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notjustinfo.com |
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Knowledge centre for MBA students. |
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Industrialization in Senthuran Industrialization is vital for a country’s
economic development. Indian industrial sector is characterized by
under-utilization of resources, low capital formation, low level of technology,
lack of skilled manpower and social
attitudes of the population. Indian industrial development is also highly
influenced by the political climate of India, the political philosophy of the
ruling party, the attitude and culture of the political administrators and
Indian Industrial Policies. Indian industry also depends highly on the
attitudes and aspirations of the Indian manpower and Indian society. The economic structure of India follows a
mixed economy. Thus, the functioning of duel sectors - public and private -
exist in India. Public sector includes both public utility undertakings and
public enterprises. Due to several factors, such as, low returns, long time
lag, defence requirements, public utilities, large resource requirement,
development of backward regions, development of infrastructure, etc. the
Government had to invest in certain capital-intensive segments to share the
burden of industrialization and to generate employment opportunities.
However, most of the public sector undertakings do not perform well from the
angle of profitability and/or efficiency for many reasons, like initial heavy
costs, capital-intensive industries, large capacities, heavy social costs,
low priced products, labour problems and high expense ratio, unprofessional
manpower planning, etc. The role of private sector in Indian
industrial development cannot be under stated. Private sector is also sharing
Governments burden in certain heavy investment ventures today, like
infrastructure. This is due to the improved government policy towards private
sector. The Indian Government has been form time to time changing its
industrial policies to suit the economic and global environment in favour of
industrial sector. Further, there can be found a trend towards taking advantage
of the liberalised industrial policy framework. This is vindicated by the
various indicators of investment intentions. However, the private sector in
India faces several obstacles: undue delay by the government authorities,
restrains on capacity, over-dependence of public sector, price restrictions,
small scale reservations, finance, etc. Though private sector is facing many problems,
its contribution to Indian economy is remarkable. For instance, India
achieved a GDP growth rate of 7 per cent in 1995-96 for the first time since
1950, despite a low agricultural growth rate of 2.4 per cent. The major
factor which contributed for this growth rate was achievement by the
industrial sector which registered a growth rate of 12.1 per cent in 1995-96.
Further, besides the output aspect, there is
an equally important aspect relating to the pattern of industrial
development. There can be found substantial changes in the pattern of Indian
industrial development which can be viewed from two dimensions: one, there is
a fast growth of basic and capital goods industries; and two, there is a
large diversification of industries. During independence, industrial production was
confined to select industry categories. Progress of industrial sector in
India has been a striking feature of Indian economy. Industrial production
has gone up by about seven times, registering a compound rate of growth of 6
per cent per annum during Plan period. This is certainly impressive compared
to 2.0 per cent rate of industrial growth per annum during pre-independence
period - 1900-91 to 1945-46. The contribution of industry to GDP has
substantially increased from 14.9 per cent in 1950-51 to 28 per cent in
1995-96. Apart from the rise in the quantity of production, the industrial
structure has been widely diversified, covering the entire spectrum of
consumer, intermediate and capital goods. There has been an acceleration of the
production of basic and capital goods industries, particularly since Second
Five Year Plan, which had a heavy-industry strategy. this has resulted in a
larger contribution of these industries to the economy. As a result of the
swifter growth of investment goods industries, there has been a big shift in
their status in the economy. Prior to Planning in India, industries
manufacturing machines, tools etc. were almost non-existent. Currently, these
industries account for around 50 per cent of total value added by the
industries. (Their importance is also vindicated by the large weight age
assigned to them in the index of industrial production.) No less important is the change that has taken
place in the composition of industries. The number of industries producing a
large variety of goods has increased. And there can be found a change in the
relative significance of traditional and new industries. During independence,
India inherited an industrial structure, which was restricted to a few
industries, such as sugar, steel and textiles. However, the structure
underwent a major transformation during mid 1950s when industrialization
drive was launched; and self-reliance became one of the vital objectives of
Planning. Thanks to the Second Plan, in particular, India has a large variety
of industries today producing goods of varied nature. This change in Indian industrial structure has
yielded many fruits to Indian economy. It has strengthened the base of the
economy, which helps the economy to move towards self-reliance. |
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