Industrial Policies-Meaning

Rules, regulations, principles, policies and procedures laid

down by government for regulating, developing, and controlling industrial undertakings in the country.
It prescribes roles of the public, private, joint, and co-

operative sectors.
It incorporates fiscal and monetary policies, labor policy,

and the government attitude towards foreign capital.

Objectives of Industrial Policies

To accelerate the rate of economic growth and to speed

up industrialization.
Providing opportunities for gainful employment Eradication of poverty Protecting and developing a healthy small scale sector

Updating technology and modernization of industry

Industrial Policy Resolution-1948

1. State Monopolies: included the manufacture of

arms and ammunitions, the production and control of atomic energy and the ownership of railways
2. Basic industries: government will take over the

basic industry sector undertakings by paying compensation which is fair and equitable.
3.

Private Industries: Rest of the industrial field open to private enterprise though the State would also progressively participate in this field.

Industrial policies in India--1956 The Background

The first five year plan ( 1951-52 to 55-56) was completed. Optimism was running high

First General election completed Second Five year plan : Rapid Industrialization, infrastructure and

institution building to priority

Lack of confidence in private sector Public sector Commending heights

Self reliance : Apprehension towards foreign capital.

Industrial policy-1956
New classifications of industries:
a) Schedule A: Those exclusive for state(17 categories) ,

Arms and ammunitions, atomic energy and railways.. b) Schedule B: Those which were progressively state owned(12 categories) but private expected to supplement. c) Schedule C: All remaining industries left private sector.

Industrial policy-1956
Fair and non-discriminatory treatment for private

sector.
Encouragement to village and small-scale enterprises. Change in attitude towards foreign capital.

Industrial Policy -1991

The New Policy has four features: Liberalization, privatization, globalization .
Policy focus is on Deregulating Indian industry; Allowing the industry freedom and flexibility in responding to market forces. Providing a policy that facilitates and fosters growth of Indian industry.

Industrial Policy -1991

Industrial Licensing : Restricted to only certain industries viz
alcohol, cigarettes ,hazardous chemicals, aerospace, defense equipments ,drug and pharmaceuticals( excluding bulk drugs).

Public sector policy:

priority areas for growth of public enterprises in future would be: a) Essential infrastructure goods and services. b) Oil and mineral resources. c) Technology development and building manufacturing capabilities where private sector investment is inadequate.

Industrial Policy -1991

Liberalization of Foreign Investment:

Policy towards foreign capital and technology has been modified very significantly. Advantages: a) technology transfer b) marketing expertise, c) introduction of modern managerial techniques d) new possibilities for promotion of exports.

Industrial Policy -1991

MRTP ACT:
The principal objectives are:
Prevention of concentration of economic power . Prohibition of monopolistic , restrictive and unfair trade

practices.

Industrial reforms
Introduction: The term economic reforms refers to policy reforms undertaken by the central govt. since 1990 to attain certain significant achievements through the main approaches which are as follows: Stabilization Restructuring Globalization

Major Economic Reforms

Fiscal Reforms:
Reducing the Fiscal Deficit
Banking Sector
Import Licensing Export Orientation

Tax Reforms
Direct Tax Indirect Tax

Resource Generation through Divestment

Structural Economic Reforms

Reorientation of Planning

Banking Reforms
Changing in rate SLR and CRR Entry of Public and Private Sector in capital

market Operational Flexibility Relaxation in Licensing of Private Bank Improve standard of supervision , audit and technology Interest rate deregulation and financial repression.

Industrial Reform
Industrial licensing
Foreign Technology MRTP limit Technological Development Development of small scale industries Right of Labor Foreign Investment Self reliance

Significant Consequences
Higher rate of growth
Rapid growth of secondary and tertiary Sectors Increase in Export and Imports

Improved Balance of Payments

Rise in value of Rupee Less reliance on foreign borrowings Overall development of Indian economy

Growth Rate
7.8

7.3

7.3
6.5

5.9 5.6 5.1 4.8

6.1

1.3

90-91

91-92

92-93

93-94

94-95

95-96 Growth Rate

96-97

97-98

98-99

99-00

Indicators Of External Sector

Growth of ExportsGrowth of BOP(%) Imports-BOP(%) Exports/ imports (%)

Year

90-91
95-96 00-01 2005-2006

9
20.3 21.1 23.4

14.4
21.6 4.6 32

66.2
74 78.5 67

WPI Inflation Rate

14 13 12 11.3 11.3 10.6 10.1 10

8.1
8

5.4

5.1 3.9 3.1

4.7

3.6

0 Primary aarticaes Power Fuel Light Lubricants Manf. Products All comodities

Conclusion
Policies & reforms have put the Indian economy on a

higher growth path.

Equally important to resolve the immediate liquidity

problem.
To restore the economy on the path of rapid and

healthy economic growth.

Bibliography
Books Referred; Indian economy reforms Since 1990 Indian economy since 1945 Indian Economy Indian Economic crises Role of Manmohan singh in Economic reforms www.Wikipidia.com www.Google.com www.planningcommision.gov.in www.rbi.org.in www.slideshare.com www.sribd.com

The Indian IT Industry

Until 1991 the IT sector was growing at sluggish pace.

The private sector was subjected to numerous controls and had restricted access to technology
The economic reforms of 1991 changed the Indian

business context from one of state-centered, control orientation to a free, open market orientation especially for hi-tech companies.

 The Indian software exports increased from US$128

million in 1991 to US$6.2 billion in 2001.

The Indian domestic software sales increase from

US$115 million to US$ 2 billion in the same period.

An ideal example is Infosys which grew from Rs. 1

million and 12 employess in 1982 to about Rs. 90 million and 300 employees in 1992, to Rs. 19.5 billion and over 10,000 employees in 2001.

The phenomenal growth rate of Indias software exports, with (ten-year rolling) average annual growth never dropping below 30%, and overall exports exceeding US$36bn in 2008/09:

Software Exports as a Percentage of Total Exports

The much higher growth rate of Indian IT exports compared to production for the domestic market. As a result, the share of exports in total IT output has risen from 19% in 1991/92 to 69% in 2008/09:

IT Sector Contribution to GDP

GDP: $1.209 trillion (2008 Estimate) GDP Growth: 6.7% (2009) GDP per capita: $1016 GDP by sector (2008 Estimate): Agriculture: 17.2% Industry: 29.1% Services: 53.7%

QUESTIONS