varieties of khadi industries increased
from about 60 million square metres in 1968-69 to 77.2 million square metres in
1972-73.

Fifth Five Year Plan (1974-1979)

The fifth plan focussed on rapid development of the core sector covering
steel, machine building, power, coal, petroleum products arid export oriented
industries and consumer goods industries such as sugar; drugs textiles etc. The
industrial growth was slow despite the introduction of several incentives to
private sector (delicensing of 21 items). Following were the reasons for slow
growth: Imbalances in production of Basic Industrial Inputs Unremunerative
prices and Industrial unrest. The achieved growth rate in the industrial
production during the plan was around 5.2% per annum. Thus structure of
industrial development was promoted and nurtured in the 4th and 5th plans with
minor changes here and there.

Fifth Plan aimed at increasing the employment level, reducing poverty,

and attaining self-reliance. The twin objectives of poverty eradication and
attainment of self reliance were inculcated in the fifth plan. A national
programmes for minimum needs including elementary education, safe drinking
water, health care, shelter for the landless was included.

Total Plan Outlay was Rs. 39303 crores but the outlay for the next two
years was reckoned at Rs 19902 crores as against the estimate for the first three
years of the Plan which aggregated to Rs 19401 crores. Allocation included:
Central sector Rs. 19954,10 crores: States--18265.08: Union Territories--
634.06: Hill and Tribal Areas-- Rs. 450.00 crores.

Industrial Development in Fifth Five Years Plan:

During the fifth five years plan a sum of Rs. 9581 crore were spent on
industrial development which accounted for 25% of the total plan expenditure.
Impressive and considerable advancement could be made in the field of
industry, though its growth rate was uniform. After a steady growth of about 8
per cent during the initial period of 14 years, there was fluctuating trend, even
approaching near stagnancy in 1966-68 and clinching to a level of 9.5 per cent
in 1976-77 and dipping to 1.4 per cent in 1979-80.

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 There were many reasons for fluctuations as early period was largely
based on import substitution and the development of the capital market.
Thereafter, during the course of changed national and international
environment, India could attain hardly an average growth rate of about 4 per
cent per annum (1970-71 to 1979-80). The entire credit goes to public sector as
it took keen initiative for the development of many fields like steel, non-ferrous
metals, petroleum, coal fertilizers and heavy engineering.

The total investment in the central public sector in 1979 was amounting
to Rs. 1,56,00 crores of which Rs. 1,28,00 crores approximately were invested
in industrial and mining undertakings. The share of public sector in the net
domestic product in organised industry and mining moved up from 8 per cent in
1960-61 to 28.9 per cent in 1977-78.

During the period 1974-80, the estimated value of production registered a

growth rate of 6.8 per cent per annum. The gross value added at factor cost, rose
from Rs. 2800 crores in 1973-74 to Rs. 4100 crores in 1979-80 (at prices of
1970-71). The employment increased in village and khadi industries from 8.84
lacs in 1973-74 to 11.24 lacs and 18.21 lacs in 1979-80. Small industries
contribution to export was only Rs. 538 crores in 1973-74 which rose to Rs.
1050 crores in 1979-80. All traditional industries exported goods amounting to
Rs. 1175 crores in 1979-80 when it was hardly of Rs. 302 crores in 1973-74.

The number of persons employed were 61.50 lacs in small scale industry
during 1979-80 against its number of 52.10 lacs during 1973-74. In short,
various measures were taken to accelerate the rate of industrial growth. Twenty-
one industries were delicensed and 29 selected industries were permitted to
utilize their installed capacity without any limitation. These measures made
considerable impact on manufacturing exports.

Sixth Plan (1980-1985)

On the eve of the sixth plan, a stock-taking of the industrial progress

over the previous 35 years, showed that the industrial production increased by
almost 5 times and Industrial Structure had been widely diversified covering
broadly the entire range of consumer, intermediate and capital goods. The plan
provided for large outlays for five Industries, viz., Steel, Petroleum, Coal,
Fertilisers, Petro Chemicals. However, as in the earlier periods the growth was
slow due to transport and power bottlenecks, labour militancy and raw material
shortage.
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 The objectives of this Plan were stated as (i) To eliminate unemployment
and underemployment; (ii) To raise the standard of living of the poorest of
masses; (iii) To reduce disparities in income and wealth; (iv) To provide basic
needs of life such as drinking water, health care, roads in rural areas and
minimum services for those living in urban area; (v) To achieve self-reliance.

The outlay of the Sixth Plan totalled Rs. 1, 58,710 crore, of which Rs.
97,500 crore was for the public sector. The actual public sector expenditure
came to be Rs. 1, 10,967 crore. The plan was able to achieve most of its targets.
The average annual growth rate was around 5%. Food production increased to
151.5 MT. The growth in individual sectors was also satisfactory. Some of the
segments of the economy achieved self-reliance.

The plan paid special attention to the removal of poverty through rural
development programmes like Integrated Rural Development Programme
(IRDP), National Rural Employment Programme (NREP) and Rural Landless
Employment Guarantee Programme (RLEGP). According to the Planning
Commission, at the end of the plan 37% of population was below poverty line.

Industrial Development in Sixth Five Years Plan:

The Plan provided an outlay of Rs. 11,848 crores for industrial and
mineral projects in the central sector excluding coal and petroleum and Rs.
1,389 crores in state and union territories. Rs 15,182 crores were invested in the
private, corporate and cooperative sectors in mining and manufacturing, while
actual expenditure in public sector was Rs. 15,338 crores against its outlay of
Rs. 13,232 crores.

The actual growth rate achieved was 5.6 per cent against a target of 7.00
per cent per annum. The production of cement increased from 17.8 million
tonnes in 1979-80 to 30.1 million tonnes in 1984-85. During this period, the
production of Vanaspati increased from 626 to 920 thousand tonnes. The
production of iron ore increased from 39 million tons to 42.2 million tonnes.

The production of crude oil showed tremendous increase of about 150 per
cent. It increased from 11.77 million tons in 1979-80 to 28.99 million tonnes in
1984-85. The industries with higher weightage i.e. textile with weightage of
17.43 registered a growth rate of 0.8 per cent and engineering with a weight of
29.85 showed only 4.7 percent rise ending 1984-85. The share of manufacturing
sector in the net domestic product fell by 17.4 percent from 1979-80 to 1984-85.

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 The production ncreased from Rs. 33,538 crores during 1979-80 to Rs.
65730 crores during 1984-85 and export from Rs. 2,280.62 crores to Rs.
4557.56 crores over the same period at current prices. With regard to
employment, it increased from 233.72 lakh persons to 315 lakh persons. With
the manufacturing sector, this represented about 80 percent of the total industrial
employment. This sector plays an important role in the Indian economy by
providing employment opportunities and helping the country to earn foreign
exchange. In 1985-86, the export of handicrafts was worth Rs. 92.4 crores was
achieved. The All India Handloom and Handicrafts Board was reconstituted in
October 1984 to advise the Government on matters relating to development of
handlooms and handicraft.

Seventh Five Year Plan (1985-1990)

The Seventh Plan, with an outlay of Rs. 30,000 crore for the Industrial
Sector, re-emphasized the earlier objective of rapid economic growth with
social justice. The main features of industrial development during the Seventh
Plan, were: Adequate supply of consumer articles for mass consumption at
reasonable prices. Development of Industries with large domestic market and
also export potential to emerge as World leaders in them; and integrated
development of industries in general to achieve self reliance and high
employment generation. The average growth rate of Industry in the 7th plan was
8.5% per annum as against the target of 8% per annum. This sizeable growth
was due to a number of factors: Improvement in Performance of Infrastructure.
Higher Import of Capital Goods, Better utilisation of capacities, Import of
Technology, and Broad Branding of Products.

Industrial Development in Seventh Five Years Plan:

During the Seventh five years Plan, significant growth in industrial sector
was recorded i.e. 5.6 percent. Major industry showing such growth rates
included textile products, basic metals, alloys and metal products, electrical
machinery and appliances.

The Seventh Plan also witnessed a higher dose of liberalization measures

as: (1) raising the asset limit for exemption to companies from the purview of
MRTP Act; (2) exempting 83 industries under the MRTP Act for entry of
dominant industries, (3) grant of exemption from licensing for industrial units
with an investment of up to Rs. 50 crores in backward areas and Rs. 15 crores in
other areas on the basis of negative list and delicensing non-MRTP, non FERA
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companies for 31 Industry groups and MRTP/FERA companies in backward
area for 72 industry groups. (iii) Village and Small Industries:

During 1984-85 to 1989-90 the value of output increased at constant

prices, at a compound rate of 12.06 percent. However, the production of khadi,
village industries, handloom cloth and coir yarn and coir products fell short of
their respective target. Export of this sector increased at a compound rate of
26.57 per cent (Constant prices). The production of khadi cloth was 107.47
million Sq. metres in 1989-90 against its target of 180 million sq. metres. The
employment in Khadi was of 14.12 lakh persons in 1989-90 which is less than
the tax-get as well as employment of 14.58 lakh persons in 1984-85.

The employment in village industries was estimated at 32.14 lakh

persons. The value of output in village industries was of Rs. 1,101 crores at
constant prices and Rs. 1705 crores at current prices. In 1989-90, the production
of white fibre was stagnant, the production of brown fibre registered more than
55 percent increase. The production of white fibre and brown fibre was 1, 24,
900 tonnes and 64,600 tonnes against the respective level of 1, 24,800 tonnes
and 39,600 tonnes in 1984-85. During this period, the export of coir yarn and
other products increased from 8.36 lakh in 1984-85 to 11 lakh in 1989-90.
Similarly, the value of handicrafts has also registered an increase from Rs. 3500
crores in 1984-85 to Rs. 7,067 crores in 1989-90 (1984-85 Prices) and exports
from Rs. 1,700 crore to Rs. 6,400 crore over the same period. For the expansion
of small industries, credit facilities were extended amounting to Rs. 15,543
crore as ending March 1990 against Rs. 6,766 crores ending June 1985.

Conclusion

After its independence, India had to embark on economic growth. Pandit

Jawaharlal Nehru the first Prime Minister of India, impressed by Planned
development of Soviet Union, chose to implement the five year plans in India.
Entire development in every sector of Indian economy has been done through
five year plans. Industrial development of the country too has been done
through the five year plans.

Industrial growth rate in India has not been smooth over the period under
study. While there was a steady growth of grossly 8% during the first three
Plans from 1951 to 1966, thereafter Country witnessed a slow industrial growth

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of just 4.1% per annum. Period from 1965 to 1980 is regarded as a period of
regression and slow industrial growth. During this period production of mass
consumption goods suffered, the production of goods such as beverages,
cosmetics, refrigerators, cars etc increased.

The situation increased during 1980-1991 when the annual rate of growth
of Industry reached 7.8 percent. Reason for sluggish industrial growth in India
are many. For instance, most industries suffer from substantial underutilisation.
In fact level of capacity utilisation is 50-60 percent. There is lot of scope in
increasing net output of industry. Raw material shortages, substandard/worn out
machinery, demand recession, labour problems are also the reason s for slow
industrial growth. Moreover, a large number of industrial units suffer from
inefficient functioning. There are high costs of structure of the units sometimes
twice or thrice the international costs.

Industrial sector has failed to produce goods of mass consumption. Indian

industry has been producing goods for the elite consumption, which has caused
sluggishness in industrial growth. Industrial growth has failed to generate
employment significantly. The rate of growth of industrial labour force has been
less than 2 % per annum. Public sector enterprises have been performing very
poorly. To keep them alive, government has to pump lot of money, which is a
national loss.

There is sectoral imbalance in the industrial growth of the country.

Agriculture and infrastructure have failed to provide requisite support to the
industrial sector. Input and output relationship between various industries need
to be fine tuned.
Last but not the least, t here is a visible regional imbalance in
industrial growth. Industrial Development in India has remained confined to
Gujarat, Maharashtra, Tamil Nadu etc. , while vast areas of the country remain
devoid of industrial growth. Due to growing competition at the international
level, many industrial units run away from competitive cost effective
production, declaring themselves sick nits. This causes huge losses to the
countrys economy.

References:
1. Nayar, Baldev Raj (2001): Globalization and Nationalism: The Changing
Balance of India's Economic Policy, 19502000, New Delhi, Sage,
2. Agrawal, A N (1995). Indian Economy: Problems of development and
planning. pune: Wishwa Prakashan.
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3. Sthiti Das: Growth of Industrial Development under Five Years Plans,
available at, by
http://planningcommission.nic.in/plans/planrel/fiveyr/index1.
4. History of Planning in India - General Knowledge Today, See,
www.gktoday.in/blog/history-of-planning-in-india/
5. http://www.gktoday.in/blog/industrial-growth-in-india-during-five-year-
plans/
6. http://eaindustry.nic.in/handbk/chap001.pdf
7. http://www.ncert.nic.in/ncerts/textbook/textbook.htm?keec1=0-10

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