Industrial policy changes started in India in a big way from the year 1991 which marked the beginning of economic reforms and LPG. Major changes initiated in 1991 were:
(a) Delicensing of a large number of industries.
(b) Dilution of the role of public sector
(c) Opening up foreign investment
(d) Relaxation of MRTP Act.
Subsequent changes in industrial policy have been, by and large, extension of the above and enactment of competition Act, FEMA, import liberalisation, convertibility of rupee and further opening up foreign investment in tune with WTO making Indian industry global. Industrial growth in India is measured on the basis of IIP which has nearly 80 percent weight of the manufacturing sector. Initial euphoria of liberalisation resulted in robust industrial growth in the 8th Five Year Plan (1992-1997) during which the growth rate peaked to 13 percent in 1995-96.
However, the average annual growth rate of industrial sector was only 7.3 percent during 1992-97, i.e. 8th Five Year Plan, which was below the annual growth rate of 8.5 percent in the pre-reform period of 1985-90 viz., the 7th Five Year Plan. During the Ninth Plan (1997-2002) industrial growth rate slipped to 4.6 percent per annum but picked up to 8.2 percent per annum in Tenth Plan. The performance of the industrial sector during 11th Plan has been modest and below the rate achieved in the 10th plan.
Industry has failed to act as harbinger of overall GDP growth in the post reform period during which industrial growth has been confined largely to consumer durable goods and to some extent capital goods. It is mainly the services sector which has been the main catalyst of growth. The share of industry in national income in 1948-49 was 17 percent which at present is only close to 22 percent which shows a very dismal growth rate and contribution of the industrial sector. The share of manufacturing sector continues to be very low as compared to advanced nations where this share is between 30 to 50 percent. This has prompted the government to unveil a New National Manufacturing Policy which targets a 12-14 percent growth rate of manufacturing sector and its share in GDP at 25 percent in 2022.
There has been alarming slowdown of the industrial growth rate, particularly in the last five years due to severe constraints of infrastructure and factors like virtual halt of economic reforms, policy paralysis due to compulsion of coalition governments, widespread corruption and scams, all of which have caused to collateral damage to the credibility of the government and its governance.
Industry - Environment linkages have further resulted in inordinate delays in clearance of projects due to lack of coordination among different departments.
Major determinants of industrial growth in India are agricultural growth and rural incomes, infrastructure development and exports. While infrastructure has been a vital bottleneck, export growth rate has slowed down due to Euro zone crisis while agriculture continues to be uncertain.
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(a) Delicensing of a large number of industries.
(b) Dilution of the role of public sector
(c) Opening up foreign investment
(d) Relaxation of MRTP Act.
Subsequent changes in industrial policy have been, by and large, extension of the above and enactment of competition Act, FEMA, import liberalisation, convertibility of rupee and further opening up foreign investment in tune with WTO making Indian industry global. Industrial growth in India is measured on the basis of IIP which has nearly 80 percent weight of the manufacturing sector. Initial euphoria of liberalisation resulted in robust industrial growth in the 8th Five Year Plan (1992-1997) during which the growth rate peaked to 13 percent in 1995-96.
However, the average annual growth rate of industrial sector was only 7.3 percent during 1992-97, i.e. 8th Five Year Plan, which was below the annual growth rate of 8.5 percent in the pre-reform period of 1985-90 viz., the 7th Five Year Plan. During the Ninth Plan (1997-2002) industrial growth rate slipped to 4.6 percent per annum but picked up to 8.2 percent per annum in Tenth Plan. The performance of the industrial sector during 11th Plan has been modest and below the rate achieved in the 10th plan.
Industry has failed to act as harbinger of overall GDP growth in the post reform period during which industrial growth has been confined largely to consumer durable goods and to some extent capital goods. It is mainly the services sector which has been the main catalyst of growth. The share of industry in national income in 1948-49 was 17 percent which at present is only close to 22 percent which shows a very dismal growth rate and contribution of the industrial sector. The share of manufacturing sector continues to be very low as compared to advanced nations where this share is between 30 to 50 percent. This has prompted the government to unveil a New National Manufacturing Policy which targets a 12-14 percent growth rate of manufacturing sector and its share in GDP at 25 percent in 2022.
There has been alarming slowdown of the industrial growth rate, particularly in the last five years due to severe constraints of infrastructure and factors like virtual halt of economic reforms, policy paralysis due to compulsion of coalition governments, widespread corruption and scams, all of which have caused to collateral damage to the credibility of the government and its governance.
Industry - Environment linkages have further resulted in inordinate delays in clearance of projects due to lack of coordination among different departments.
Major determinants of industrial growth in India are agricultural growth and rural incomes, infrastructure development and exports. While infrastructure has been a vital bottleneck, export growth rate has slowed down due to Euro zone crisis while agriculture continues to be uncertain.
TAGS : vajiram and ravi economy notes, vajiram and ravi current affairs download, vaji ram and ravi current updates, Effects of Industrial Policy Changes on Industrial Growth, 2014 economy updates, latest vajiram and ravi current affairs download ,
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