Module: Industrial

Psychology

Session 1-2:
The Indian Industrial Scene
Backdrop of Industrial Psychology in India
Business and Industry: Pre-British
Period
 Two groups: Rural Industry and Urban Industry.
 Rural industries manufactured utility goods such as
earthenware, coarse cloth, baskets, etc, catering to the local
needs.
 Urban industries manufactured luxury goods such as gold and
silverware, and also silk and woolen fabrics and calico, to
serve wider foreign markets
Business and Industry Under
the British
 Changes in the Industrial Scene with the advent of the British:
 Industrial Revolution in England led to the decline of Indian
handicrafts.
 Use of machines in the manufacturing sector helped England to
produce goods cheaply and displace Indian products in foreign
markets as well as in the home market.
 Prospects of industrial development in India was deliberately
discouraged to suit the British economy. India’s internal economy
was upset by British imperialism and Indian industries decayed.
 Indians could not set up new industries to match the British
because of lack of knowledge and capital.
 As Indian manufactured goods declined, the British made India
their main market of manufactured goods.
Business and Industry Under
the British (Contd.)
 Only such raw materials as were necessary for the progress of
Industrial Revolution in England were allowed to be exported from
India.
 As a result India gradually withdrew herself from industrialization
and increased her dependence on agriculture.
Industries in India During the
War Years
 The Second World War pushed India into further industrial
activity to suit the war needs.
 Factories worked extra shifts, technical methods were improved
and organizational changes were brought about to increase
productive capacity.
 New sources of supply were created by the expansion of small
scale industries all over the country.
 Such industries were set up on an ad hoc basis.
 Enough attention was not paid to scientific planning.
 Long-term factors like right location, operation, marketability and
availability of raw materials were not given enough attention.
 High cost of production resulted in inflation.
 Malpractices became rampant.
Industries in India During the
War Years (Contd.)
 Such industries were set up on an ad hoc basis. (Contd.)
 Smaller groups got exploited by powerful industrialists at the cost of
the public.
 Basic capital goods industries lagged behind in development.
 Poorer sections of the community were badly affected by the scarcity
of consumer goods and steep rise in prices.
 Corruption and black marketing appeared in large-scale.
Business and Industry: Post
Independence
 Independent India’s industrial policy announced in 1948.
 Indian economy was declared Mixed Economy with an overall
responsibility by the government for planned development of
industries and their regulation in national interest.
 Policy revised in 1956 in the form of Industrial Policy
Resolution Act,1956
 Parliament accepted a socialistic pattern of economy for India.
Business and Industry: Post
Independence
 Several reforms were introduced in the areas of:
 Industrial Licensing
 Manpower utilization
 Five Year Plans and Industrial Growth
 Industry Unions and Confederations of Indian Industry
 Industrial Unrests and Labour Problems
Industrial Licensing

 Industrial licensing to be given under the Industries

Development and Regulation Act 1951
 State made directly responsible for the future development of
industries
 Industrial licensing given to the following sectors:
 Public Sector
 Small-scale industries
 Small and Medium Entrepreneurs
 Larger Industrial Houses
 Foreign Concerns
 Joint Sector
Manpower Utilization

 Large population of India: A boon not a curse

 Vast manpower resources not been utilized.
 unprecedented industrial growth and increase in employment
since independence failed to keep pace with the country’s
manpower requirements.
 Lack of training and skills development leave people
unemployed and underemployed.
 Government and Planning commission optimistic about
gradual growth.
Manpower Utilization (Contd.)

 High degree of non-utilization and under utilization of our

manpower resources has resulted in a negative psychological
environment of pessimism.
 Economic, Social, and Psychological repercussions of
unemployment and underemployment affect the industrial
climate adversely.
Five Year Plans and Industrial
Growth
 Planning Commission reviewed and declared 7% growth in
the industrial and minerals sector during the first 15 years of
the planning period.
 Industrial production increased at an average rate of 7
percent with the first decade of planning (1950-51 to 1960-61)
recorded an increase of around 9 percent annum during the
next four years, i.e., 1961-62 to 1964-65).
 On the whole, during the decade 1965-75, the average annual
growth was no more than 4 percent and about 6 percent
during the period 1974-75 to 1977-78.
Five Year Plans and Industrial
Growth (Contd.)
 The Planning commission in their Draft Plan for 1978-83
expected the average rate of industrial growth to be 7 percent
per annum during the plan period.
 As of now, in 2008-09, towards the end of the Plan Period ,
we have maintained a consistent 8% Industrial growth in the
country for the last three decades.
Industry Unions and Confederations
of Indian Industry
 Various Chambers of Commerce, trade and industrial
associations developed for concerted actions. Associations
were formed trade-wise (such as Indian Jute Mills
Association), region-wise (such as Employers Federation of
the Indian Chambers of Commerce and Industry, (FICCI), and
nationally and globally Confederation of Indian Industries (CII)
etc.
 Causes of such unions and associations:
 lack of motivation and insecurity
 Interference in industry matters by politicians and social activists
and Leftists
Industry Unions and Confederations
of Indian Industry (Contd.)
 Instability and disturbances due to political leadership using trade
unions as a means.
 Employees associations paid more attention to labour
matters,
 Coordinated with labour departments to assist their members.
 standardize wage rates and conditions of employments.
 Federation of Indian Chambers of Commerce and Industry
(FICCI) and the Employers Federation of India (EFI) helped
 formulation and implementation of the labour policy of the
government.
 private employers to improve their business.
Industrial Unrests and Labour
Problems
 Industrial policies aim at bringing a harmonious relationship
between employers and employees on democratic norms.
 Government’s arguments and efforts:
 industrial conflicts are natural and inevitable in the process of
industrial development.
 They are to be accepted as a part of industrial reality.
 it is important to remain aware of the causes behind such
conflicts and develop policies and practices accordingly in order
to keep them within reasonable control for increased industrial
growth and productivity.
 An atmosphere of mutual understanding and trust should develop
between all stakeholders.
Industrial Unrests and Labour
Problems
 Peace and harmony must be maintained through rational
discussion between the parties so that the prospect of
compromise and settlement on an ongoing basis could be
visualized.
 Government aiming to curb various factors contributing to the
labour problem like
 the desire of the employers to get the maximum profits with
minimum resources.
 transformation of industry from domestic system of manufacture
to more large-scale production,
 migration of people from rural and tribal areas to urban areas in
the wake of industrialization.