nd str and n rastr         t re      9.5
     expansion of PSUs accounted for more than half                 imPortAnce
     of the GDP of the economy by 1988–89.8
                                                                    This is considered as the most important industrial
     2. Provision of Licencing                                      policy of India by the experts as it decided not only
                                                                    the industrial expansion but structured the very
     One of the most important developments of                      nature and scope of the economy till 1991 with
     independent India, the provision of compulsory                 minor modifications. All the industrial policies
     licencing for industries, was cemented in this                 were nothing but minor modifications in it except
     policy. All the schedule B industries and a                    the new industrial policy of 1991 which affected
     number of schedule C industries came under                     deeper and structural changes in it with which
     this proivision. This provision established the so-            India started a wider process of economic reforms.
     called ‘Licence-Quota-Permit’ regime (raj) in
     the economy.9                                                  inDustriAl Policy stAtement, 1969
                                                                    This was basically a licencing policy which aimed
     3. Expansion of the Public Sector                              at solving the shortcomings of the licencing
     Expansion of the public sector was pledged for                 policy started by the Industrial Policy of 1956.
     the accelerated industrialisation and growth                   The experts and industrialists (new comers)
     in the economy—glorification of government                     complained that the industrial licencing policy
     companies did start with this policy. The emphasis             was serving just the opposite purpose for which it
                                                                    was mooted. Inspired by the socialistic ideals and
     was on heavy industries.
                                                                    nationalistic feelings the licencing policy had the
     4. Regional Disparity                                          following reasons:
                                                                          (i) exploitation of resources for the
     To tackle the widening regional disparity, the
                                                                              development of all;
     policy committed to set up the upcoming PSUs in
                                                                         (ii) priority of resource exploitation for the
     the comparatively backward and underdeveloped
                                                                              industries;
     regions/areas in the economy.10
                                                                        (iii) price-control of the goods produced by
     5. Emphasis on Small Industries                                          the licenced industries;
     There was emphasis on small industries as well as                  (iv) checking concentration of economic
                                                                              power;
     the khadi and village industries.
                                                                         (v) channelising investment into desired
     6. Agricultural Sector                                                   direction (according to the planning
                                                                              process).
     The agricultural sector was pledged as a priority.
                                                                          In practice, the licencing policy was not serving
        8.  V.M., Dandekar, ‘Forty years After Independence’,       the above-given purpose properly. A powerful
            p. 64.
                                                                    industrial house was always able to procure fresh
        9.  These industries which were set up after procuring
            ‘licences’ from the government had fixed upper limits
                                                                    licences at the cost of a new budding entrepreneur.
            of their production known as ‘quota’ and they needed to The price regulation policy via licencing was
            procure timely permit i.e., permission for the supply   aimed at helping the public by providing cheaper
            of, raw materials—that is why such a name was given
            to the whole system.
                                                                    goods, but it indirectly served the private licenced
         .  Such a commitment went completely against the ‘theory   industries ultimately (as central subsidies were
            of industrial location’.                                given to the private companies from where it