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Unit 7: Indian Industries

Plan because of a slowdown in investment. Capital goods sector was hit the most and it registered Notes
negative growth rate of (-) 12.8%, (-) 0.1% and (-) 4.1% during 1991-92, 1992-93 and 1993-94
respectively. But, it did pick up during 1994-95 and 1995-96.
Numerous industries could not confront foreign competition as a consequence of decrease in
import duties. Copper and paper industry were not in a position to confront external competition.
In hydrocarbon sector also, numerous petroleum products were imported while domestic capacity
faced under-utilisation. Dumping by foreigners also developed issues for many industries. The
Government was not able to prepare anti-dumping machinery to confront the challenge.
Insufficiency availability of infrastructure such as power and transport bottlenecks and inadequate
handling amenities at ports, also affected industrial production. It is actually disappointing that
the addition to power capacity in the Eighth Plan was lower than that in the Seventh Plan even
in absolute conditions. The average growth rate of electric energy during the Eighth Plan was
6.6% as against the target of 7.8 per cent for the Plan. This also served as a constraint. In fact, the
Government retreated from investment in electricity generation in the hope that the private
sector would fill the gap, but this did not emerge.
All the above factors led to shortfalls in industrial production. Although the overall target was
almost fulfilled, but still in many crucial regions production targets could not be attained. The
capital goods sector was particularly a victim of new Industrial Policy.

7.3.7 Industries during the Ninth Plan (1997-2002), Tenth Plan (2002-07)
and Onward

It is important for you to note that the ninth Plan aimed at a growth rate of 8 per cent for
industry, but realized growth rate was merely 5.0 per cent which was even lesser than the
growth rate of 7.3 per cent achieved in the Eighth Plan. In this manner, it may be mentioned that
the Ninth Plan was a failure. As against the target of 5.9 per cent for mining, the realised growth
rate was hardly 2.5 per cent. Likewise, achievement in manufacturing was 5.3 per cent as opposed
to the target of 8.2 per cent and in electricity, the realised growth rate was 5.5 per cent as opposed
to the target of 9.3 per cent.
Ninth Plan allotted ` 69,972 crore for industry at 1996-97 prices, but the Tenth Plan discloses that
the total allotment to industry in the public sector was ` 44,695 crore at 2001-02 prices. If we
revalue the suggested allocation of the Ninth Plan of ` 69,972 at 1996-97 prices, it comes out to be
` 88,730 crore at 2001-02 prices. Comparing it with the public sector outlay of ` 44,695 crore, it
infers that real expenditure of the public sector was only 50.3% of the proposed outlay. It was
hoped that the private sector would fill the gap, but this did not occur.
Reviewing the internal as well as external factors for the strike during the Ninth Plan, the Tenth
Plan states:
“The industrial slowdown is widespread, covering all broad sectors, e.g. manufacturing, electricity
and mining and all end-use based groups such as capital goods, intermediate goods and consumer
goods (both durables and non-durables). The slowdown in domestic and global demand appeared
to be a major factor constraining industrial growth. Another major reason has been the decline
in investment, noticeably by the private sector.”
The difficulties brought about by internal factors were intensified by the gradual growth of the
world economy, which led to a substantial slowdown in manufacturing exports. This infers that
failure of the Ninth Plan in industry can be credited to the decline in public sector investment
which was not rewarded by an upturn in private investment.
You must take into consideration that analysing the performance of the Tenth Plan, Eleventh
Plan mentions the following: “Industrial performance in the Tenth Plan period enhanced to a

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