Page 51 - DMGT401Business Environment

Business Environment

Notes 2.2.2 Industrial Policy 1956

The draft of the 1956 industrial policy was very comprehensive. This laid emphasis on the
establishment of a socialist pattern of society. This policy also emphasised that industrial
development of the country should be guided by the Directive Principles of the Constitution.

Did u know? The 1956 Policy was regarded as the "economic constitution of India". The
1980 policy statement paid the highest tribute when it stated that, "the industrial policy
announcement of 1956 reflects of the value system of our country and has shown
conclusively the merit of constructive flexibility."

Objectives of the 1956 Industrial Policy

1. To accelerate the rate of growth and speed up industrialisation.

2. To expand public sector.
3. To develop heavy and machine industry.
4. To check the concentration of economic power in a few hands.
5. To reduce the disequilibrium in the distribution of income and wealth.
6. To build a cooperative sector.

7. To expand cottage, village and small-scale industry.
8. To achieve balanced regional development and other socio-economic objective.

Features of the Policy

The 1956 resolution divided industries into three categories:
1. Monopoly of the State

2. Mixed Sector (Public and Private both allowed)
3. Industries left for private sector

Monopoly of State

In this list (Schedule A) industries whose future development would be the exclusive
responsibility of the state were included. The 17 industries listed in this categories were: arms
and ammunition, atomic energy, iron and steel, heavy castings, heavy machinery, heavy electrical
industries, coal, mineral oils, iron ore and other important minerals like copper, lead and zinc,
aircrafts, air transport, railway transport, shipbuilding, telephone, telegraph and wireless
equipment generation and distribution of electric energy.

Mixed Sector of Public and Private Enterprise

In this section 12 industries (listed in Schedule B) were included. These will be progressively
state owned and where the State will generally take the initiative in establishing new
undertakings.

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