9.4 ndian onom
left open for private sector investment— supposed to take up the initiatives with a more
with many of them having the provision expansive follow up by the private sector. This
of compulsory licencing. schedule also carried the provisions of compulsory
(v) There was a 10 year period for review of licencing. It should be noted here that neither
the policy. the states nor the private sector had monopolies
in these industries unlike Schedule A, which
inDustriAl Policy resolution, 1956 provided monopoly to the Centre.3
The government was encouraged by the impact (iii) Schedule C
of the industrial policy of 1948 and it was only All industrial areas left out of Schedules A and
after eight years that the new and more crystallised B were put under this in which the private
policies were announced for the Indian industries. enterprises had the provisions to set up industries.
The new industrial policy of 1956 had the Many of them had the provisions of licencing and
following major provisions. have necessarily to fit into the framework of the
social and economic policy of the state and were
1. Reservation of Industries subject to control and regulation in terms of the
A clear-cut classification of industries (also known Industries Development and Regulation (IDR)
as the Reservation of Industries) were affected Act and other relevant legislations.4
with three schedules: The above classification of industries had
(i) Schedule A an in-built bias in favour of government-owned
companies (i.e., the CPSUs) which went according
This schedule had 17 industrial areas in which to the ideas of the planning process, too. Thus,
the Centre was given complete monopoly. The expansion of the public sector became almost a
industries set up under this provision were known directive principle of economic policy and the
as the Central Public Sector Undertakings (CPSUs) PSUs did expand in the coming times.5
later getting popularity as ‘PSUs’. Though the It was this industrial policy in which the then
number of industries were only 17, the number of PM Pandit Jawaharlal Nehru had termed the
PSUs set up by the Government of India went to PSUs the ‘temples of modern India’, symbolically
254 by 1991. These included those industrial units pointing to their importance.6 There was a time
too which were taken over by the government soon after Independence when the PSUs were
between 1960 to 1980 under the nationalisation regarded as the principal instrument for raising
drives.2 These industries belonged to Schedules B savings and growth in the economy.7 The rapid
and C (other than Schedule A).
3. The Central government had always the option to set
(ii) Schedule B up an industry in any of these 12 industrial areas. This
happened in the coming years via two methods first,
There were 12 industrial areas put under this
through nationalisation and second, through the joint
schedule in which the state governments were sector.
. ndustrial olicy esolution, cto er .
2. The nationalisation of industrial units allowed the
5. V. M. Dandekar, Forty Years After Independence in
government to enter the unreserved areas, which
Bimal Jalan edited Indian Economy: Problems and
consequently increased its industrial presence. Though
Prospects, enguin oo s, ew elhi, , p. .
the nationalisation was provided a highly rational
official reason of e e ic e efi the private 6. This statement we get in the Second Five Year Plan
sector always doubted it and took it as an insecurity and (1956–61), too.
major unseen future hurdle in the expansion of private 7. Bimal Jalan, India’s Economic Policy ew elhi
industries in the country. Penguin Books, 1992), p. 23.