Escolar Documentos
Profissional Documentos
Cultura Documentos
• Industrialization refers to the grdual change in the technology used to produce goods and
service, it is a much broader process of economic development which has in view the
integrated development of all other sectors, i.e. agriculture, power, transport and other
services.
• Industrialization becomes the main source of income, output, employment, and economic
growth.
• A satisfactory rate of industrialisation generates many advantages for the economy which
will ultimately lead to create an all round prosperity and progress.
Industrialization may lead to many advantages, of which the following are the major ones:
• Aids agriculture : Agriculture sector can get more implements and inputs (like fertilizers) and
increase the demand for wage goods thereby becoming more modern and dynamic.
• Boosts GDP: ( is a mandatory measure of the market value of all the final goods and services
produced during a period of time, often annually.
As per the research and analysis industrialization increases both the National GDP and
the Per Capita Income.
This is so because the industrial activities are more productive than the agricultural
occupations in a stagnant economy.
The traditional outlook of lethargy, stagnation, and low productivity is replaced by that
of dynamism, productivity and industrial discipline.
One of the most important driving force for industrialization is the idea that a higher per
capita income will be able to banish poverty, hunger, unemployment, malnutrition and
dependency.
• Growth of Infrastructure
India was made a source of raw materials and market for the British goods.
Thus, in the real sense, India never experienced the industrial revolution of the type that
Great Britain witnessed.
The modern industry in India started from 1860. The main industry then was the
plantation industry.
Towards the end of the 18th century, modern industrial enterprise began in India, when
some indigo plantations were started.
Early in the 19th century, tea, coffee, and rubber plantations started.
The industrial development of India was greatly stimulated by the opening of the Suez
Canal in 1869 and the construction of railways.
Indian industries received encouragement from Swadeshi movement, war demand, and
the grant of protection to industries in 1923.
The Second World War affected Indian industries by stimulating them as demand
increased during war time. Due to this, the output of the existing industries such as
machine tools, heavy chemicals, etc. increased.
• Many positive incentives, including subsidy, tax concessions, cheap loan facilities, and so
on, are granted to those industries that are nationally important, and
• many types of penalties including high taxation are imposed on those industries that are
unwanted.
• The policy of privatization must ensure that it does not lead to allocative inefficiency,
market power, and the growth of monopoly
The year 1991 is an important landmark in the economic history of post-Independence India.
The country went through a severe economic crisis triggered by a adverse Balance of
Payment , lower GDP growth and higher inflation rate. The crisis was converted into an
opportunity to introduce some fundamental changes in the economic policy of the country.
Former Prime Minister Manmohan Singh is considered to be the father of New Economic
Policy (NEP) of India. Manmohan Singh introduced the NEP on July 24,1991.
The main objectives behind the launching of the New Economic policy (NEP) in 1991
by the union Finance Minister Dr. Manmohan Singh are stated as follows:
1. The main objective was to plunge Indian economy in to the arena of ‘Globalization and to
give it a new thrust on market orientation.
3. It intended to move towards higher economic growth rate and to build sufficient foreign
exchange reserves.
4. It wanted to achieve economic stabilization and to convert the economy into a market
economy by removing all kinds of un-necessary restrictions.
5. It wanted to permit the international flow of goods, services, capital, human resources and
technology, without many restrictions.
6. It wanted to increase the participation of private players in the all sectors of the economy.
That is why the reserved numbers of sectors for government were reduced.
Main Objectives
The various elements, when put together, constitute an economic policy which marks a big
departure from what has gone before.
The thrust of the New Economic Policy has been towards creating a more competitive
environment in the economy as a means to improving the productivity and efficiency of
the system.
This was to be achieved by removing the barriers to entry and the restrictions on the growth
of firms.
While allowing a greater role for the private sector, it vests the Government with necessary
control in key areas of industry as per the Industrial Policy Resolution of 1956.
There will be no bottlenecks of any kind in clearing proposals for foreign equity
participation. Such clearance will be available if foreign equity covers the foreign exchange
requirement for imported capital goods. Furthermore, the foreign equity proposals need
not necessarily be accompanied by foreign technology agreements. Companies with 51%
foreign equity will be encouraged to act as trading houses primarily engaged in exporting
activities in order to generate greater passage of Indian goods to export markets.
A specially empowered Board will be constituted to negotiate with large international firms
called multinational corporations (MNCs) and encourage direct foreign investment in select
areas.
This would be a special programme to attract substantial investment that would provide
access to high technology and world markets.
Repatriation of dividends by companies with foreign equity will have to be met through
export earnings over a period of time.
The stress is on foreign technology agreements in high priority areas with incentives for
domestic sales and export promotion.
Foreign technology agreements in high priority industries will be given automatic permission
up to a lump-sum payment of Rs. 1 crore. In non-high priority areas, automatic permission
would be given as per the same guidelines provided no free foreign exchange is required for
the payments.
Though the role of the public sector has been emphasised, the Government has committed
to ensure that it runs on sound commercial lines and continues to innovate and maintain its
dominant role in strategic areas.
Furthermore, in order to raise resources and encourage wider public participation, a part of
the Government’s shareholding in the public sector units would be offered to mutual funds,
financial institutions, the public and workers.
Chronically sick PSUs, which are unlikely to turn around, will be referred to the BIFR or other
such institutions to formulate a rehabilitation-cum- revival scheme for such units. Also, a
social security mechanism will be created to protect the interests of workers likely to be
affected by such rehabilitation packages.
Comments:
The New Industrial Policy announced by the Government is a landmark policy in the history
of industrial development of the country. It is in line with the current economic philosophy
of the Government to liberalise the existing industrial and commercial policies with the
objective of increasing efficiency, competitive advantage and modernisation in the
economy.
The abolition of the system of licensing in most industrial areas as also the break from the
‘big is evil’ syndrome in terms of the withdrawal of the asset criterion from the MRTP Act
are policy initiatives which are likely to boost industrial growth in the country.
Similarly, the raising of the automatic foreign equity participation to 51% in 34 high priority
areas will lead to greater foreign portfolio investment and thereby reverse the phenomenon
of capital flight from the economy. This—in conjunction with the liberalised foreign
technology agreements and doing away with the Phased Manufacturing Programmes (PMP)
provisions for new projects—will lead to technology up-gradation and modernisation of the
industrial sector.
A novel feature of NIP has been the effort to encourage direct foreign investment. In
particular, the constitution of a special empowered Board to negotiate with large
international firms for this purpose is a step in the right direction. The Board should perform
a promotional role so that domestic firms can derive the benefits of international markets.
By the removal of the convertibility clause on term loan of financial institutions, the new
policy will give a fillip to the capital market as the profitability and the consequent rise in
dividend payments is likely to promote equity culture in the country.
In view of the drain on the exchequer the large and public sector imposes, the new policy
rightly emphasised the need to promote privatisation in the economy. The commitment to
run the existing PSUs on commercial lines will, however, have to be watched. However, the
revival package for the perpetually sick PSUs needs to be formulated without any delay so
that the burden on the Centre’s financial resources can be removed at early as possible.
New industrial policy to be announced soon: Suresh Prabhu
The new policy, aimed at modernising existing industries, is expected to encourage
adoption of frontier technologies such as robotics and artificial intelligence.
New Delhi: The government has finalised the new industrial policy, which is set to be
announced soon, Commerce and Industry Minister Suresh Prabhu said today.
The new policy will replace the industrial policy of 1991 which was prepared in the backdrop
of balance of payment crisis.
"We have finalised the new industrial policy and will be announcing it soon. It is going
through an inter-ministerial consultation," Prabhu said here at an international SME
convention.
The proposed policy aims at promoting emerging sectors and modernising the existing
industries. It will also look to reduce regulatory hurdles and encourage adoption of frontier
technologies such as robotics and artificial intelligence.
The Department of Industrial Policy and Promotion (DIPP) in August last year floated a draft
industrial policy with an aim to create jobs for the next two decades, promote foreign
technology transfer and attract USD 100 billion FDI annually.
Talking about the importance of micro, small and medium enterprises (MSMEs), Prabhu said
the sector holds huge potential to boost economic growth.
Speaking at the convention, Minister of State for External Affairs M J Akbar said the
government is taking steps to promote the sector.
About the Mudra Yojana, which funds the self-employed, he said: "Do you know how much
money has already been transferred? (It is) upwards of Rs 4,30,000 crore".
This has been transferred to 12 crore people and they are now creating jobs and products,
he said adding "NPAs (non performing assets) of Mudra from 120 million people are less
than 7 ..