Page 201 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Unit 16: Industrial Sector in Pre-Reform Period

The Seventh Plan provided for an investment of ` 19,710 crores in large and medium industries and Notes
` 2,750 crores for the development of village and small industries. Total investment in the industrial
sector would thus be of the order of ` 22,460 crores or 12.5% of the total Plan outlay. The annual
target growth rate was 8 per cent.
The main elements of the Seventh Plan industrial strategy were :
(i) Rapid removal of infrastructural constraints, by placing greater emphasis on additional
availability of power through more efficient use of existing capacity as well as the establishment
of new power stations including super thermal and nuclear plants.
(ii) Encouragement of modernization and technological upgradation in industries like textiles and
sugar where a large number of units were set up in the early part of the 20th century.
(iii) Specific targets of productivity for major industries like steel, fertilizers, non-ferrous metals,
petro-chemicals, paper and cement were to be set for the Plan.
(iv) Export production was to be made an integral part of production in the domestic economy. A
special effort was to be made in selected industries in which the country has comparative
advantage and has reached a degree of industrial maturity.
(v) Encouragement of ‘sunrise’ industries such as telecommunications, computers, micro-electronics,
ceramic composites and bio-technology. Industries were to be encouraged to adopt technologies
like fibre optics, lasers, robotics etc. for enhancing productivity and quality.
(vi) Location of industries near the small district towns which were not industrialized so far would be
promoted with a view to removing regional disparities and encouraging dispersal of industries.
(vii) About 30 per cent of industries—large and medium—had already installed pollution control
system. The Seventh Plan intended to enlarge the coverage of this programme as also to
strengthen it.
A review of the progress of the Seventh Plan reveals that the annual growth rate of the industrial
sector including mining, manufacturing and electricity generation during the Seventh Plan
period was 8.5% which though marginally lower than targeted 8.7% was much higher than the
5.5% achieved during the Sixth Plan.
Industries in the Eighth Plan (1992-97)

The Eighth Plan was formulated under a new environment when a number of reforms in industrial,
fiscal, trade and foreign investment policies were introduced in the economy —commonly called as
economic liberalisation. In the context of the new Industrial Policy of July 1991, the role of the public
and private sector was reviewed. In the initial phase of planned development the public played a
pioneering role but its principal weakness extremely poor performance and its inability to general
adequate resources for sustaining the growth process. During this period, the private sector has
come of age has developed considerable entrepreneurial, manage technological, financial and
marketing strengths. Thus, private sector should henceforth play a greater role in process of
development. This new approach is consist with the general philosophy of placing greater reliance
competitiveness of industries and efficiency of operation. Future growth would, therefore, be more
in those sector where the country has comparative cost advantage.
Eighth Plan allocated a total investment of ` 38,083 crores for industry and mineral production (at
1991-92 prices). A review of the progress of actual outlay reveals that at current prices, ` 40,759 crores
were spent, but measured at 1991 -92 prices, this worked out to be ` 31,39 crores. In other words,
actual investment worked out to about 82 per cent of planned investment. There therefore, a serious
shortfall of the order of 18 per cent.
Industries during the Ninth Plan (1997-2002), Tenth Plan (2002-07) and onward
Ninth Plan targeted a growth rate of 8 per cent for industry, but realized growth rate was only 5.0 per
cent which was even lower than the growth rate of 7.3 per cent realised in the Eighth Plan. In this
way, it may be stated that the Ninth Plan was a failure. As against the target of 5.9 per cent for

LOVELY PROFESSIONAL UNIVERSITY 195