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Trend & development of industrial growth

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  • 1. TREND & PATTERN OF INDUSTRIAL GROWTH UNIT 2.1
  • 2. Introduction:
    • Since 1956, the industrial development in India took place mainly in the four forms:
    • Wide diversification of industrial base: production of several new products.
    • Development of public sector
    • Restricted Imports and less dependence on them.
    • Globalization of industries and their progressive privatization.
  • 3. Industrial Development during the Five Yearly Planning
  • 4. Ist Five Year Plan (1951-56):
        • Main emphasis was given on agricultural sector. But attempts were made to lay foundation of future industrial growth.
        • To encourage small scale industries a cess was imposed on the products of large scale industries.
        • Total expenditure on development of large scale industries was Rs. 55 Crore.
        • 5% of total plan outlay was allocated for the industries.
        • Growth rate of industrial production during the first plan was 7.5%
  • 5. 2 nd Five Year Plan (1956-61)
    • It aimed at development of basic industries.
    • Most of the capital goods industries were set up and developed in the public sector. e.g. three new steel plants were set up at Bhilai, Durgapur and Rourkela.
    • There was good progress in village and small scale industries. The small businessmen were given technical, financial and marketing facilities.
    • 24% of total plan outlay was allocated for the industries.
    • Annual growth rate of industrial development was 6.6%.
    • 60 industrial estates were set up and 1000 small units were housed therein.
  • 6. 3 rd Five Year Plan (1961-66)
    • Aim was to expand heavy industries so as to meet the need of the industries within its own resources in the next ten years.
    • In this plan automobile, diesel engines, cement and heavy chemical units made considerable progress.
    • The production capacity of many industries like iron and steel, machines etc. that were set up in the 2nd plan was expanded.
    • Total expenditure on development of large scale industries was Rs. 1,726 Crore and Rs. 241 Crore on small scale industries.
    • 23% of total plan outlay was allocated for the industries.
    • Growth rate of industrial production was 9% per annum.
  • 7. One Year Plans(1966-69)
    • Due to the Indo-China war and Indo-Pak war, the fourth plan was unable to start in 1966. Our economy was facing the shortage of funds.
    • Instead of Five year plan, three annual plans were formulated.
    • The prime aim was to focus on green revolution. Industrial development took a back seat.
    • The average industrial growth rate during these plans was 1.6% per annum.
  • 8. 4 th Five Year Plan (1969-74):
    • The industrial development did not however match its target during the 4th plan.
    • No worth while change in the industrial production structure took place.
    • Total expenditure on development of large scale industries was Rs. 2,864 Crore and Rs. 243 Crore on small scale industries.
    • 19.7% of total plan outlay was allocated for the industries.
    • Growth rate of industrial production was 4.5% per annum.
    • Number of industries increased to 465
  • 9. 5 th Five Year Plan (1974-79):
    • The main aim was the attainment of self sufficiency and growth with justice.
    • Increased development of basic industries.
    • Development of export industries
    • Increase in the supply of mass consumption goods.
    • Development of industrially backward regions.
    • Application of modern technology in the development of industries.
    • Total expenditure on development of large scale industries and minerals was Rs. 8,989 Crore
    • 24.3% of the total outlay was allocated to industries.
    • The industrial growth rate was 5.9% per annum.
  • 10. 6 th Five Year Plan (1980-85)
    • The main objective was to make optimum utilization of existing capacity of industrial production and to increase productivity.
    • To make maximum use of the existing industrial capacity and increased productivity.
    • To increase considerably the installed capacity of industries in the public and private sectors not only to produce mass consumption goods but also intermediary and capital goods.
    • To pay attention to the development of capital goods industry in general and electronic industry in particular.
  • 11. Contd..
    • To realize the importance of superior technique for industrial progress, import of foreign technology and technical know-how.
    • To develop industrially backward regions.
    • Total expenditure on development of large scale industries was Rs. 14,790 Crore and Rs. 1,945 Crore on small scale industries.
    • 26.5% of total plan outlay was allocated for the industries.
    • Growth rate of industrial production was 6.4% per annum.
  • 12. 7 th Five Year Plan (1985-90):
    • The main aim was to increase the production of consumer goods.
    • Adequate supply of consumer goods.
    • Maximum use of existing productive capacity. Industries were restructured to increase their production capacity.
    • Those industries were developed more which met the rising demand of the domestic market or were necessary for export.
  • 13. Contd..
    • A suitable policy has been adopted to achieve self-sufficiency in the important industries.
    • Labourers were given proper training.
    • Special attention was paid on the development of electronics and computer industry.
    • 23.7% of total plan outlay was allocated for the industries.
    • Growth rate of industrial production was 8.5% per annum.
  • 14. Annual Plans (1990-92):
    • Liberalisation: it refers to procedural simplification, removal of restrictions, delicensing and removal of unnecessary bureaucratic hurdles.
    • Privatization: It refers to opening the economy for privatization. In privatization, the areas earlier reserved for public sector public sector were made open for private sector. The private sector was given the main importance.
    • Globalisation: It refers to opening of the domestic economy for foreign enterprises. Import duties were reduced.
    • The average annual growth rate was 4.4% per annum.
  • 15. 8 th Five Year Plan (1992-97):
    • Private sector was given more importance.
    • Earlier capital goods were given priority but during this plan all industries were given equal importance.
    • Foreign companies were assign important role
    • Modernisation of Industries was given importance.
    • Protection given to the domestic industries has been reduced to increase their efficiency.
    • Some areas reserved for public sector were opened for the private sector.
    • 18.8% of total plan outlay was allocated for the industries.
    • Growth rate of industrial production was 6.8% per annum.
  • 16. 9 th Five Year Plan (1997-2002)
    • Private sector was given more importance. More areas were opened for the private sector.
    • Special efforts were made for setting up new industries in backward areas. It was done to reduce regional imbalances.
    • More stress was given on attracting foreign investments. The domestic economy was open for the foreign companies.
    • Modernization and import of capital goods were considered important for improving the efficiency of the industrial sector.
  • 17. Contd..
    • Companies under MRTP Act were given various concessions. E.g. such companies need not to take special permission for mergers, diversification, expansion etc…
    • Licensing policy was liberalised.
    • In some industries, foreign equity participation was increased to 100%.
    • Total expenditure on development of large scale industries was Rs. 33,587 Crore and on the development of small scale industries was Rs. 8,384 Crores.
    • Growth rate of industrial production was 5% per annum. (due to slower growth of the world economy)
  • 18. 10 th Five Year Plan (2002-07)
    • The industrial sector will have to grow at over 10% to achieve the target of 8% growth for GDP.
    • Special emphasis is given for the infrastructure development, power generation, development of roads, railways, air-ports etc. it was thought that rapid industrial growth can be achieved through improving the quality of infrastructure.
    • Special concessions were extended to ready-made garment industry like liberal import of capital goods; tax-concessions etc. were extended. Apparel-parks have been established to promote the same.
    • To make the industry more competitive, R&D, modernization and technological up gradation activities have been emphasized.
  • 19. Contd..
    • Loss making public sector units have been disinvested
    • Special concessions were given to export oriented units in order to promote exports.
    • Special Economic Zones have been set up for promoting rapid industrialization of the economy. For promoting agro based industrial units, agro export zones have been set up. For promoting leather industry, leather industry development programmes have been undertaken.
    • More privatization has been encouraged. The funds from global capital market are also encouraged.
    • Foreign investments are encouraged in the service sector like banking, insurance etc…
  • 20.  
  • 21. Achievements
    • Growth Rate of Industrial Production
    • Strong Industrial Base
    • Modernisation
    • Development of the Public Sector
    • Building up of the Infrastructure
    • Increasing Share of Industries in National Income & Export
    • Increase in Foreign Collaboration
    • Increase in Industrial Production
  • 22. Weakness
    • Unregulated Increase in the Industrial Production
    • Excessive Capacity
    • Much Increase in Monopoly Power
    • Capital Investment in Low Priority Industries
    • Inefficient performance of the Public Sector
    • Growth of Regional Imbalance
    • Less Development of the Small Scale Industries
    • Industrial Sickness