Essays

Industrialisation is vital for a country's economic development. Indian industrial sector is characterised by under-utilisation of resources, low capital formation, low level of technology, lack of skilled manpower and social attitudes of the population. Indian industrial development is also highly influenced by the political climate of India, the political philosophy of the ruling party, the attitude and culture of the political administrators and Indian Industrial Policies. Indian industry also depends highly on the attitudes and aspirations of the Indian manpower and Indian society.

The economic structure of India follows a mixed economy. Thus, the functioning of dual sectors - public and private - exist in India. Public sector includes both public utility undertakings and public enterprises. Due to several factors, such as, low returns, longtime lag, defence requirements, public utilities, large resource requirement, development of backward regions, development of infrastructure, etc. the Government had to invest in certain capital- intensive segments to share the burden of industrialisation and to generate employment opportunities. However, most of the public sector undertakings do not perform well from the angle of profitability and/or efficiency for many reasons, like initial heavy costs, capital-intensive industries, large capacities, heavy social costs, low priced products, labour problems and high expense ratio, unprofessional manpower planning, etc.

The role of private sector in Indian industrial development cannot be overstated. Private sector is also sharing Government's burden in certain heavy investment ventures today, like infrastructure. This is due to the improved government policy towards private sector. The Indian Government has been from time to time changing its industrial policies to suit the economic and global environment. Further, there can be found a trend towards taking advantage of the liberalised industrial policy framework. This is vindicated by the various indicators of investment intentions. However, the private sector in India faces several obstacles: undue delay by the government authorities, restrains on capacity, over- dependence on public sector, price restrictions, small scale reservations, finance, etc.

Though private sector is facing many problems, its contribution to Indian economy is remarkable. For instance, India achieved a GDP growth rate of7 per cent in 1995-96 for the first time since 1950, despite a low agricultural growth rate of2.4 per cent. The major factor which contributed for this growth rate was achievement by the industrial sector which registered a growth rate of 12.1 per cent in 1995-96.

Further, besides the output aspect, there is an equally important aspect relating to the pattern of industrial development. There can be found substantial changes in the pattern of Indian industrial development which can be viewed from two dimensions: one, there is a fast growth of basic and capital goods industries; and two, there is a large diversification of industries.

During independence, industrial production was confined to select industry categories. Progress of industrial sector in India has been a striking feature of Indian economy. Industrial production has gone up by about seven times, registering a compound rate of growth of 6 per cent per annum during Plan period. This is certainly impressive compared to 2.0 per cent rate of industrial growth per annum during pre-independence period - 1900-91 to 1945-46. The contribution of industry to GDP has substantially increased from 14.9 per cent in 1950-51 to 28 per cent in 1995-96. Apart from the rise in the quantity of production, the industrial structure has been widely diversified, covering the entire spectrum of consumer, intermediate and capital goods.

There has been an acceleration of the production of basic and capital goods industries, particularly since Second Five Year Plan which had a heavy-industry strategy. This has resulted in a larger contribution of these industries to the economy. As a result of the swifter growth of investment goods industries, there has been a big shift in their status in the economy. Prior to Planning in India, industries manufacturing machines, tools etc. were almost non- existent. Currently, these industries account for around 50 per cent of total value added by the industries.

No less important is the change that has taken place in the composition of industries. The number of industries producing a large variety of goods has increased. And there can be found a change in the relative significance of traditional and new industries. During independence, India inherited an industrial structure which was restricted to a few industries, such as sugar, steel and textiles. However, the structure underwent a major transformation during mid 1950's when industrialisation drive was launched; and self-reliance became one of the vital objectives of Planning. Thanks to the Second Plan, in particular, India has a large variety of industries today producing goods of varied nature.

This change in Indian industrial structure has yielded many fruits to Indian economy. It has strengthened the base of the economy which helps the economy to move towards self-reliance.