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Industries during 1950-1990

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  • Last Updated : 01 Dec, 2022
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The economic activities concerned with the production of goods (steel energy), extraction of minerals (coal mining), and provision for services (tourism) are referred to as Industries. To be more specific, an industry is a group of organisations that are involved in the production/manufacturing or handling of the same product and service. All the industries come under secondary activity and deal in the conversion of raw materials into finished products.

A large population of people was dependent on agriculture for livelihood as there was a non-availability of employment opportunities. The introduction of industries in India was done to unfold the population with more employment opportunities and reduce the dependence on the agricultural sector. The industries are further classified based on the types of raw materials required, the size of the industry, and ownership.

Need or Role of Industrial Sector in India’s Development during 1950-1990:

The development of industries was considered essential as it played an important role in the development of India. It was estimated on the following grounds:

1. Self-reliant Economy

There were very few industries in India at the time of British rule as the development of modern industries in India was hampered or restricted by the British government. After gaining independence, India was required to develop or set up a variety of industries like iron and steel, fertilisers, chemical, power, and machine-making industries to establish a self-reliant, strong, and sound economy.

2. Balance Occupational Structure

It was necessary to establish new and modern industries in India as a major portion of the working population was dependent on the agricultural sector. This caused an imbalance in the occupational structure and to overcome this imbalance, industrialisation was considered important. Industrialisation was also considered necessary to reduce the burden on the agricultural sector.

3. Expansion of Employment Opportunities 

The expansion of new employment opportunities was needed as a large number of the population suffered the problem of disguised unemployment and under-employment due to the overcrowded agricultural sector. As the industrial sector is more stable than the agricultural sector, the expansion of this sector was necessary.

4. Increase in the Economic Growth Rate 

As the growth rate of the agricultural sector largely depends on nature, this sector’s productivity was far less compared with the industrial sector. Therefore, the development of industries was done to increase the economy’s growth rate and pave a way for the country’s modernisation and overall prosperity.

5. Development of infrastructure

We inherited a less-developed and imperfect infrastructure at the time of independence. The establishment of industries in India helped in the development and modification of infrastructures as our country needed to achieve rapid industrialisation. 

Role of Market and State in India’s Industrial Development

The Market (or Private Sector) and the State (or Public sector) were considered important factors for the development of industries in India. The private sector operated the mechanism or working of the market whereas the public sector operated through the mechanism of the state or the government.

The post-independence period in India considered the role of the public sector in industrial development to be of greater importance due to some very clear reasons which are:

  1. The development of heavy industries was considered essential for creating a strong industrial base for the development of the country. The set-up or establishment of these heavy industries required a large amount of investment which could be fulfilled by the private sector. Hence, the state or the public sector helped establish its establishment. 
  2.  The public sector or the state also helped in the prevention of the concentration of economic powers, exploitation, and redistribution of income. 
  3. The expansion of the public sector also helped in maintaining the balance of growth in every region as a major portion of the public sector investment is directed towards the backward regions.
  4. The public sector provided a modern technological base for a large segment of the industrial economy and also contributed to import substitution, export earnings, and social spheres of the country.
  5. The public sector was designed to play a significant role in the development of Indian industries as the government was able to help, guide, and take control over the economy and attain its goals through the public sector.
  6. And, the private sector was considered to play a secondary and complementary role to the public sector.

Role of Public Sector in Industrial Development

The leading role of the Public Sector was important due to the following reasons

1. Objective of Social Welfare

To achieve the Government’s objective of social welfare and equity, it was very important to involve the direct participation of the state or the public sector in the process of industrialisation.

2. Shortage of Capital with Private Sector

The Government had to start investing in the industries or the Public Sector Undertakings (PSUs) as the private entrepreneurs were not able to accumulate adequate capital that was required for the industrial investment. The Government started investing in the public sector as it was necessary for the development of the Indian economy.

3. Lack of Incentives for the Private Sector

The size of the Indian market was limited as there was not much emphasis laid on the private industrialists to undertake major projects. Due to this, the demand for industrial goods got very limited in the Indian market.

The Benefits of Industrialisation

The Industrialisation Policy came with various benefits for the Indian market. They were:

1. Increase in the Per Capita Income

The Industrialisation policy led to an increase in the per capita income of the country and it provided the Indian market with goods to meet the high-income demand.

2. Increase in employment

The introduction of the industrialisation policy led to an increase in the employment of a new and skilled labour force.

3. Diversified Market

This policy enabled the diversification of the Indian markets that were required at the higher stages of the development process.

4. Improvement in Infrastructure

The introduction of the industrialisation policy in India helped in the development of better infrastructure facilities like power generation, railways, etc., that were important for the further development of the Indian economy.

5. Generation of Foreign Exchange

The industrialisation policy helped increase the rate of earning foreign exchange as the demand for industrial goods in the international market was much higher as compared to that for agricultural goods.

Classification of Industries

Classification of Industries

 

According to the Industrial Policy Revolution, 1956, the industrial sector was divided into 3 categories:

1. Schedule ‘A’ Industries or Government Enterprises

In the scheduled category ‘A’ there are 17 industries. These industries are reserved for the public sector and are of basic and strategic importance. These are: a) Defense equipment, arms, and ammunitions; b) Atomic energy; c) Heavy plants and machinery; d) Heavy casting and forging of iron and steel; e) Iron and Steel; f) required for basic industries; g) Heavy electrical plants; h) Coal and Lignite; i) Mineral Oils; j) Mining of iron ore, manganese ore, gypsum, sulphur, gold, and diamond; k) Minerals for atomic energy; l) Mining and processing of copper; m) Aircraft; n) Air transport; o) Railway transport; p) Ship-building; q) Telephones and telephone cables.

2. Schedule ‘B’ Industries or Mixed Enterprises

The Schedule ‘B’ category includes 12 industries. These industries are owned by the states which will generally take the initiative in establishing new undertakings. These industries also give private enterprises a chance to flourish. Industries included under this schedule are: a) All minerals (except minor minerals); b) Aluminum and other non-ferrous metals (not included in Schedule ‘A’); c) Machine tools; d) Ferro alloys and tool steels; e) Basic and intermediate products required by chemical industries (like drugs, dye, and plastics); f) Antibiotics and other essential drugs; g) Fertilizers; h) Synthetic rubber; i) Carbonization of coal; j) Chemical pulp; k) Road transport; l) Sea transport.

3. Schedule ‘C’ Industries or Private Enterprises

All the industries that have not been included in Schedule ‘A’ and Schedule ‘B’ are included in the Schedule ‘C’ category. The development and establishment of the industries in this category had been left to the initiatives taken by the private sector.


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