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Report of the National Commission on Labour

Report of the National Commission on Labour

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Published by: ncramaa on Dec 29, 2009
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138
REPORT OF THE NATIONAL COMMISSION ON LABOUR
CHAPTER-III
INDUSTRIAL DEVELOPMENT & PROGRESS AFTER INDEPENDENCE
I
ndia has made considerableeconomic progress since itsIndependence. Most noticeable are theexpansion and diversification of production both in industry andagriculture. New technologies wereintroduced in many industries.Industrial investment took place in alarge variety of new industries. Modernmanagement techniques wereintroduced. An entirely new class of entrepreneurs have come up with thesupport system from the Government,and a large number of new industrialcentres have developed in almost allparts of the country. Over the years,the Government has built theinfrastructure required by the industryand made massive investments toprovide the much-needed facilities of power, communications, roads etc. good number of institutions werepromoted to help entrepreneurshipdevelopment, provide finance forindustry and to facilitate developmentof a variety of skills required by theindustry as well as agriculture. TheGovernment also followed a policy of encouraging indigenous industries andprovide them all facilities andencouragement. As a result, we havenow a widely diversified base of industry and an increased domesticproduction of a wide range of goodsand services. The index of industrialproduction has gone up from 7.9 in1950-51 to 154.7 in 1999-2000.Electricity generation went up from 5.1billion Kwh to 480.7 billion Kwh in thesame period.3.1Particularly significant achieve-ment has taken place in the field of agriculture. Between 1950-2000, theindex of agricultural productionincreased more than four-fold. Between1960 and 2000, wheat production wentup from 11 to 75 million tonnes, andthe production of rice increased from35 to 89.5 million tonnes. We are nowhaving a problem of plenty, withGovernment godowns overflowing withwheat stocks. This is not a meanachievement for a country that reliedon imported food aid until the early1960s. The credit for this greenrevolution goes to Indian scientists aswell as to millions of Indian farmers, who wholeheartedly
 
REPORT OF THE NATIONAL COMMISSION ON LABOUR
139
cooperated with the Government, tomake India self-sufficient in the matterof its food requirements.3.2This economic expansioncontributed to a steady and impressivegrowth in India’s GNP. With theexception of 4 years, India experienceda positive rate of growth. As a result,India’s per capita Net National Product(NNP) in 1999-2000 was 2.75 timeshigher than that of 1951. The rate of growth before 1980 was 1.2% percapita. Thereafter, it grew at the rate of 2.4%, and between 1950-90, by 3.2%on average every year. Between 1993-94 and 1999-2000, it registered anaverage rate of growth of 4.8% peryear.3.3A variety of promotional policieswere followed by the Government toachieve this success. In the early years,Indian industry thrived within protectivetariff walls. The policy was toencourage Indian industries and thoughforeign technical collaborations wereencouraged, direct foreign investmentin any corporate body was restricted to40%. In 1991, this policy was changedcompletely and foreign majorityinvestment was encouraged in a varietyof industries, import restrictions wereremoved, customs tariff was broughtdown and the doors of the Indianeconomy were opened for foreigncompetition.3.4In this chapter, we will brieflytrace the developments that took placein the field of industrial economic policyof India during these years. The year1991 will now be regarded as alandmark in the economic history of India. Therefore, a more detailedreview of the economic policies after1991, and their effect on Indianeconomy has been attempted in thenext chapter.
INDUSTRIAL POLICY ANDINCENTIVES SINCE 1947
3.5After India became independentin 1947, the country embarked upon anambitious plan of industrialdevelopment and encouraged thesetting up of new industries and theexpansion of existing industries.3.6We may briefly recapitulatesome of the steps that were taken toachieve these objectives.3.7PROTECTION TO INDIANINDUSTRIES: India is probably one of the few countries in the world whichused its import policy for the healthydevelopment of local industries.Barring the first few years afterIndependence, the country was facinga shortage of foreign exchange, andbecause of this shortage, imports hadto be restricted. Imports of consumergoods were, therefore, disallowed.
 
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REPORT OF THE NATIONAL COMMISSION ON LABOUR
good number of restrictions were puton the import of industrial goods, andthe effort of the Government was toencourage the production of thesegoods indigenously. Local industrieswere encouraged to have foreigncollaborations and to import thetechnical know-how needed to producewhat was being imported into thecountry.3.8Levying higher tariffs restrictedimports, and there was also a total orpartial physical ban on the imports of such products. This gave a much-needed sheltered market for Indiangoods, and many industries thrivedwithin these protective walls. Initially,products produced by Indian industrieswere not of good quality. But as yearswent by, industries acquired experiencein manufacturing and turned outquality products comparable withimported products. There was acontinuous effort to improve quality.3.9During the Second and Thirdplans, the emphasis was on thedevelopment of capital goodsindustries. India wanted to makemachines that helped to produceother machines. Therefore, greateremphasis was given to thedevelopment of machine tools, textilemachinery, power equipment and soon. We were importing these mothermachines, and the new effort was toproduce them in India, to achieve self-sufficiency. As a result of this policy,encouragement was given to importtechnical know-how and to enter intoforeign collaborations to undertakemanufacture of capital equipmentlocally. This gave further fillip toindustrial development.3.10Protection from importsencouraged Indian industry toundertake the manufacture of a varietyof products. There was a ready marketfor all these products. TheGovernment also gave encouragementto industries to import parts andcomponents that were required forindigenous production. The importpolicy was meant to serve twocategories of importers - actual usersand established importers. Actual usersof imported raw materials or productswere given preference over thecategory of established importers i.e.traders. Certain items that were scarceand not available were channelisedthrough the State Trading Corporation,Mines & Minerals Trading Corporationand such other Government bodies.They arranged for the import of suchproducts and distributed them toindigenous industries according torequirements. Thus, imports werestrictly controlled by the import policyannounced every year by theGovernment of India.

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