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
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
the khadi and village industries.
(v) channelising investment into desired
6. Agricultural Sector direction (according to the planning
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
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