How would one characterize the trajectory of India’s industrial sector during the Five-Year Plans up to 1990?
Show answer & explanation
Correct answer: C
Explanation
Correct Answer: Demonstrating significant growth in basic and heavy industries, yet often falling short of targets and facing inefficiencies.
Explanation:
- Industrial Progress (1950–1990): From independence until 1990, India's industrial policy focused primarily on the Public Sector and heavy industries (such as iron, steel, and machinery).
- Successes: During this period, India's industrial base became highly diversified and robust. India moved towards self-reliance in terms of basic and capital goods.
- Challenges: Due to the 'License-Permit Raj,' excessive government control, and a lack of competition, inefficiencies increased within Public Sector Undertakings (PSUs). Many schemes failed to achieve their stipulated targets, and India lagged behind global standards in terms of technology.
Additional Facts:
- Industrial Policy Resolution (IPR) 1956: Often referred to as India's 'Economic Constitution,' it established the primacy of the public sector.
- Interlude: A 'Plan Holiday' occurred during the period 1966–69, which impacted industrial investment.
- 1991 Reforms: It was precisely these problems persisting until 1990 (inefficiencies and the Balance of Payments crisis) that necessitated the implementation of the LPG (Liberalization, Privatization, and Globalization) reforms in 1991.
Potential Questions for Upcoming Exams:
- Question: Which Industrial Policy Resolution emphasized the protection of Small Scale Industries?
- Answer: Industrial Policy Resolution, 1977.
- Question: What term was used to describe the slow growth rate of the Indian economy prior to 1991?
- Answer: The 'Hindu Rate of Growth' (a term coined by Prof. Raj Krishna).
- Question: When was 'FERA' enacted?
- Answer: In 1973 (to regulate foreign exchange).