Industrial Policy And Public Administration

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Industrial Policy

The Industrial Policy in India was influenced by two important factors : 0 Acceptance of mixed economy as economic system o Development strategy adopted in our plans. Acceptance of mixed economy as an economic system. The growth of the idea of a mixed economy in India can be seen in the Constitution itself. In its Directive Principles of Policy, the Constitution of India states that the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political shall inform all the institutions of the national life. These basic and general principles were given a more precise definition when the Indian Parliament accepted in December 1954 a socialistic pattern of society as the objective of social and economic policy.

Characteristics Of The Socialist Pattern Of Society

The socialistic pattern of society was to be achieved within the democratic framework that the Constitution had provided. ‘In all other countries where a socialist State had captured power, it had become totalitarian. 

Development there will be no disparities between different regions of the country so that there will be no social or political tensions between different sections of the society. Concentration and centralisation of any shade do not have any place in the socialistic pattern of society. The concentration of economic power prevents equal distribution of national products and often leads to the growth of monopolistic power. Similarly, centralisation of decision-making power breeds vested interests, so that private gains come to command a premium over social gains. It provides special assistance to the weaker and downtrodden sections of the economy.

The provisions may include meeting the minimum needs of the weakest sections of the society and other measures that may assure minimum means of livelihood to the poorest sections of the society. In a socialistic pattern of society, social ownership of the means of production exists alongside private ownership. State-owned means of production are so used to promote social welfare: privately-owned means of production may serve private interest but within the norms laid down by the State; such interests invariably cannot be allowed to run counter to the social interests. The use of the privately owned means of production is effectively regulated by the State through the various instruments of economic policy, like fiscal, monetary and trade policies, etc.

Development strategy adopted in the plans: The development strategy adopted year plans (known as the Mahalanobis strategy of growth) had two components… emphasis on industrialisation, and +Emphasis on heavy goods industry believed that this type of strategy will help us to attain what may be called ‘self-sustained growth.

These two factors, by and large, influenced the formulation of industrial policy, in an earlier phase of development.

Industrial Policy Resolution 1956

The Industrial Policy followed in India during the earlier phase of development had been chalked out within the framework of the IPR, 1956. The roots of the IPR, 1956 can be traced back at least to a decade earlier. Immediately after Independence, it was considered desirable by the government to announce its attitude toward private capital and to define the scope of state participation in economic activity. This aimed at removing all uncertainties that would have worked as constraints on economic development. This announcement took the form of the Industrial Policy Resolution, 1948 (I.P.R. 1948). A number of important developments had taken place in India since adoption of the IPR, 1948.

  1. These necessitated a fresh statement on industrial policy. Among these developments the more important were as follows:
  2. The promulgation of the Constitution of India in 1950, which guaranteed certain Fundamental Rights and provided for Directive Principles of State Policy.”
  3. The completion of the First Five Year Plan and the commencement of the Second Plan; and
  4. Acceptance by the Parliament of the socialist pattern of society as the objective of social and economic policy.
  5. The Industrial Policy, as other policies, was, therefore, to be governed by these policies and directions.
  6. The IPR, 1956, had been known as the Economic Constitution of India. 
  7. The expansion of the public sector.
  8. The establishment of a large and growing cooperative sector.
  9. Encouragement to the diffusion of ownership and management in the private sector.

Main Features Of The IPR 1956

The main features of the IPR, 1956 were as follows :

  1. Industries were classified into three categories having regarding to the role which the state would play in each one of them.
  2. Emphasis on the role of cottage and small scale industries. 0 Provision of infrastructural facilities such as power, water, transport to backward areas to develop these areas. Emphasis on training and development of technical and managerial cadres at the supervisory levels. 
  3. Provision of improved living and working conditions to workers with a view to raising their efficiency.
  4. The basic framework of the IPR 1956 was followed with minor modifications till 1991. In 1991, the country embarked on economic reforms.
  5. The process of economic reforms began with the announcement of New Industrial Policy in the year 1991 itself.

The Industrial Policy 1991

Making a sharp departure from the Industrial Policy Resolution, 1956, the Government announced a New Industrial Policy on July 24, 1991. The basic philosophy of the new policy has been summed up as: ‘continuity with change’.

Objectives Of The Industrial Policy 1991

  1. to consolidate the strength’s built during the last four decades of economic planning and
  2. to build on the gains already made. 
  3. To correct the distortions or weaknesses that may have crept in the industrial structure as has developed over the last four decades. O To maintain sustained growth in t productivity and gainful employment.
  4. To attain international competitiveness.
  5. The pursuit of these objectives will temper by (a) the need to preserve the environment, and (b) the need to ensure the efficient use of available resources.

Check out these notes for Features Of The New Industrial Policy.

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