Economics Notes: Industrial Policy
Industrial policy resolution 1948:-
It is considered to be 1st Industrial policy and 1st economic policy.
It decided the model of the economic system i.e. Mixed system.
Central, state & private Industries were recognized.
Industrial policy 1956:-
Reservation of Industries as schedule A, B, C.
Licensing, Monopolies, License-Quota Permit regime started.
Emphasis on small Industries.
Expansion of public sector.
Industrial policy 1969:-
It was a new licensing policy which aimed at solving the shortcomings of licensing policy 1956.
MRTP Act was passed
Industrial policy statement 1973:-
A new classification was added i.e. core Industries.
Core industries will also be known as basic industries or infrastructure industries.
The concept of ‘Joint Sector’ was developed which allowed partnership among the centre, state & the private sector while setting up some Industries.
FERA was passed in 1973
Limited permission of foreign investment was given with MNCs being allowed to set up their subsidiaries in the country.
Industrial policy 1977:-
Foreign investment in the Unnecessary areas was prohibited.
Emphasis on the village industries.
New Industrial policy 1991 (NIP 1991):-
A. Factors which necessitated NIP
1. Gulf war which increased the oil prices & decreased remittance.
2. Inflation during the period was 17%
3. India had a fiscal deficit of 8.4% of GDP
4. Forex reserves were depleted
B. Features of NIP (1991)
1. De-reservation of Industries
3. Abolition of MRTP limit
4. Promotion of foreign Investment
5. FERA was replaced by FEMA
6. Compulsion of phased production was abolished
7. Compulsion to convert loans into shares was abolished
8. Industries were now classified into polluting & non-polluting & this fact decided the location of industries.
9. Non-Pollution industries might be set up anywhere polluting industries to be set up at least 25 kilometres away from million cities.
1. It is a process of selling government equities to the investor or other private companies in public sector enterprises.
2. Disinvestment is a tool of public sector reforms.
3. It is part of the economic reforms started in mid-1991. It has to be done as a complementary part of the de-reservation of Industries.
4. Disinvestment is initially motivated by the need to raise resources for the budgetary allocation.
Types of Disinvestment:-
(i) Taken Disinvestment (Disinvestment of 5% Equity)
(ii) Strategic Dis-investment
National Investment found:-
In 2005 the government of India decided to constitute a National investment fund (NIF)
The proceeds from disinvestment will be channelized into the NIF which to be maintained outside the consolidated fund of India.
NIF are been used in full for funding capital expenditure under the social programme of GOI.
(v) Accelerated Irrigation Benefits programme
(vi) Accelerated power development reform programme