Q.14. What is Industrial policy? Discuss the various objectives of industrial policy. (AKTU. 2012-13)
Ans. The Indusrial policy is a statement which defines the role of the Government in industrial development, the place of the public and private sectors in industrialization of the country, the relative role of large and small industries the role of foreign capital, etc. It is also a statment of the objectives to be achieved in the area of industrial development and the measures to be adopted towards achieving these objective. The industrial policy formally indicates the spheres of activity of the public and the private sectors. It lays down norms, rules and procedures that would govern the growth and pattern of industrial activity.
The industrial policy is not inflexible. It is amended, modified and redrafted according to the changed situations, requirements and perspective of development.
Objective of the Industrial policy: -
The major objectives of the Government’s industrial policy are as following :
(i) Rapid Industrial development: -
The industrial policy of the Government of India is aimed at increasing the tempo of industrial development. It seeks to create a favourable investment climate for investment in industry.
(ii) Prevention concentration of economic power: -
The industrial policy seeks to provide a framework of rules, regulations and reservation of spheres of activity for the public and the private sectors. This is aimed at reducing the monopolistic tendencies and preventing concentration of economic power in the hands of a few big industrial houses.
(iii) Balanced industrial structure: -
The industrial policy is designed to correct the prevailing lopsided industrial structure. By laying emphasis on heavy industries and development of capital goods sector, the industrial policy seeks to bring a balance in industrial structure.
(iv) Balanced regional growth: -
Industrial policy also aims at correcting regional imbalances in industrial development. It is quite well-known that some regions in the country are industrially advanced (e.g., Maharashtra, Gujarat) while other are industrially backward, (like Bihar, Orissa). It is the purpose of industrial policy to work out programmes and policies which lead to industrial development of backward areas and thus correct regional distortions in the pattern of industrial growth.
Q.15. Discuss in detail the major provisions of industrial policy resolution 1991. (AKTU. 2012 - 13)
Ans. The major provisions of the new Industrial policy resolution 1991 are as follows :
1. Abolition of industrial licensing: -
The Industrial policy of July 1991 announced that industrial licensing will be abolished for all industrial projects except for a short list of industries wherein security and strategic concerns are involved or which have compelling social reasons for strictly regulating their growth. Hazardous chemicals and industries adversely affecting environment were also to be continued under the licensing requirements.
2. Dereservation of Industries for public sector: -
(i) Reduced reservation for public sector. New industrial policy dereserved 9 industries and thus limited the scope of public sector to only 8 industries. Later, a few more industries were dereserved and now the exclusive area of the public sector remains confined to only 4 industrial sectors which are (i) defence production (ii) atomic energy, (iii) railways, and (iv) minerals used in generation of atomic energy.
(ii) Efforts to Revive Loss Making Enterprises.
(iii) Disinvestment in Selected Public Sector Industrial Units.
(iv) Greator Autonomy to Public Enterprises.
3. Librlised policy towards foreign capial and technology: -
(i) Relaxation in upper limit of foreign investment. The maximum limit of foreign equity participation was placed at 40 percent in the total equity capital of industrial units which were open to foreign investments.
(ii) Automatic permision for foreign Technology Agreements. The new industrial policy provides for automatic permission to foreign technology agreements in the high priority industries.
4. Changes in the MRTP Act: -
(i) Under the Monopolies and restrictive trads practices (MRTP) Act, 1960, all big companies and large business houses were required to obtain clearance from the MRTP Commission for setting up any new industrial unit, because such companies (called MRTP companies) were allowed to invest only in some selected industries.
5. Greater support to small-scale industries: -
The new industrial policy seeks to provide greater Government support to the small-scale industries so that they may grow rapidly under environment of economic efficiency and technological upgradation.
6. Other provisions: -
The new indstrial policy announced some more steps to promote rapid industrial development. It provided for establishing Foreign Investment Promotion Borad to negotiate with a number of international companies for direct investment in industries in India. It also announced the setting up of a fund (called National Renewal fund) to provide social security to retrenched workers and provide relief and rehabilitate those workers who have been rendered unemployed due to technological changes.
