Industrial Sector (1947–90)
1 Quick Explanation 1–3 min
Industry got a big push via the Industrial Policy 1948/1956, public sector and import substitution.
Licensing, protection and public investment built the base but created inefficiency.
2 Detailed Notes
Key idea
Industrial Policy 1948 & 1956
- Industrial Policy Resolution 1956 set the 'socialistic pattern': three categories of industries.
- Category A (public sector monopoly): arms, atomic energy, railways.
- Category B (mixed): steel, minerals, machine tools.
- Category C (private sector, state facilitative): remaining industries.
Important
Industrial Policy 1991
The 1991 Industrial Policy dismantled the licence raj — only 5 industries remained under licensing (later reduced). New economic policy opened the sector to private and foreign investment.
Key points
The licensing system
- Industries required licences for entry, expansion and output.
- Protected from foreign competition (import substitution).
- Result: domestic firms had no pressure to innovate or cut costs.
Example
Small scale industry
SSI units were reserved and protected to generate employment, but many remained small-scale and less efficient than large plants.
Key idea
Assessment
- Positives: industrial base diversified, capital goods produced indigenously.
- Negatives: inefficiency, high costs, low productivity due to protection & controls.
In One Minute
1947–90 industry: public-sector-led via IPR 1956, licence raj + import substitution built the base but bred inefficiency. 1991 policy ended licence raj.
Important for Exam
- ⭐ IPR 1956 categories — very common MCQ.
- ⭐ Licence raj → inefficiency (3 marks).
- ⭐ Import substitution policy.
- ⭐ Public sector role in initial development.
Watch & Learn
Watch on YouTubeINDUSTRIAL DEVELOPMENT - INDIAN ECONOMY 1950 1990 - IPR 1956
by Rajat Arora
Why watch? IPR 1956, licensing and public sector explained.
Open on YouTube Watch on YouTubeINDUSTRIAL DEVELOPMENT - INDIAN ECONOMY 1950 1990 - IPR 1956
by Rajat Arora
Why watch? 1948, 1956 and 1991 policies compared.
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