Trend In Exports And Imports
Sluggish growth in exports
In a number of years during the 1990s, exports grew at a very low rate. This was due to increasing competition in the international market on the one hand and the inability of the domestic industry to meet external competition by ensuring quality products, keeping to delivery schedule etc. on the other hand. The outbreak of the East-Asian crisis in mid-1997 compounded the problems for Indian exporters as there was a sharp depreciation in the external value of the currencies of this region. This made Indian exports uncompetitive in international markets as against the exports from countries belonging to the East-Asian region.
Anomalies in tariff structure
According to the Ninth Five Year Plan, there were anomalies in tariff structure leading to large-scale imports of second-hand machinery, basic materials and intermediate products. This adversely affected industrial growth in these sectors. In the case of the fertiliser sector and refineries, while the finished capital goods enjoyed a ‘zero’ rate of import duty, the domestic manufacturers were subject to taxes and duties and import duties on intermediates and components.
Contraction in Consumer Demand
There has been an acute contraction in consumer demand in the 1990s… Three distinct explanations can be offered to explain this contraction. First, the rural purchasing power has been severely affected by lower agricultural – growth and increased fluctuations in growth in the 1990s. Besides, there have been contractions in the funds flow into the rural areas in the form of special employment programmes in the 1990s unlike in the 1980s. Secondly, Indian industry is faced with depressed purchasing power not only from the rural sector but also from the urban sector. The substantial wealth erosion caused by the fall in the equities and real estate markets has also hampered the average urban consumer’s proclivity to spend. Finally, there are distinct signs of growing inequalities in the distribution of income, and in the face of reduced employment growth as well as deterioration in the quality of employment, there are obvious possibilities of narrowing of purchasing power in the hands of the vast masses of the urban population.
A brief outline of changes in Industrial pattern during the plans
The share of the industrial sector in the Gross Domestic Product (GDP) has slowly but consistently increased. There has been a substantial expansion of infrastructural industries like electricity, coal, steel, crude petroleum, petroleum refinery and cement. Heavy and capital goods industries have developed and strengthened the industrial base of the country.
The rapid growth of consumer durables has been observed since the eighties and due to the policy of liberalisation pursued by the government in recent years, the output of consumer durable goods has expanded at a fast pace. o Emphasis has been given to chemical, petrochemical and allied industries during the past decade and a half.
The post-independence period saw the emergence and massive expansion of the public sector The number of public sector units at the commencement of the first plan was only 5 and with total capital of 29 crores. The number of operating public sector enterprises shot up to 248 23 in 2010-11 with a total capital employed of Rs. 9,50,449 crore.