Sample Material of Our IAS Mains GS Online Coaching Programme
Subject: General Studies (Paper 3 - Technology, Economic Development, Bio diversity, Environment, Security and Disaster Management)
Topic: Changes in Industrial Policy and their Effects on Industrial Growth
Changes in Industrial Policy and their Effects on Industrial Growth
The post‐liberalization industrial policy came in the wake of severe balance of payments crunch. The process initiated in the 1980s did bring about some positive results on the industrial growth front. The industrial policy statement of July 1991 stressed that the government would continue to pursue a policy framework encompassing encouragement of entrepreneurship, development of indigenous technology through investment in research and development, bringing in new technology, dismantling of the regulatory system, development of capital markets and increased competitiveness. It underlines the spread of industrialization to backward areas of the country with active promotion through right kind of incentives, institutions and infrastructure investments.
Objective of Industrial Policy Statement
The prime objective of Industrial Policy Statement was to maintain sustained growth in productivity, enhance gainful employment and achieve optimal utilization of human resources, to attain international competitiveness and transform India into a major player in the global arena. The focus of the policy was to unshackle the industry from bureaucratic controls. This needed policy reforms in many areas. In the first instance, a substantial modification in industrial licensing policy was considered necessary with a view to ease restraints on capacity creation, and respond to emerging domestic and global opportunities by improving productivity. Accordingly, the policy statement included abolition of industrial licensing for most industries, with the exception of a few industries for reasons of security, strategic concerns, and social and environment issues. Compulsory licensing was required only in respect of eighteen industries. These included inter alia coal and lignite, distillation and brewing of alcoholic drinks, cigar and cigarettes, drugs and pharmaceuticals, white goods and hazardous chemicals. Small sector continued to be reserved. Norms for setting up industries (except for industries subject to compulsory licensing) in cities with more than one million populations were further liberalized.