Industrial Policy Resolution

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Industrial activity is a major source of stability in an economy. It is more crucial in a planned economy wedded to the achievement of such an objective of economic growth and social justice. Achievement of such an objective requires active State participation in the process of industrialization to give the required directions as demanded by the situation. An industrial policy provides guidelines for the effective co-ordination of the activities of various sectors of the economy. The evolution of industrial policy in India may be studied in this background to see how far it has worked as a potent tool to realize the goal of planned development. Industrial Policy Resolution, 1948: The IPR, 1948 created a mixed economy reserving a sphere for the private and public sectors. It divided the industries into four groups: (i) Industries with exclusive Central Govt. monopoly, arms and ammunitions, atomic energies and railway transport. (ii) Mixed sector - State controlled new undertaking in coal, iron and steel, air craft, telephone, etc. (iii) Under State resolution and control consumer goods industries, and (iv) Under cooperative and private enterprises remainder industries. The policy further emphasized the role of cottage and small scale industries and of foreign capital in industrializing the Indian economy. Industrial Policy Resolution, 1956: In April 1956, the Govt. of India announced its new industrial policy which acted as a turning point of industrial growth in the economy. The new policy was based on certain important economic and political developments in the country, the adoption of the Constitution of India in 1950, the emphasis on socialistic pattern of society, the success of 1st Five Year Plan and the launching of 2nd Five Year Plan with emphasis on industrialization. The Industrial Policy Resolution of 1956 laid down the various objectives as follows: (1) To accelerate the growth-rate of the economy:

(2) To speed up industrialization;
(3) To expand the public sector;
(4) To develop heavy, basic and key industries;
(5) To build up a co-operative sector;
(6) To reduce concentration of wealth and assets in few hands; or to prevent private monopolies and concentration of economic power; (7) To undertake State trading on increasing scale;
(8) To set up new undertakings and develop new transport facilities by the State.

Important Provisions of IPR, 1956

1. The 1956, IPR divided the industries in to three groups, such as, (a) Schedule A industries which were under the exclusive monopoly of the State. It included arms and ammunitions, atomic energy, iron and steel, coal, oil, power, heavy machinery, railways and etc. (b) Schedule B industries comprising 12 industries which would be progressively State-owned. The existing units under this category in private sector will continue, but new units have to be set up by the State. This category included chemicals, fertilizers, drugs, transport and etc. (c) Schedule C industries comprising all other enterprises development of which has to be left to the private sector. 2. The Industrial Policy also emphasised the mutual co-existence of both the private and public sectors. 3. It emphasised the role of State in the development of private sector through provision of financial assistance and technical guidance. 4. The Policy also encouraged both the cottage and small scale units. 5. The Policy further emphasised to reduce the level of disparity in levels of industrialization between different regions of the country. The Policy also stressed on the balanced development of both agriculture and industry in different regions. 6. The Policy also aimed at establishing proper technical and managerial cadres by providing training facilities in universities and other industrial centers. 7. The Policy also emphasised improving the working conditions of workers for maintaining industrial peace. 8. Emphasis was also given to the role of foreign capital in the economic development of...
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