Page 207 - DECO502_INDIAN_ECONOMIC_POLICY_ENGLISH

Unit 17: Industrial Sector in Post-Reform Period

1. To assess the change in small industry’s relative contribution to GDP, exports and organised Notes
sector employment in the 1990s with that of the 1980s.
2. Comparison of the growth rates of units, employment, output and exports of small industry in
the 1990s with that of the 1980s.
We observe that the growth of small industry in the transitional period of 1990s has come down not
only in terms of units and employment but also output. The increasing competition in the globalisation
period might have affected the growth of Indian SSIs adversely. It may be noted that the scenario
during the two periods does not differ much, except for exports. It is true that the growth rates of
units and employment have steadily come down but the growth rates of output and more importantly,
exports have fluctuated.
It is seen that the share of small industry in national income increased in the protection period of the
1980s but declined considerably in the transitional period of the 1990s. To conclude, performance of
the SSI sector in India does indicate that the sector is facing a tough challenge for its survival and
growth in the period of globalisation. However, international and national policy changes have thrown
open new opportunities and markets for the SSI sector in India. The Government and small industry
must make efforts to imbibe technological dynamism to build upon the opportunities.
Review of Industrial Growth Under Planning— Structural Transformation

The progress of industrialisation during the last 50 years since 1951 has been a striking feature of
Indian economic development. The process of industrialisation, launched as a conscious and deliberate
policy under Industrial Policy Resolution of 1956 and vigorously implemented under the five year
plans, involved heavy investments in building up capacity over a wide spectrum of industries. As a
result, over the last nearly 50 years, industrial production went up by about five times, making India
the tenth most industrial country of world. The industrial structure has been widely diversified
covering broadly the entire range of consumer, intermediate and capital goods. The progress India
has made in the field of industrialisation is clearly reflected in the commodity composition of India’s
foreign-trade in which the share of imports of manufactured goods has steadily declined; on the
other hand, industrial products, particularly engineering goods have become a growing component
of India’s exports. Finally, the rapid stride in industrialisation has been accompanied by a
corresponding growth in technological and managerial skills for efficient operation of the most
sophisticated industries and also for planning, designing and construction of such industries.
Industrial Progress Since Independence

A major achievement in the industrial sector has been the diversification of India’s capability. This
indicates the growth of the industrial output in selected commodities. The figures show clearly the
tremendous increase in production of some important goods in the country.
India has attained self-sufficiency in almost all consumer goods. Growth of capital goods production
has been specially impressive. An impressive industrial capacity has been achieved in mining and
metal industries, chemical and petrochemical industries, production, capital goods industries including
sophisticated equipment for steel mills, fertiliser plants, chemicals etc. light, medium and heavy
engineering industries and transportation industry, construction industries. Further, India can now
sustain the future growth sectors of the economy primarily through domestic and only with marginal
imports. Finally, the infrasture including R and D capability, consultancy and engineering services,
project management services innovative capacity to improve and adapt technology have indeed shown
an impressive record of progress.

Rate of Industrial Growth
Industrial growth, however, has not been since 1951. After a steady growth of about 8 pen cent the
initial period of 14 years (1951 to 1965), there fluctuating trend since then—near stagnancy during 1968,
and of 9.5 per cent during 1976-77, a high level percent in 1979-80. In the sixties (1961-70) the growth
rate of industrial output was put at 5.5 per cent in the seventies (1971-80) the average growth rate
about 4 per cent per annum. Even during 1980-81 growth rate of industrial production was 5.5 annum.

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