INDUSTRIAL POLICY

It lays a wide canvas and sets the tone for implementation of govt regulatory and promotional roles.

Direct the flow of resources in the most desirable areas o f investment Prevent the wasteful use of scarce resources and ensure their conservation.Rationale Correct the imbalances in the development. Empower the Govt to regulate the establishment and expansion of Pvt sectors Demarcate the areas among public. . Prevent the formation of monopolies(Fiscal. pvt.and Joint sectors.monetary measures) Guidance for importing Foreign capital.

paper mill etc)  Pvt Enterprise  Role of small and cottage Industries . Iron Steel etc)  Govt Control. Atomic energy etc)  Mixed Sector (Coal . fertilizers. Division of Industries State Monopoly (Arms.sugar.IPR-1948 1. Acceptance of the dual Sector.Aircraft.(Regulatory Role-A utomobiles.

Industrial Policy-1956 Constitution was adopted Planning Commission Socialism Govt was rich enough to invest in public sector .

Objectives Accelerate the rate of economic growth & speed up industrialization Expand Public Sector and develop heavy and machine making industry Increase employment opportunities Prevent creation of monopolies Reduce disparity o f income and wealth Promote private sector Expand cottage Industry Balanced regional development .

Schedule A had 17 Industries Schedule B had 12 Industries Rest were thrown open to Private Participation 1956 Policy was hailed as the Economic Constitution of India .

.Industrial Policy -1991 Announced on 24th July drastically altered the Industrial scenario of our country.

 Encouragement to Indian entrepreneurship and employment generation.† Objectives Build on the many sided gains already made.  Development of Indigenous Technology through greater investment in R&D and bringing in new Technology  Removing regulatory system  Increasing competitiveness of Indian Industries PSU·s on Business lines and cut their loss  Protect the interest of workers  Abolish Monopoly (except on Strategic or Security ground  Link Indian Economy to the Global Market  .

Industrial Licensing Policy Foreign Investment Foreign Technology agreement Public Sector Policy MRTPC Act .

Merits of 1991 Policy .

Policy was drafted at the behest of IMF. Govt has not announced clear exit policy for sick units (relenting to trade union pressure). Policy is silent on tackling growing industrial sickness . . which means virtual surrender of economic sovereignty .Limitations Scrapping of Licensing means absence of mechanism to determine priorities and to develop backward areas. Off loading 20% equity in profit making units is a revenue raising exercise than genuine privatization Infrastructural deficiencies will deter foreign investment.

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