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Unit 16: Industrial Sector in Pre-Reform Period

During the Second Plan a major task in industry was the building up of three steel plants in the Notes
public sector : Rourkela Steel Plant in Orissa, Bhilai Steel Plant in Madhya Pradesh and Durgapur
Steel Plant in West Bengal. The other programmes of industrial development include manufacture of
electrical equipment, expansion of Hindustan Machine Tools, expansion of Sindri Fertilizer factory
and the establishment of a fertilizer plant at Nangil further expansion of Hindustan Shipyard and
Chittranjan Locomotive factory.
The Second Plan witnessed a major diversification of the industrial spectrum. It strengthened further
programmes of development in respect of oil exploration and coal and made a beginning with the
development atomic energy.
Most of the investments in the Second Plan were heavy and basic industries. There was also rapid
expansion of machine-building industries for use in agriculture are transport and for such industries
as chemicals, textiles, Jute, cement, tea, sugar, flour and oil mills, paper, mining, etc. Good progress
was also recorded in modernisation and equipment of important industries such as jute, cotton textiles
and sugar. Quite a number of new industrial items e.g., industrial boilers, milling machines, tractors,
motor cycles, scooters, etc., were also produced in large quantity.
In the sphere of village and small industries substantial progress was recorded. About 60 industrial
estates comprising 1,000 small factories were set up. The period also witnessed the rise of a vigorous
class of small entrepreneurs. In a number of items such as machine tools, sewing machines, electric
motors, fans, bicycles, hand tools, etc. production increased from 25 to 50 per cent during the five-
year period. Khadi, handloom and powerloom cloth production increased from 1,610 million metres
to 2,150 million metres.

Industries and the Third Plan (1961-66)
With the base created in the first two Plans, the Third Plan called for the maximum rate of investment
to (a) strengthen industry, power and transport and (b) hasten the process of industrial and
technological change.
The overall financial outlay in organised industries and mining during the Third Plan period was
` 3,000 crores out of which the outlay in the public sector was about ` 1,700 crores and that in the
private sector ` 1.300 crores.
The key role in industrial development programme was for the public sector. The aim was to make
the economy self-sustaining in producers’ goods industries such as steel, machine building, etc., so
that the quantum of external assistance needed could be curtailed to a very low level. An overall
target of 7 per cent increase in industrial production was envisaged in the Plan.
Except for the year 1965-66, industrial output increased steadily at the rate of 7.6 percent per annum.
The achievement was lower than the average of 14 per cent per annum visualised in the plan. Although
the increase in the output of producer and basic industries was higher than the growth in the general
index of production, yet it was much lower than the target set out in the Third Plan.
Despite the overall under-achievement of targets of Third Plan reflected the first stage of a decade or
more intensive development leading to a self-reliant and self-generating economy. Engineering
industries like automobiles, cotton textile machinery, diesel engines, electric transformers and machine
tools, advanced according to set-targets as did industries such as petroleum products, heavy chemicals,
cement etc. Mining and extractive indusries also showed considerable progress. It was during this
period that a fairly sound base for future industrial growth was laid through the completion of projects
of the HEC for manufacture of machinery and equipment for steel plants, the MAMC for the production
of mining equipment and Bharat Heavy Electrical for power generation and transmission equipment.
Industries and the Fourth Plan (1969-74)

The Fourth Plan intended to complete industrial projects undertaken in the Third Plan. It also aimed
to enlarge capacities in export promotion and import substitution industries.
During the Fourth Plan, the actual outlay on organised industry was of the order of ` 2,700 crores in
the public sector. Thus, the financial investment was short of the targets set out in the Fourth Plan.
Nearly three-fourths of the total investment was in the core sector, viz., iron and steel, non-ferrous

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