A Project submitted in partial fulfillment of the requirement

for the degree of Bachelor of Arts, Political Science Hons.

Submitted by Under the Supervision of

Priya Mallick Miss. Itinarani Sahoo
+3 Final Year Arts Govt. Women’s college, puri
(Political Science Hons.)
College Roll No.: BA16-245
Univ. Roll No: 22P0116019
Regd. No: P01-5677/2016

DEPARTMENT OF POLITICAL SCIENCE

GOVT. WOMENS COLLEGE, PURI
2019
1
 CERTIFICATE

This is to certify that the candidate Priya Mallick bearing

College Roll. No: BA16-245,University Roll No: 22P0116019,
Regd. No: P01-5677/2016, a student of +3 Final year Arts (Political
Science Honors) for the session 2018-19 is a bonfire student of Govt.
Womens College, Puri. She has done the project entitled
“Industrialization in India After independence” is her original
piece of work and to the best of my knowledge, no other candidate has
submitted the same paper for the award of Bachelor’s Degree in Arts.

Sign. of the Guide

Date:

2
 DECLARATION

I do hereby declare that the project entitled

“Industrialization in India After Independence” submitted by
me to the Department of Political Science of Govt. Womens
College, Puri in partial fulfillment of the requirement for
Bachelor Degree in Economics is of my own work neither I
have copied or translates it from others and it has not been
submitted to any other institutions including Govt. Womens
College, Puri or published at any time before.

Priya Mallick
+3 Final Year Arts
(Political Science Hons.)
College Roll No: BA16-245
Univ. Roll No: 22P0116019
Regd. No: P01-5677/2016

3
 ACKNOWLEDGEMENT

My project report entitled “Industrialization in India

After Independence” would not have been possible without co-
operation and valuable guidance given by my Guide Miss.
Itinarani Sahoo, Dept. of Political Science, Govt. Womens
College, Puri. I undertake this opportunity to convey gratitude
and obligation to her
While presenting this project I have tried my best to the
precise and objective. Up to-date data and recent findings of
eminent scholars have been included by drawing on recent
issues of learned journals and periodicals. I express my
gratitude to the authorities concerned in this respect.
I acknowledge my thanks to my parents without whose
cooperation and financial provisions this project would not
have been possible.

Date:
Place:
Priya Mallick
+3 Final Year Arts
(Political Science Hons.)
College Roll No: BA16-245
Univ. Roll No: 22P0116019
Regd. No: P01-5677/2016

4
 CONTENTS
Page No:
CHAPTER -1____________________________________ _1-4__
 Introduction to industrialization
 Objective of the study
CHAPTER –II____________________________________ __5-12_
 Growth and structural composition of industries
 Long-term trend
 High low and higher
 Present uptrend
CHAPTER –III__ 13-16
 Structural changes and reforms in independence
 Fast growth of basic capital goods
 Enlarged production capacity
 Industrial licensing policy
 Liberalization
CHAPTER-IV________________________________________17-27
 Role of Industrialization
 Raising income
 Reduce disparities in export and import elasticity
 Meet high-come demands
 Absorbing surplus labour
 Strengthening the economy
 Provide for security
 Evaluation off industrial
 Positive features
 Negative features
CHAPTER –V__________________________________ __28-30
 Conclusion
 Reference

*******

5
 CHAPTER-1

Introduction

India is one of the newly industrialized country and the country

was economically mostly dependent on agriculture post independence.
Even today, most people are dependent on agriculture and the economy
is mostly dependent on service sector. India is one of the very few
countries which skipped industrialisation and jumped directly to
services after agriculture.India is the third largest economy in terms of
purchasing power parity. There are various industrial fields in which
India saw limited growth until market liberalisation and the growth has
been better post liberalisation.

Before going into the details of Industrialisation in India after

independence, lets gather an idea about what is the actual meaning of
Industrialisation in general terms. According to Wikipedia,
Industrialisation or industrialization is the natural time frame of social
and economic change that transforms a human group from an agrarian
society into an industrial one. It is a part of a wider modernisation
process, where social change and economic development are closely
related with technological innovation, particularly with the development
of large-scale energy and metallurgy production.

The first country to industrialise was the United Kingdom during the
Industrial Revolution, commencing in the 18th century. Industrialisation
in Asia began in the late 19th century starting from Japan. One of the
fastest rates of industrialisation occurred in the late 20th century across

6
four countries known as the Asian tiger (Hong Kong, Singapore, South
Korea and Taiwan), due to the existence of stable governments and well
structured societies, strategic locations, heavy foreign investments, a
low cost skilled and motivated workforce, a competitive exchange rate,
and low custom duties. China and India, while roughly following this
development pattern, made adaptations in line with their own histories
and cultures, their major size and importance in the world, and the geo-
political ambitions of their governments. ndia's government is investing
in economic sectors such as bioengineering, nuclear technology,
pharmaceutics, informatics, and technologically-oriented higher
education, exceeding its needs, with the goal of creating several
specialisation poles able to conquer foreign markets.

Prime Minister Nehru firmly believed that "no country can be politically
and economically independent unless it is highly industrialised and has
developed its resources to the utmost". Nehru’s ideas about India’s
development were broadly incorporated in free India’s first Industrial
Policy Resolution adopted by the Contituent Assembly in 1948. The
resolution officially accepted the principle of mixed economy. Industries
were divided into four categories. In the first category were strategic
industries which were made the monopoly of the Government. In the
second category were six industries which included, among others, coal,
iron and steel. Government decided that all the new units would be
started exclusively by the government in the public sector without
disturbing the existing ones in the private sector. 18 industries, including
heavy castings and forings of iron and steel, ferro alloys and tool steel
were covered by the third category and the rest of the industries by the
fourth.

7
In total, the government committed itself to the development of basic
steel industry while the private sector was to benefit through the
establishment of downstream units which would use pig iron, billets,
blooms and flat products to be made by the public sector steel plants. In
keeping with the spirit of the resolution the Government decided to start
a chain of steel plants all over the country in the public sector. The first
such plant was set up at Rourkela in Orissa. The second came up at
Bhilai in Madhya Pradesh. It was followed by a third at Durgapur in
West Bengal. Each of these three plants had an initial production
capacity of one million tonne. Durgapur was followed by a steel plant at
Bokaro in Bihar. Durgapur Steel Plant is one of the integrated steel
plants of Steel Authority of India Limited, located in Durgapur, in the
eastern Indian state of West Bengal. It has played a historically
important part in the industrial development of India. It is the first
Ingot(1960) producing steel plant in India. Apart from it its the only
steel plant in India which produces train wheels for all passenger cars
which includes Rajdhani, Shatabdi Express. Bokaro Steel Plant is
located in the Bokaro district of Jharkhand. It is the fourth integrated
public sector steel plant in India built with Soviet help. It was
incorporated as a limited company in 1964. It was later merged with the
state-owned Steel Authority of India Limited. Bokaro Steel Plant is
hailed as India's first Swadeshi movement steel plant. Its first blast
furnace was started on 2 October 1972. The onward march of Indian
steel did not stop at Bokaro. The fifth public sector steel plant was set up
at Visakhapatnam in andhra Pradesh. As a matter of fact, the country
was dotted with steel and steel-related plants in public and private
sectors, like Alloy Steel Plant, Salem Steel Plant, Kalinga Iron Works,
Malavika Steel Ltd., Jindal Vijaynagar Steel Ltd., to name only a few.

8
About the same time TISCO launched its two-million-tonne expansion
programme.

The Government’s Industrial Policy had undergone changes, once in

1956 and then in 1991. The resolution modified in 1956 brought
changes in the category pattern and listed more industries for the public
sector than did the earlier one, though it was not harsher towards the
private enterprise. In the new industrial policy announced in 1991 iron
and steel industry, among others, was included in the list of industries
reserved for the public sector and exempted from the provision of
compulsory licensing.

Objective of the study

 To accelerate the rate of economic growth and speed up

industrialisation.
 To develop heavy industries and machine making industries.
 To build up a large and growing co-operative sector.
 To reduce disparities in income and wealth.
 To prevent private monopolies and concentration of economic power
in different fields in the hands of a small number of individuals.

9
 CHAPTER-2

Growth and structural composition of industries

The performance of industries can be assessed in terms of the rate

at which the industrial output has grown over time and the changes in
the structural composition of industries that have marked the industrial
scene. The productive performance of industries can be assessed in
terms of the rate at which the industrial output has increased, and the
changes in the structural composition of industries that have marked the
industrial scene. The trends in respect of these two aspects of industrial
development are traced since independence, in particular since 1951,
when the government, beginning with the First Plan, embarked on the
task of industrializing the country. The scenario as the growth of
industrial production reveals is one of a rising trend, with significant ups
and downs spread over a number of years.

 Long – Term Trend:

Overall the growth-rate of industrial production has been over six per
cent since 1951. However, this has not been a steady figure through all
these years.

We can see three sub-trends in the growth rates during the period:

 High, Low and Higher:

The high sub-trend continued for 15 years since 1951 to 1965.

During this period, the growth rate has been higher than the long-term
trend rate, and an accelerating one. Commencing from 4.8 per cent

10
growth for the first four years since independence 1947-51, the growth
came up to 5.7 per cent during 1951- 52. This increased to 7.2 per cent
during 1955-60 and further moved up to a high of 9 per cent during
1960-65.

The second sub-trend lasted for 10 years starting from 1966-1976,

when this rising trend got a setback. The growth rate declined to 4.1 per
cent and came lower than the long-term trend. However, this decline
was compensated by the rise in the growth-rate over the trend rate in the
third period since the mid-1970s. Beginning from a growth rate of 4.6
per cent during 1976-81, it increased to 7 per cent and over 9 per cent
during the 1980s.

For the decade as a whole during 1980-81 to 1990-91 the growth rate
has been 7.9 per cent. The rise in the growth curve continues to make
the 1990’s with the growth rate at 6 per cent (1991-2000). Since the
recent uptrend has persisted for long, even longer than the earlier one,
the growth rate of industrial output may be said to have moved on to a
higher path.

 Present Uptrend:

While the growth-rate since 1991-92 has been on a higher path,

except the low rates during 1991-93. The reasons for the low growth
rate during this period has been caused by the government’s recent
policies to stabilize the economy particularly for reducing/eliminating
the large fiscal and balance of payments deficits and curbing the high
inflationary rise in prices and to restructure it to make it more
competitive and efficient.

11
 These policies have involved compression in imports adversely
affecting import-dependent industries; reduction in Government’s
expenditure, reducing aggregate demand for the industrial products;
high interest rates causing an increase in the industrial costs; devaluation
of the rupee making import-inputs expensive.

However, this fall in the growth-rate was a transitory phase. Following

liberalization of the economy, the growth rate not only recovered to a
higher level, but remained fairly sizeable thereafter. The new policies
have helped in promoting market, private sector and foreign direct
investments, and the industrial output. Thus, despite some deviations,
the over-all trend can be described as one of reasonably high growth.

After Independence Indian Industrial Policies

At the time of Independence, Indian economy was facing severe

problems of illiteracy, poverty, low per capita income, industrial
backwardness and unemployment. After India attained its Independence
in 1947, a sincere effort was made to begin an era of industrial
development. The government adopted rules and regulations for the
various industries. This industrial policy introduction proved to be the
turning point in the Indian Industrial history.

Industrial Policy

Industrial policy is a document that sets the tone in implementing,

promoting the regulatory roles of the government. It was an effort to
expand the industrialization and uplift the economy to its deserved
heights. It signified the involvement of Indian government in the
development of industrial sector.

12
With the introduction of new economic policies, the main aim of the
government was to free the Indian industry from the chains of licensing.
The regulatory roles of the Indian government refer to the policies
towards industries, their establishments, their functioning, their
expansion, their growth as well as their management.

Industrial growth of a country is guided and regulated through its

industrial policies. Let’s understand the journey of various industrial
policies.

I. Industrial Policy of 1948

The first industrial policy after independence was announced on 6th April
1948. It was presented by Dr Shyama Prasad Mukherjee then Industry
Minister. The main goal of this policy was to accelerate the industrial
development by introducing a mixed economy where the private and
public sector was accepted as important in the development of the
economy. It saw Indian economy in socialistic patterns. The large
industries were classified into four categories:

 Industries with exclusive State Monopoly/Strategic industries: It

included industries engaged in the activity of atomic energy,
railways and arms and ammunition.

 Industries with Government control: This category included

industries of national importance. 18 such categories were
mentioned in this category such as fertilizers, heavy machinery,
defence equipment, heavy chemicals, etc.

 Industries with Mixed sector: This category included industries that

were allowed to operate independently in private or public sector.
13
 The government was allowed to review the situation to acquire any
existing private undertaking.

 Industry in the Private sector: Industries which were not mentioned

in the above categories fall into this category. High importance was
granted to small businesses and small industries, leading to the
utilization of local resources and creating employment.

II. Industrial Policy Resolution, 1956

This second industrial policy was announced on April 20, 1956, which
replaced the policy of 1948. The features of this policy were:

 A new classification of Industries.

 Non-discriminatory and fair treatment for the private sector.

Promotion of village and small-scale industries.

 To achieve development by removing regional disparity.

 Labour welfare.
The IRDA divided industries into three categories:

 Schedule A industries: The industries that were under the monopoly

of the state or government. It included 7 industries. The private
sector was also introduced in this industries if national interest
required.

 Schedule B industries: In this category of industries, the state was

allowed to establish new units but the private sector was not denied
to set up or expand existing units e.g. chemical industries, fertilizer,
synthetic, rubber, aluminium etc.

14
  Schedule C industries: So the industries that were not a part of the
above-mentioned industries then it formed a part of Schedule C
industries.

To summarize, the policy of 1956 in which the state was given a primary
role for industrial development as capital was scarce and business was not
strong.

III. Indian Policy Statement, 1973

Indian Policy Statement of 1973 identified high priority industries with

investment from large industrial houses and foreign companies were
permitted. Large industries were permitted to start operations in rural and
backward areas with a view to developing those areas and enabling the
growth of small industries around. And so the basic features of Indian
Policy Statement were:

 The policy was directed towards removing the distortions, it

provided for closer interaction between agriculture and industrial
sector.

 Priority was given towards generation and transmission of power.

 The list of industries reserved for the small-scale sector was

expanded.

 Special legislation was made to protect cottage and household

industries were introduced.

III. Indian Policy Statement 1977

Indian Policy Statement was announced by George Fernandes then union

industry minister of the parliament. The highlights of this policy are:

A] Target on the development of small-scale and cottage industries.

15
  Household and cottage industries for self-employment.

 Tiny sector investment up to 1 lakhs.

 Smallscale industries for investment up to 1-15 lakhs.

B] Large-scale sector

 Basic industries: infrastructure and development of small-scale and

village industries.

 Capital goods industries: meeting the requirement of cottage

industries.

 High technological industries: development of agriculture and

smallscale industries such as petrochemicals, fertilizers and
pesticides.
C] Restrict the control of big business houses.

D] Role of the public sector:

 Development of ancillary industries.

 To make available expertise in technology and management in

small and cottage industries.
E] Revival and rehabilitation of sick units.

V. Industrial Policy, 1980

The Congress government announced this policy on July 23rd, 1980. The
features of this policy are:

 Promotion of balanced growth.

 Extension and simplification of automatic expansion.

 Taking over industrial sick units.

16
  Regulation and control of unauthorized excess production
capabilities installed for industrial houses.

 Redefining the role of small-scale units.

 Improving the performance of the public sector.

VI. New Industrial Policy, 1991

The features of NIP, 1991 are as follows:

 Public sector de-reservation and privatization of public sector

through disinvestment.

 Industrial licensing.

 Amendments to Monopolies and Restrictive Trade Practices

(MRTP) Act, 1969.

 Liberalised Foreign Investment Policy.

 Foreign Technology Agreements (FTA).

 Dilution of protection to SSI and emphasis on competitiveness

enhancement.
The all-around changes introduced in the industrial policy framework
have given a new direction to the future industrialization of the country.
There are encouraging trends on diverse fronts. Industrial growth was 1.7
percent in 1991-92 that has increased to 9.2 percent in 2007-08.The
industrial structure is much more balanced. The impact of industrial
reforms is reflected in multiple increases in investment envisaged, both
domestic and foreign.

17
 CHAPTER- 3

Structural Changes and Reforms in Industries

Besides the uptrend in the growth-rate, the industrial scene has been
marked by a change in the structural composition of industries which is
of considerable significance for the economy.

a. Fast Growth of Basic and Capital Goods:

For quite a long period since the Second Plan (1956-61) the basic and
capital goods industries enjoyed a rapid growth. It in fact remained
higher than the general growth rate of industries. Consequently, the
industrial structure leans quite heavily towards the capability- building
industries. This trend began since the Second Plan that accorded the
highest priority to these industries. As compared to this, the growth rates
of intermediate goods and consumer goods have mostly been lower than
the general growth-rate.

The two types of consumer goods- durable and non-durable consumer

goods- the former witnessed a higher rate which compares well with that
of the basic and capital goods industries. Without double, the higher
growth rates in respect of these industries appeared high only because
the initial starting base of these industries was very low.

However, from another point of view, this means that a fast growth was
necessary to correct the imbalance in the industrial structure. The net
impact is in fact more than a mere correction of the imbalance. The
industrial capacity for production has become quite sizeable.

18
b. Enlarged Production Capacity:

The fast growth of the basic and capital goods industries resulted in that
the country’s capacity for the production of industrial goods has been
much expanded. This is shown by the fact that the weight age to the
basic and capital goods industries in the index of industrial production
has remained quite high. In the new index (base year 1993-94), it is 44.9
per cent. Its weight was more than half at 55.85 per cent in the index of
industrial production with the base 1980-81.

This has increased from a lower weight age at 47.53 percent in the index
of industrial production with 1970 as base, which in turn has risen from
36.87 per cent in the earlier index of production with 1960 as the base.
This structural change is significant as it allows a country to build
infrastructure which facilitates direct productive activities. It also means
larger possibilities of producing machines which produce consumer
goods.

In fact, it is for this reason that much diversification in the products has
taken place in the country. And for the same reason, the country is no
longer dependent on imports of some goods of vital importance for the
economy. This has also enabled the country to produce goods which
cannot be imported or imported with great difficulty. The greater
importance of these industries is also reflected in India’s exports, as the
export of manufactured goods has gone up substantially. With the
adoption of policies of liberalization several structural reforms in the
economy have taken place

19
c. Industrial Licensing Policy

With the introduction of New Industrial policy (NIP) 1991, a substantial

program of deregulation has been undertaken. Industrial licensing has
been abolished for all items except for a short list of 7 industries related
to security, strategic or environmental concerns.

The Monopolies and Restrictive Trade Practices Act (MRTP Act) has
been amended in order to eliminate the need to seek prior Government
approval for expansion of the present industrial units and establishment
of new industries by large companies. The system of Phased
Manufacturing Program, which was designed to enforce progressively
greater degree of local content, has been abolished. Industrial location is
discouraged only in large cities because of environmental reasons.

A significant number of industries had earlier been reserved for the

public sector.

Now the areas reserved for the public sector are:

 Arms and ammunition and allied items of defense equipment,

defense aircraft and warships,
 Atomic energy,
 Mineral specified in the schedule to atomic energy, and
 Railway transport.

Even in this areas private sector participation can be invited on a

discretionary basis.

20
d. Liberalization:

The liberalization ushered in 1991 has tremendously expanded the scope

of the private industry by removing many of the entry and growth
restrictions. Prior to liberalization, 17 of the most important industries
were exclusively reserved for the public sector. Further, in 12 of the
most important remaining industries the public sector was to play a
dominant role.

Even in industries open to the private sector, establishment of new units

and expansion of the existing units was regulated by licensing. Large
companies and dominant undertaking had to obtain clearance under the
MRTP Act. The restrictive policies resulted in slow growth of the
industry and economy and lack of competition causing lack of choice,
high prices, poor quality, lack of innovation and disregard for the
consumer

Now only six industries are reserved for the public sector and even in
some of these industries, selective entry of the private sector is allowed.
Industrial licensing is confined to 15 industries. Private enterprises can
now enter and grow in most of the industries. Liberalization has given
an enormous boost to private investment in the industrial sector

21
 CHAPTER -4

Role of Industrialization

There is a strong case for the industrialization of countries like India

with vast human resources, large and varied natural resources and
continental dimensions.

The following are the main arguments in favor of industrialization

a. Raising Income:
The industrial development can provide a secure basis for a rapid
growth of income. Industries produce products that are largely
dependent upon man’s efforts. In the sphere of industries, man can, by
putting in more effort and application of ever-improving technology,
push on with the objective of producing more and more economic
goods. In the industrial sphere it is possible to enlarge the scale of
production.

Empirical evidences suggest a close relationship between the high level

of income and industrial development. In the industrially developed
countries, for example, the GNP per capita is as high as $ 27,510. It is
very low at $420 for the low-income economies and around $ 1970 for
the middle income economies.

b. Reduce Disparities in Export and Import Elasticity:

If an economy does not opt for industrial development, it may
concentrate on the products of primary goods, export them, and get
industrial goods from industrially developed countries. But such an
22
economy may find it difficult to earn foreign exchange to import their
manufactures.

The income-elasticity of export-goods of agricultural countries is low,

while the income elasticity of import-goods is high. As in the case of
domestic demand, the demand for agricultural products in other
countries, in particular advanced countries, is very low.

In fact, developed countries have surpluses in agricultural products for

exports. As against this, the demand for the import of manufactured
goods by underdeveloped countries is very intense. The disparities in
elasticity, therefore, point to the difficulty of earning adequate foreign
exchange. India presents an example who cannot export to earn enough
foreign exchange from the export of its primary products alone.

Jagdish Bhagwari remarks, “Where this is so, industrialization is a

rational consequence”. Industrialization can, therefore, correct
disparities in the elasticity of foreign trade. The country may establish
such industries that are in the nature of import-substitutes so that the gap
between the elasticity of imports and exports is bridged

c. Meet High-Income Demands:

After having met the needs of food, incomes of the people are spent
mostly upon non-food items. Beyond certain limits, the demands of the
people are usually for industrial products alone. Till basic needs are met,
the demand for agricultural products increases. Once agricultural
production, including dairy production, reaches a point where the
demand for food is completely met, its further expansion comes to a
halt.

23
With the advancement on the industrial front, the proportion of natural
raw materials in finished products has declined. Besides, the synthetics
have greatly reduced the need for natural raw material. This points out
to the fact that income-elasticity of demand for the manufactured goods
is high and that of agricultural products low

d. Absorbing Surplus Labor:

Indian economy characterizes by surplus labor and rapidly growing
population. In addition the labor becomes redundant as the process of
technical improvement in agriculture progresses. To absorb this surplus
labor, as also to provide employment at a rate commensurate with the
addition to the labor force, it is essential to industrialize the country. It is
the establishment of industries alone that can generate employment
opportunities at an increased rate.

e. Strengthening the Economy:

The industrialization can provide the necessary elements of strength to
the economy.

i. The development of industries producing capital goods enables a

country to produce a variety of goods, in large quantities and at
low costs, make for technological progress and change in the
outlook of the people. This brings about an industrial civilization
or environment for rapid progress.

ii. It makes possible the production of infrastructural goods for the

future growth of the economy.

24
iii. Industrialization imparts elasticity to the system and overcome the
bottlenecks to achieve comparative advantage to suit its resources
and potentialities of manpower.
iv. It meets the requirements for the development of agriculture.
v. The industrial development imparts to an economy dynamic
element in the form of rapid growth and a diversified economic
structure which makes it a progress economy

f. Provide for Security:

Industrialization provides security to the country when some

international crisis develops. Dependence on foreign sources for defense
materials is a risky affair in such situations. To provide against such
contingencies as also to keep the country’s security arrangements in
perform form during all times. It is only through industrial development
in a big way that the national objective of self-reliance in defense
materials can be achieved.

Evolution of Industries in India

The enhancement in science and technology has brought tremendous

chances all over the world and the world is literally shrinking in size and
has become a global village. The latest phase of economic transition has
one aspect in common, change which was brought about in one part of
the world has slowly spread out to other parts, and thereby led to
economic development of the countries adapting to change, and India
was no exception to this. The British rule in India synchronized a new
beginning in the history of India. The trade routes were developed by
means of roads, railways and seas. This connected India to the rest of
the world and Indian products competed with the world market, slowly
this affected the organisation of the Indian Industrial Sector. During the

25
eighteenth century, India was predominantly an agricultural nation with
no major industrial development. There were some industries in towns,
like the brassware, wood carving, weaving, stone work, gold and silver
work ,copperware industries and many other small industries catering to
the needs of the people. Benares, Bombay Presidency, Nasik and Poona,
and in the South, Hyderabad, Vishakhapatnam and Thanjavur were
famous for its brass and copper and bell metal wares. Thus every
important city had different handicrafts flourishing. Before the
nineteenth century India was exporting elegant fabrics to the western
countries, the invention of new machineries for spinning and weaving
had diminished the market for these elegant fabrics and at the same time
it 13 revealed the possibilities of India as a supplier of raw cotton. A
failure of the cotton crop in America during 1846 made them look for
alternatives. The American Civil war closed the ports of the south and
there was a huge demand for cotton and it was only then that Britain
turned their attention towards cotton cultivators from India. This led to
the increase in the price of cotton and led to the construction of roads
and railways for the faster movement of goods

Evaluation of Industrial Performance:

We need to evaluate the developments in the industrial production.

Since the industrial growth has experienced both desirable and
undesirable features, it is appropriate to describe both of them, before
making a final judgment.

Positive Features:

There have been certain positive features of industrial performance.

We describe some of them

26
1. Impressive Growth:

The growth rate of industrial production has been satisfactory, if not

very satisfactory. The industrial output has grown at the rate of 6 per
cent since 1961. As a result its contribution to the GDP has gone up
sharply from 6 per cent to 25 per cent. The industrial growth rate is far
higher than that of agricultural growth rate which is at 2.7 per cent. It is
also much above the growth in national income at 4 per cent.

The industrial growth rate has also exceeded the population growth at
around 2 per cent. In comparison to other countries, India’s growth rate
appears to be of fair size. It falls between the high growth rate of 8 per
cent and more in a very few country, including some developing
countries, and low growth rates of under 4 per cent in many countries,
including some developed countries. Therefore, some people describe
India as a semi-industrialized country.

2. Strong Industrial Base:

The good industrial performance has assisted in strengthening the base

for further industrial growth. This is clear from the large developments
made in the field of basic and capital goods industries. The
establishment and fast expansion of such industries as steel, cement,
engineering, petroleum, etc., strengthen the supplying capacity of the
economy.

The strength of India’s industrial development may also be measured

from the fact that India is one of the six countries in the world that can
manufacture thermal and hydroelectric stations on their own. This

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further assists in the growth of intermediate and consumer goods
industries.

3. Industrial Modernization:

The profile of industries has witnessed a transformation from one of old

and traditional to new and modern. This is clear from the several
changes that have taken place in industrial development. One is
diversification in the industrial set up. This has seen a journey from an
industrial structure restricted mostly to a few consumer goods industries
like textiles and sugar, then to setting up of steel plants.

There was also some limited development of engineering in railway

workshops and assembly plants. All this has now changed. Traditional
industries like textiles are no longer as important as before. The weight
age of these industries in the index of production has declined
substantially/Engineering and Information Technology have been
important.

These industries have gained importance and produce a large variety of

products. Second, there are significant advances in the fields of
technology and managerial skills. This has enhanced the capabilities of
the country not only to operate highly complex and sophisticated
industrial enterprises, but also for their planning, design and
construction. Significant progress has also been made in the field of
industrial research.

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4. Self-Reliance:

The industrial development has done a commendable work in making

India a self-reliant country in quite a number of commodities, and in
several other the foreign dependence has become very much less as
compared to earlier.

For example, in commodities like Iron and steel, the country has become
self-reliant. In matters of items such as machinery and fertilizers, the
dependence has been significantly reduced. In quite many manufactured
consumer goods, the country has ceased to rely on imports. This can be
attributed to a strategy of industrialization that stressed the development
of producer goods industries which over time enabled the country to
produce durable consumer goods.

5. Increased Investment:

There have been large investments actualized and planned for in the
year 1990s and thereafter. The sharp spurt in the loans sanctioned and
loans disbursed by the All Indian Financial Institutions are indicative of
this development. The period has also seen huge increase in Foreign
Direct Investment as well as Portfolio Investment.

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Negative Features:

1. Long Retrogression:

The fall in the growth rate over a long period of over a decade or so
following the mid-1960s is a matter of concern. However, the growth
rate rose to as high as 9 per cent in the five year period of 1960-65. But
thereafter there has been an almost continuous fall in the growth rate to
an average of as low as 4.1 percent during the ten year period of 1965-
76. Similar serious is the structural retrogression. There has been a large
decline in the growth rate of basic and capital good industries.

The growth rate of basic goods industries fell from 10.4 per cent during
1960-65 to 6.5 per cent during 1965-76, and that of capital goods
industrial from 19.6 per cent to 2.6 per cent. The growth rate of
intermediate goods declined from 6.9 per cent to 3.0 per cent and that of
consumer goods industries from 4.9 per cent to 3.4 per cent. The slow
growth of these industries has inhibited the growth in a large number of
other industries.

2. Large Inefficiency:

Many large industries suffer from inefficiency which leads to the high
costs of several firms, in any case two to three times higher than the
world costs. The inefficiency manifests in low levels of productivity and
existence of large unused capacity. The extent of underutilization has
been in some cases as high as 70 to 90 per cent.

The industries involved have been large in number and important ones
such as steel casting, cycle tubes, mining and coal washing machinery,
cement mill machinery, pulp machinery, building and road construction
machinery etc.
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The inefficiency causes serious consequences such as wastage of inbuilt
capacity, finances and managerial ability, waste of employment
potential, loss of production, dampening of enthusiasm for new
industries, emergence of unethical practices. Inefficiency also turns out
shoddy goods of questionable quality produced by many firms.

3. Widespread Sickness:

Many large industries have fallen sick resulting in their sporadic

closures. The number of such sick industrial units was 3,317 in March
2001 belonging to industries like engineering, textiles, chemicals, sugar,
rubber, cement etc. It is important to note that unlike the developed
countries, countries like India with limited resources, cannot afford their
productive assets turning non-operational. Further, it results in loss of
jobs, production and of revenue to the government and undesirable
socio-economic consequences.

4. Regional Imbalance:

The industrial development of the country has resulted in unequal

distribution. Gross region/state imbalances have developed with few
states taking a lion’s share. According to the Annual Survey of
Industries (1996-97) four states (Andhra Pradesh, Gujarat, Maharashtra
and Tamil Nadu) have accounted for a very large proportion of the
industrial activities of the country.

On the other hand the four states with large population namely Bihar,
Madhya Pradesh, Uttar Pradesh and West Bengal have very little by
way of industrial development. All this shows large regional imbalances

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caused largely by a faulty industrial planning that allowed the existing
grown industrial regional to grow further.

5. Employment Generation:

The industrial development has failed to generate employment to any

significant extent.

Taking together the achievements and the negative aspects, the picture
of industrial development appears to be a mixed one. However, despite
such an inference, the country is industrial still in a backward stage. The
growth-rate, though not unsatisfactory, is not sufficiently high to make a
perceptible dent in the agrarian character of the economy.

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 CHAPTER-5
Conclusion:
Industries are the backbone of any nation. Industrial growth has a
positive bearing on a nation’ seconomy. An upward swing with regard
to per capita income, an overall rise in the standard of living, availability
of essential commodities at affordable cost and all pervasive element of
prosperity areindicative of industrial growth. A nation’s prosperity is in
direct proportion to the growth of industries. Industrialization leads to
the development of a country. Appearance of large scale industries

contributes to the national economy by mass production of goods and

employing the latest machinery. Industrialization is a major condition
for social, scientific and economic progress. Industrialization methods
and their social and economic consequences are determined by the
country’s internal and external condition.

An attempt has been made in the foregoing chapters to analyse

Tuticorin as a prominent industrial hub of the southern peninsular India.
It had once been identified as a coastal town where pearl fishing was
once the widely preferred occupation. It has become the show piece of
industrial enterprise and with the new port in place, the possibilities
seem endless.

The port has a glorious past, and today it has emerged as one of the
finest and fast developing ports occupying a predominant position in
Indian maritime trade. The proposal to construct a deep-sea harbor at
Tuticorin was first thought of in the year 1914. The administration of
port made under

33
Tuticorin Port Trust (TPT) board was constituted by the TPT Act of
1924. Afterwards various committees and experts examined the
development of the port. Due to stringent financial condition of the
government, all the proposals were dropped. After Independence, the
port development proposals were once again revised and funds were
sanctioned by the government in the year 1958. The first systematic
traffic survey for Tuticorin was carried out by the National Council of
Applied Economic

Research during the year 1958-59. Now at present, Tuticorin is the

second largest port in Tamil Nadu and 3rd largest container terminal in
India and also 3rd international port in Tamil Nadu and second all
weather port. Tuticorin port was the first Indian port to obtain the
prestigious ISO 9002 certificate issued by the Indian register quality
system accredited by the Dutch Council Certification.

34
Reference
Book & Authors
 Amar, A. D. (1996) "The business opportunity of the next
century: India" in The Mid–Atlantic Journal of Business,
(December 1996).
 Anonymous (1996) "India: Poised for growth", World Trade,
October 1996.
 Basu, K. & P. Patnaik (1995) in D. Mookherjee Indian Industry
– Policies and Performance. Oxford University Press: Oxford.
 Bouton, M. M. (1998) "India’s problem is not politics" in
Foreign Affairs, (May/June 1998).
 Bristow, D.(1998) "A stake in the road to modernisation" in
Accountancy Int., (December 1998).
 Heeks, R. (1996) India’s software industry. Sage Publications:
New Delhi.
 Lane, P. (1998) "World trade survey: India’s hesitation" in The
Economist, (October 1998).

Magazine:

 Times of India
 India Today
 Business India
Website

 www.industrialization in India/after independence com

 www.google.com

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