Discuss the salient features of Industrial Policy Resolution 1990
Industrial Policy Resolution, 1980:
The 1980 industrial policy statement was only a further elucidation of the 1956 industrial policy. The aim of the July 1980 amendment was to achieve the industrial revival and effective management of public sector undertakings. It proposed to promote a concept of economic federalism by setting up a few nucleus plants in each of the identified backward districts to generate the development of largest possible number of ancillary industries and promote the growth of cottage and small scale industries.
Objectives:
The policy recognized the importance and implementation of professionalism in the public sector to achieve the target growth, development of management coders in areas of operation, finance, marketing and information system have to receive priority.
The policy statement realized the need of the development of backward areas and proposed to set a few nucleus plants in each backward district to develop small scale and ancillary units through the upgradation of technology and skill.
The promotion and development of agro based industries to receive priority.
The export promotion programme and import substitution sector to received high encouragement.
In the case of sick units, it was proposed to identify them well in advance and take necessary steps either to merge them with large scale unit where ever possible or to find out early remedial measure to avoid it based on the principle 'prevention is better than curve.
The policy statement emphasized the implementation of 'Dispersal of industries principle' to avoid concentration of industries in the urban and metropolitan areas, as they would breed socio economic problems and bring about ecological imbalance.
Capacity utilization of resources to increase productivity received priority.
Removal of distortions to achieve regional balance was considered higher imperative.
The policy statement emphasized on the equitable distribution of investments both in the urban and rural areas.
It was decided to build up buffer stocks of essential raw materials needed by small scale units and as well as decentralizing the market process for these products.
To educate consumers against low quality products and high prices.
Salient Features:
The salient features of Industrial Policy Resolutions 1980 are as follows:
Redefining small units
Approach towards sick units
Effective management of public sector
Private sector
Economic federalism
Increase in production, productivity and employment opportunities.
Promoting regional and sectoral balance
Village industries
Nucleus plant
Modernization packages
Simplifying licencing system
Encouraging latest technology, research & development
Policy regarding water and air pollution.
Redefining small units:
Small scale units have been redefined to boost their development. Limit of investment has increased from Rs. 1 Lakh to Rs. 2 Lakhs for tiny units, from Rs. 20 Lakhs for small scale units (present limit Rs. 3 crores) and from Rs. 15 Lakhs to Rs. 26 Lakhs for ancillary units.
Approach towards sick units:
The policy statements warns that the deliberate mismanagement and financial improprieties leading to sickness would be dealt with firmly. With regard to existing sick undertakings, the policy would be to encourage their manager with healthy units. For this purpose, the existing tax concessions under section 72-A of the income tax act will be made more liberal. Take over would be resorted to as a last measure, only when the efforts to revive industry or other alternatives fail.
Effective management of public sector:
The statement emphasized that public sector will continue to provide the pillars of the country's infrastructure. The Government proposed to strengthen the management of public sector undertakings by developing management ciders in functional field, such as operations, finance, marketing and information systems. The Government also promised to improve the contribution of public sector in terms of generating surpluses and employment for further growth of the economy.
Role of private sector:
The Government will pursue the goal of a vibrant, self-reliant and modern economy in which all sectors and all systems of the society have a positive role to play. Government recognizes that it would be desirable to private sector undertakings to develop in common sense with target and objectives of national plans and policies, but shall not permit the growth of monopolistic tendencies or concentration of economic power and wealth in a few hands.
Economic federalism:
All the best efforts would be made to integrate industrial development and to promote the concept of economic federalism. A few nucleus plants would be set up in each industrial backward district, so that ancillary and small and cottage units may be established in the district.
Increase in production, productivity and employment opportunities :
Industrial development has to be viewed in the broader context of generating higher production and employment. An integral part of this approach would be to create new-focal points of industrial growth which has the maximum effect on the quality of life. This will have to be based essentially on the utilization of local materials and locally available main power. The ripple effect of substantial investment in the backward districts in the past has in many cases not been adequate, mainly because such investments did not have effective language with local resources. Government, therefore, propose to encourage investment by public and private sector which will meet this criteria and will also promote a network of spread out ancillaries
Promoting regional sectoral imbalance:
In order to remove regional unbalances, the Government would promote dispersal of industries with selling up of industries in industrially backward areas. Special concessions and aid would be made available in industrially backward areas.
Rural (village) industries:
Government is to promote such a form of industrialization in the country generate economic viability in the villages. promotion of suitable industries in the rural areas will be accelerated to generate higher employment and higher per capita income for the villages in the country. Handlooms, Handicrafts, Khadi and other village industries will receive great attention.
Nucleus plant:
A nucleus plant would concentrate on assembling the product of the ancillary units falling within its oibit on producing the inputs needed by a large number of smaller units and making adequate marketing arrangement. The nucleus will also ensure a widely spread pattern of investment and employment and w9 distribute the benefits of industrialization to the maximum possible. The nucleus plants would also work for upgrading the technology of the small units. Small is beautiful only if it is growing.
Modernization packages:
Modernizations packages will be evolved to suit the requirements of each industry and will include all aspects like appropriate location and optimum use of energy and the adoption of the right kind of scale and technology in order to minimize cost and improved efficiency in the use of scarce materials. It will be government's endeavor to ensure that the process of modernization percolates down to small units and the villages. Government will review the present arrangements in terms of special facilities and incentives such as soft loan, establishing of proper linkage in the field of marketing and strengthening the credit facility particularly, for the decentralized sector.
Simplifying licensing system:
It was proposed to speed up the processes of examination and decision making and also to examine the possibilities of further rationalization and simplification of the system of industrial licensing. The agencies concerted with issuing of letters of intent and industrial licenses, will not merely concern themselves with letters of intent/industrial licenses, but would also evolves comprehensive system of monitoring the implementation of the schemes. For this purpose, a Data Bank would be built on the progress of various licensed/registered investment schemes.
Encouraging latest technology, research & Development:
In a number of cases, Indian industries has not been able to compete in markets abroad because the scale of output which is related to the level of domestic demand is to small too give them the advantages of modern technology and economies of scale. In cases where a large production base would increase the competitiveness of Indian industry abroad, Government will consider favorably the induction of advanced technology and will permit creation of capacity large enough to make it competitive in world markets, provided substantial exports are likely.
The Indian industry must embark substantial resources for R&D, to constantly update technologies with a view of utilizing optimally the scarce exports. Greater emphasis is required on bringing the benefit of the latest resources, servicing the consumers in a better way and achieving greater R&D to the medium and small units.
Policy regarding water and air pollution:
A data bank was to be created for the study of industrial investments etc., and licensing producers were to be simplified and streamlined. Industrial policy resolution of 1988 emphasized measures for increasing industrial production, but ignored policy stress on measures to reduce concentration of economic power in the private sector and other problems.
Evaluation of Industrial policy Resolution, 1980 :
The Industrial Policy Resolution of 1980 is more pragmatic, because the policy aimed at greater employment generation, more productivity, removal of regional imbalances, boosting exports and promotion of agro-based, cottage and small scale industries. This policy has scored over other policy statements in view of its emphasis on ecological balance and removal of artificial bifurcation between small scale and large scale units.
Even this policy statement is not free from limitations in their, it has given more importance to capital intensive techniques rather than labour intensive methods that could have geared up employment generation.