The Industrial Policy Resolutions of 1956 and 1991 were landmark policy frameworks that shaped the growth and structure of industries in India. These policies reflect the country's evolving approach to economic development, planning, and liberalization.

Industrial Policy Resolution of 1956

  1. Known as the Second Industrial Policy Resolution after the 1948 resolution.
  2. Based on the principles of socialist pattern of society.
  3. Emphasized the role of the public sector as a key driver of industrialization.
  4. Industries were classified into three schedules:
    • Schedule A: Industries exclusively reserved for the public sector (e.g., defense, atomic energy).
    • Schedule B: Mixed sector industries where both public and private sectors could operate.
    • Schedule C: Industries left for the private sector, but regulated by the government.
  5. Promoted heavy industries to build infrastructure and self-reliance.
  6. Encouraged state ownership of key industries to reduce economic disparities.
  7. Stressed on balanced regional development through investment in backward areas.
  8. Supported small-scale industries (SSIs) to generate employment.
  9. Introduced the concept of industrial licensing to regulate private sector growth.

Impact of 1956 Policy

  1. Laid the foundation for India's public sector enterprises (PSUs).
  2. Created a license-raj system, limiting private sector flexibility.
  3. Focused heavily on capital-intensive industries, leading to limited job creation.
  4. Encouraged self-reliance but resulted in inefficiency due to lack of competition.

Industrial Policy Resolution of 1991

  1. Marked a paradigm shift from state-led industrialization to a market-driven approach.
  2. Introduced as part of the Liberalization, Privatization, and Globalization (LPG) reforms.
  3. Focused on removing industrial licensing except for a few critical sectors.
  4. Encouraged foreign direct investment (FDI) to bring in capital and technology.
  5. Reduced the role of the public sector and encouraged privatization of PSUs.
  6. Aimed to improve efficiency and reduce the fiscal burden of the public sector.
  7. De-reserved many industries for the private sector, encouraging competition.
  8. Facilitated the entry of multinational corporations (MNCs) into the Indian market.
  9. Adopted measures to integrate India into the global economy by reducing trade barriers.
  10. Emphasized the role of small and medium enterprises (SMEs) in generating employment.

Impact of 1991 Policy

  1. Led to rapid economic growth and modernization of industries.
  2. Increased FDI inflows and technological advancements.
  3. Reduced the dominance of license-raj and increased competition.
  4. Boosted exports and improved India's integration with the global economy.
  5. Created challenges like jobless growth and regional disparities.

Comparison of 1956 and 1991 Policies

  1. The 1956 policy emphasized the role of the public sector, while the 1991 policy promoted privatization.
  2. The 1956 policy introduced industrial licensing, while the 1991 policy aimed to dismantle it.
  3. The 1991 policy encouraged foreign investment, unlike the inward-looking 1956 policy.
  4. The 1956 policy focused on self-reliance, whereas the 1991 policy promoted globalization.

Key Points

  1. The Industrial Policy Resolution of 1956 was based on a socialist pattern of society.
  2. The 1956 policy classified industries into three schedules: A, B, and C.
  3. The Industrial Policy Resolution of 1991 marked the beginning of LPG reforms.
  4. The 1991 policy reduced the role of the public sector and encouraged FDI.
  5. The 1956 policy focused on state control, while the 1991 policy emphasized market mechanisms.
  6. The 1991 policy led to the removal of license-raj and promoted competition.
  7. Both policies played a crucial role in shaping the industrial landscape of India.

Category

Questions