Evolution of Industrial Policy of India

Evolution of Industrial Policy of India

Industrial Development in India

Beginning of Industrial Development

• India started its quest for industrial development after independence in 1947.

• The Industrial Policy Resolution of 1948 marked the beginning of the evolution of the Indian Industrial Policy.

Industrial Policy of 1948

• In the Industrial Policy of 1948, the importance of both the public sector and the private sector was accepted.

• However, the responsibility for the development of basic industries was handed over to the Public Sector.

• There were four categories of industries in the Industrial Policy of 1948.

Industrial Policy of 1956

• The Industrial Policy Resolution of 1956 gave the public sector a strategic role in the economy.

• Earmarking the pre-eminent position of the public sector, it envisaged the private sector co-existing with the state and thus attempted to give the policy framework flexibility.

• The main objective of the Industrial Policy of 1956 was to develop the public sector, the co-operative sector, and control private monopoly.

• In this policy, the earlier four categories of industries were reduced to three categories.

Joint Sector Formation – 1973

• In 1973, the Joint Sector was constituted on the recommendations of the Dutta Committee.

Industrial Policy of 1980

• The Industrial Policy of 1980 was influenced by the concept of federalism.

• The policy of giving concessions to agriculture-based industries was implemented through it.

New Industrial Policy of 1991

• Various liberalised steps to be taken were declared at a comprehensive level in the Industrial Policy declared on 24th July, 1991.

• Privatisation and liberalisation are the main thrust areas in the New Industrial Policy.

Annual Survey of Industries (ASI)

About ASI

• The Annual Survey of Industries (ASI), conducted by the MOSPI, covers the organised manufacturing sector.

• Its coverage extends to the entire Factory Sector comprising industrial units (factories) registered under Sections 2(m)(i) and 2(m)(ii) of the Factories Act, 1948, with:

  • Ten or more workers with electricity

  • Twenty or more workers without electricity

ASI Results for 2020-21 and 2021-22

• The Annual Survey of Industries results for the years 2020-21 and 2021-22 showcased the Indian manufacturing sector's resilience, given its turnaround after a marginal fall in employment in the pandemic year of 2020-21.

• As per ASI 2021-22:

  • Employment in the organised manufacturing sector recovered to above the pre-pandemic level.

  • Employment per factory continued its pre-pandemic rise.

  • The growth in wages per worker was reinstated after a brief hiatus.

Employment Concentration

• Over 40% of India’s factory jobs are concentrated in Tamil Nadu, Gujarat, and Maharashtra.

• The fastest employment growth between FY18 and FY22 was seen in states with the upside of demographic transition:

  • Chhattisgarh (31%)

  • Haryana (29%)

  • Uttar Pradesh (22%)

ASI FY22 Findings

• As per the latest ASI FY22:

  • Employment in the organised manufacturing sector (workers and total persons engaged) has returned to its upward trend after the pandemic-induced fall.

  • Employment per factory is also rising.

Workers

• Workers are directly involved in the manufacturing process or in activities incidental to manufacturing, such as cleaning and repair.

• They can be employed directly or through an agency.

Total Persons Engaged

• Includes:

  • Employees (workers + clerical/administrative staff)

  • All working proprietors and their family members were actively engaged in the work of the factory, even without. pay

  • Unpaid members of co-operative societies who worked in or for the factory in any direct and productive capacity

[Source: DoRA, Monthly Report, Feb 2024]

Final Thoughts

India began its journey of industrial development after independence in 1947, with the Industrial Policy Resolution of 1948 laying the foundation. This policy recognised the role of both the public and private sectors, though the responsibility of basic industries was given to the state. Later, the Industrial Policy of 1956 strengthened the role of the public sector while allowing private industries to coexist, aiming to prevent monopolies.

Over the decades, new shifts emerged — the Joint Sector in 1973, concessions for agro-based industries in 1980, and finally, the 1991 New Industrial Policy that introduced liberalisation and privatisation.

To track this growth, the Annual Survey of Industries (ASI) was set up, covering organised manufacturing. ASI 2021-22 showed that jobs, wages, and factory activity recovered strongly after the pandemic, with states like Tamil Nadu, Gujarat, and Maharashtra leading in factory employment.