INDUSTRIAL POLICY IN INDIA:

Constitutional Vision of Socialism

Dr. P.B. Pankaja

CONTENTS

Forexvard Hi Acknowledgement x Contents xi Cases Cited xxii Abbreviations xxx

CHAPTER-I INTRODUCTION 1

Significance of the topic 6 Problem and limitations in carrying out this

study 10 Review of the existing literature 11 Objectives of the study 17 Hypotheses 18 Methodology 19 Plan of Chapters 20

CHAPTER-II CONCEPTUAL FRAMEWORK OF SOCIALISM:

CONCEPTUAL ANALYSIS Introduction Concept of socialism — Backdrop

Definitions and analysis Socialism as defined in dictionaries Socialism as defined by Political Scientists and

Thinkers Different perceptions of socialism Communist perception Capitalist perception The origin and growth of socialism Different dimensions of socialism—A global

perception Utopian and Scientific Socialism Genesis of Utopian Socialism

23 23 24 25 26

29 31 32 35 38

39 40 40

(xij) Industrial Policies in India: Constitutional Vision of Socialism

Scientific Socialism 43 Revolutionary and Evolutionary Socialism 47 Marxism 48 Later modifications of Marxism 49 Leninism 49

Stalinism 51 New Leftism 52 Euro-Communism 53 Evolutionary Socialism 57

Fabian Socialism 57 German Social Democracy 59 Revisionism 60 French Syndicalism 60 Guild Socialism 62 Critical Theory 63

Relevance of socialism in the present context 63 Contemporary Socialism 63 Socialist International 65 Socialism in the Third world 65 Democratic Socialism 66 Neo-revisionism 69 Indian Socialism 69

Findings 70 Distinction between Socialism and

Communism 71 Policy analysis 72 The role of ideology in political economy 75 Glossary of ideological mutations 78 Summary 81

CHAPTER—III INDIAN SOCIALISM: PHILOSOPHICAL ASCRIPTIONS 85

Genesis and growth of Indian socialism 87 Phase I: Socialist values in the preaching of

great Sayers and Seers — A philosophic foundation 87

CONTENTS (xiii)

Phase II: Socialist orientation and early years of Indian National Congress 92

Phase III: Institutional developments of socialist ideology—A political orientation 95

Entry of Communism 99 The birth of Congress Socialist Party 100 Praja Socialist Party 104 Indian socialist thinkers—Different faces 106 Nehru's Socialism (1889-1964) 106 Nehru's Socialist Vision 107 Nehru's Socialist Model 111

The Economic Model 112 Political Model 114

An assessment 114 Gandhian Socialism 116 Dr. Ambedkar—An apostle of social justice 121 Jaya Prakash Narayan's Socialism (1902—

1979) 124 Lohia's model of indigenous socialism 131 Acharya Narendra Deva—a humanitarian

socialist 134 Ashok Mehta's Democratic Socialism 137 Subhas Chandra Bose's Samyavada 140 M.N. Roy — A revolutionary socialist 142 Socialist commitments of Mrs. Indira

Gandhi 145 Summary 154

CHAPTER—IV CONSTITUTIONAL VISION OF SOCIALISM 165

Shaping of the Indian Constitution-A socialist perspective 167 Indian Constituent Assembly—

Constitution and composition 168 Objective Resolution—A declaration of

dedication for socio-economic justice 168

(xiv) Industrial Policies in India: Constitutional Vision of Socialism

Constituent Assembly Debates on adoption of the word 'socialist' in the Preamble 172

Constituent Assembly Debates on Fundamental Rights—A Special reference to 'Right to property' 175

Constituent Assembly Debates on the Directive Principles of State Policy 182

Clause 36 184 Clause 37 184 Clause 38 185 Clause 43 185 Clause 44 185 Socialist fabric of the Constitution 187 Preamble —An embodiment of goal values

and instrumental values 189 Goal values and instrumental values 192 Insertion of the word 'socialist' in the

Preamble—The Constitution 42nd Amendment Act, 1976 198

Constitution (First Amendment) Act 1951 199 Constitution (Fourth Amendment) Act

1955 200 Constitution (Seventeenth Amendment)

Act 1965 202 Constitution (Twenty-Fourth Amendment)

1971 203 Constitution (Twenty-Fifth Amendment)

Act 1971 204 Constitution (Twenty-Sixth Amendment) Act

1971 205 Constitution (Forty-Second Amendment) Act

1976 206 Criticism of the Preamble and its

Amendment 211 Fundamental Rights —A Socialist

Perspective 212 Impact of the Constitution (Forty-fourth

Amendment) Act, 1978 220

CONTENTS (xv)

Directive Principles of State Policy—A socio-economic charter 221

Can we define the Constitutional Vision of Socialism? 225

Summary 227

CHAPTER-V SOCIALIST COMMITMENT IN INDUSTRIAL POLICIES IN

INDIA IN THE TIME FRAME CONTINUUM OF PLANNING 231 Introduction 231 Economic Planning and Industrial Policies 232 Planning in India-A socialist perspective 236

Genesis of planning in India and the initial exercises 237

Debate over alternative approaches 241 Strategies of Planning 241

Industrial policies in India 244 A historical perspective of Indian

industries 244 Industrial policies after independence 248

Industrial Policy Resolution of 1948 248 Categorization of Large Scale Industries 249 Call for foreign collaboration 249 Emphasis on cottage, village and small

scale industries 250 Industrial Relations and Labour welfare 251 Nationalisation measures 252 Curb on monopoly and concentration of

economic power .253 Formulation of Industrial Licensing Policy 253 Role of Public Sector 254 Industrial finance 255 Industrial Tariff Policy 256 Industrial growth 256

Evaluation of the policy 257 Industrial Policy Resolution of 1956 258

-i) Industrial Policies in India: Constitutional Vision of Socialism

Recategorisation of Industries 259 Role of the State and the Public Sector 259 Fair and non-discriminatory treatment for

the private sector 260 Encouragement to Village and Small-scale

Industries 260 Reduction of regional disparities 260 Industrial Relations and Labour Welfare 260 Industrial finance 261 Curb on Monopoly and Prevention of

Concentration of Economic Power and other Trade Controls 261

Attitude towards foreign capital 262 Approach towards foreign collaboration 263 Nationalization Measures 263 Licensing System 265 industrial Growth under Industrial Policy

Resolution 1956 until 1977 269 Evaluation of the Policy Resolution of 1956 271 Industrial Policy Statement of 1977 273 Development of Small Scale Sector 273 Promotion of export-oriented industries 274 Approach towards foreign collaboration 274 Rehabilitation of sick units 275 Expanding role for the public sector 275 Professionalisation of public sector

management 275 Regulation of big business houses 275 The equity reduction of foreign companies 275 Nationalization measures 276

Evaluation of 1977 industrial policy statement 276 Industrial Policy of 1980 278 Small Scale and Village Industries 280 Revitalization of the Public Sector 280 Economic Federalism and Development of

Backward Areas 280 Industrial Sickness 280

CONTENTS (xvii)

Energy Conservation and Ecological Balance 281

Import Policy 281 Liberalized licensing after 1980 281 Industrial Growth 282 E valuation of Policy of 1980 282 New Industrial Policy of 1991 283

Compulsions 284 Objectives set forth under the Industrial

Policy Resolution of 1991 291 Policy measures 292 Industrial Licensing 292 Foreign Investment 293 Foreign Technology 293 Public Sector Policy 294 MRTP Act 296 Promoting Small Scale Industries 297

Evaluation of the New Industrial Policy of 1991 298 Post-policy reforms 300 Measures towards privatization 300 Faulty Disinvestment 303 Rectification of Disinvestment Wrongs 306 Measures of Globalization 307 Post-2000: Industrial Reforms with

Humane face 307 Summary 308

Pre-reform Industrial Policy Resolutions 309 Post-reform Industrial Policy 310

CHAPTER-VI LEGISLATIVE AND JUDICIAL RESPONSE TO INDUSTRIAL

POLICIES Introduction Legislative response to industrial policy

measures Industrial Socialism Legislations to promote industrial relations

311 311

311 313 314

7Üi) Industrial Policies in India: Constitutional Vision of Socialism

The Industrial Dispute Act, 1947 315 The Industrial Employment (Standing

Orders) Act, 1946 316 The Trade Union Act, 1926 316

Legislations to regulate private sector 317 Industries (Development and Regulation)

Act, 1951 317 The Monopolies and Restrictive Trade

Practices Act, 1969 317 Foreign Exchange Regulation Act 1973

(FERA) 318 Legislations to gain public ownership of

means of production—Nationalization enactments 318

Legislations relating to Sick Units 320 Legislations relating to Small Scale, Village

and Cottage Industries 321 Legislations to promote labour welfare 322 The Workmen's Compensation Act, 1923 323 The Payment of Wages Act 1936 323 The Minimum Wages Act 1948 323 The Factories Act, 1948 324 The Mines Act, 1952 325 The Employees State Insurance Act, 1948

(ESI Act) 326 The Employees Provident Fund and

Miscellaneous Provisions Act, 1952 326 The Maternity Benefit Act, 1961 327 The Payment of Gratuity Act, 1972 327 The Payment of Bonus Act, 1965 327 The Bonded Labour System (Abolition)

Act, 1976 328 Special legislations to regulate child and

women labour 328 Report of the Second National Commission on

Labour 2002: A brief sketch 330 Recognition of Rights of Workers 331

CONTENTS (xix)

Gender Expression 332 Categorization of Workers 332 Exclusion of certain categories from

application of labour laws 332 Consolidation of Labour Relation Law 332 Changes in Trade Union Act 332 Suspension Period 333 Lay off and Retrenchment - 333 Access to justice 333 Strike ballot 334 Illegal Strikes and Lockouts 334 Workers participation in management 334 Uniform application of labour laws 334 Labour Flexibility and Contract Labour 334 Minimum wage fixation 335 Bonus 336 Social Security Package 336 Special provision for women 336 Non-exemption for EPZ and SEZ 337 Child Labour 337 Closed shop system 337 Labour Judicial Service 337 Umbrella Legislation for unorganized

sector 337 Obligation of Employers 338 Social security benefits 338 An assessment of recommendations 339

Paradigm shifts in legislative trends 340 Amendment of Monopolistic Restrictive

Trade Practices Act in 1976 and 1991 342 Repeal of Monopolistic Restrictive Trade

Practices Act, 1969, and bringing in Competition Act, 2002 342

Repeal of Foreign Exchange Regulation Act (FERA) and bringing in Foreign

(xx) Industrial Policies in India: Constitutional Vision of Socialism

Exchange Management Act (1999) (FEMA) 343

Paradigm shifts in labour legislations 344 Paradigm shift in NCL reports 345

Judicial response to industrial policy measures 345 Judicial response to nationalization

measures 348 Supreme Court between 1950 and 1971 348 Supreme Court between 1971 and 1980 355 Post-Emergency Supreme Court 357 Judicial response to industrial disputes and

labour welfare legislations 362 Supreme Court and right to strike 362 Supreme Court on retrenchment, bonus

and equal pay for equal work 364 Period of judicial conservatism (1950-59) 364 Period of judicial pragmatism (1960-79) 368 Post-Emergency Supreme Court 370 Judicial response to New Industrial Policy

measures 376 Supreme Court on socialism 383

Summary 385

CHAPTER—VII SUMMARY, CONCLUSIONS AND SUGGESTIONS 387

Summary 337 Socialism 389 Cultural base 391 Economic base 392 Political base 392 Intellectual base 393 Overall assessment of the industrial policies in

India 400 Multi-dimensional conclusions from the above

analysis 407

CONTENTS (xxi)

Evaluation of objectives and verification of hypotheses 413

Suggestions ' 415 From industrial perspective 415 From legal perspective 416 From ideology perspective 418 From global perspective 418 It is an eternal truth 418

ANNEXURES I Industrial Policy Resolution (6 April 1948) 421 II Industrial Policy Resolution (30 April

1956) 429 IIA Statement by the PM in the Constituent

Assembly (6 April 1949) 437 III Industrial Policy Statement (23 December

1977) 439 IV Industrial Policy Resolution (23 July 1980) 453 IVA Industrial Policy Statement (31 May 1990) 465 V Industrial Policy Resolution (24 July 1991) 471 VI Industrial Policy Reforms after 1991 493 VII Objective Resolution (13 December 1946) 499 VIII Selected Articles from the Constitution of

India 500 IX Relevant Constitutional Amendments 509 X National Manufacturing Policy, 2011 513

BIBLIOGRAPHY Bibliography 549

SUBJECT INDEX Subject Index 567

CASES CITED

AEPC v A.K. Chopra (1999) 2 SCC 34 218

Air India Statutory Corporation v United Labour Union AIR 1997 SC 645 375

Ajaib Singh v Sirhind Coop. Marketing-cum-Processing Service Society Ltd. (1999) 6 SCC 82 194

Akadasi Padhan v State of Orissa (1963) 2 Supp SCR 691 383

All-India Bank Employees Association v National Industrial Tribunal AIR 1962 SC 171 363

APPCB v M.V. Naidu AIR 1999 SC 822 218

Assam Sillimanite Ltd. v Union of India (1992) 1 Comp LJ 165 (SC): AIR 1992 SCW 754 360

Bala (S.S.) v Sardana (1997) 8 SCC 522 196

Balco Employees Union (Regd.) v Union of India (2002) 1 Comp LJ 205 (SC): (2002) 2 SCC 333 380

Bandhua Mukti Morcha v Union of India AIR 1984 SC 802 373

Basu (D.K.) v State of West Bengal AIR 1997 SC 10 218

Bella Benarjee v State of West Bengal AIR 1954 SC 170 200,351

Bharatkhand Textile Manufacturing Co. Ltd., Ahamedabad and others v Textile Labour Association AIR 1960 SC 833 368

Bhikaji Narayan v State of M.P. AIR 1955 SC 781 361

Bijoy Cotton Mills Ltd. v State of Ajmer AIR 1964 SC 193 %9

Bommai (S.R.) v Union of India AIR 1994 SC I918 196, 227,412,417

Centre for Public Interest Litigation v Union of India and another (2003) 4 Comp LJ 1 (SC) 381

CASES CITED (xxiii)

CERC v Union of India AIR 1995 SC 922 218

Chameli Singh and others v State of U.P. and another (1996) 2 SCC 549 197

Common Cause, a registered Society v Union of India (1997) 1 Comp LJ 30 (SC): AIR 1997 SC 1539 218

Cooper (R.C.) v Union of India (1970) 1 Comp LJ 144 (SC): (1970) 1 SCC 248 149, 204,351,377

D. Marcopollo and Co. (P) Ltd. v D. Marcopollo and Co. (P) Ltd. Employees Union and others AIR 1958 SC 1012 366

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Dattatraya Govind Mahajan and others v State of Maharashtra (1977) 2 SCR 815: AIR 1977 SC 915 ~ 346

Delhi Science Forum and others v Union of India and another (1996) 2 Comp LJ 1 (SC): (1996) 2 SCC 405 379

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Duncans Industries Ltd. v State of U.P and others (2000) 1 SCC 633 380

Dwarkdas Shrinivas of Bombay v Sholapur Spinning and Weaving Co. Ltd. and others AIR 1954 SC 112 364

Excel Wear v Union of India AIR 1979 SC 25 211,384

Express Newspaper (Private) Ltd., arid another v Union of India and others AIR 1958 SC 578 335

Fertilizer Corporation Kamgar Union (Reg.) Sindri and others v Union of India and others (1981) 1 SCC 568 377

Francis Corallie v Delhi Administration AIR 1981 SC 746 371

(xxiv) Industrial Policies in India: Constitutional Vision of Socialism

G.B. Pant University of Agriculture and Technology v State of Uttar Pradesh AIR 2000 SC 2695: (2000) 7 SCC 109: (2000) 1 LLJ 1109: (2000) All LJ 2420 375

Garg (R.K.) v Union of India (1982) 1 Comp LJ 139 (SC): AIR 1981 SC 2138 378

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217, 351, 352, 354

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Kameshwar Singh v State of Bihar AIR 1952 SC 252 199, 200, 350,363

CASES CITED (xxv)

Kesavananda Bharati v State of Kerala (1973) 4

Kharak Singh v State of U.P. AIR 1963 SC 1295

Khatri v State of Bihar AIR 1981 SC 923

SCC 225 188,190,192, 206, 207, 212,355,356,357,412

218

219 Kochuni v State of Kerala AIR 1960 SC 1080:

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Maha Rao Saheb v Union of India (1981) 1 SCC 166 359

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Mastan Bee (S.K.) v General Manager South Central Railway (2003) 1 SCC 184 218

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Mehta (M.C.) v State of Tamil Nadu AIR 1997 SC 699 219

Mehta (M.C.) v Union of India (1987) 3 Comp LJ 69 (SC): AIR 1987 SC 965 218

Minerva Mills Ltd. v Uiuon of India AIR 1980 SC 1789 358,359,384

(xxvi) Industrial Policies in India: Constitutional Vision of Socialism

Model Mills Nagpur Ltd. v Dharam Das and others AIR 1958 SC 311 363

Muir Mills Co. Ltd. v Sruti Mills Mazdoor Union AIR 1955 SC 170 364

Munna v State of UP AIR 1982 SC 806 219

Nageswar Rao v APSRTC AIR 1959 SC 308 361

Nakara (D.S.) v Union of India (1983) 1 SCC 305 211, 372,383

National Textile Workers' Union v PR. Ramakrishnan (1983) 1 Comp LJ 1 (SC): (1983) 1 SCC 228 194

Neeraja Chaudhary v State of MP AIR 1982 SC 1099 372

Olga Tellis v Bombay Municipal Corporation (1985) 3 SCC 545: AIR 1986 SC 180 218, 219, 374

Patna Electric Supply Co. Ltd. v Patna Electric Supply Workers Union AIR 1959 SC 1035 366

Peerless General Finance and Investment Co. Ltd. v Reserve Bank of India- (1992) 1 Comp LJ 391 (SC): (1992) 2 SCC 343 379

People's Union for Democratic Rights v Union of India AIR 1982 SC 1473 219, 372

Police Commissioner, Delhi v Registrar, Delhi High Court AIR 1997 SC 95 218

Prabha Dutt v Union of India AIR 1982 SC 6 218

Pradhan (C.K.) v Collector of Customs AIR 1962 SC 204 217

Premium Granites and another v State of T.N. and others (1994) 2 SCC 691 379

Punjab National Bank Ltd. v Shri Ram Kumar AIR 1959 SC 598 366

Purushotham Namboodri v State of Kerala AIR 1962 SC 694 202

Rai Bahadur Diwan Badri Das v Industrial Tribunal, Punjab (1963) 3 SCR 936 . 369

CASES CITED (xxvii)

Rai Bahadur Motilal Poona Mills Ltd. vTukaram and another AIR 1957 SC 73 362

Rajahmundry Electric Supply Corporation v State of Andhra AIR 1954 SC 251 348

Ram Narain Agarwal v State of UP (1983) 4 SCC 276 218

Ramachandra Iyer v Union of India AIR 1984 SC 541 374

Randhir Singh v Union of India AIR 1982 SC 879 211, 224, 372, 384

Rangarajan (T.K.) v Government of Tamil Nadu (2003) 6 SCC 581 344,363

Saghir Ahmed v State of UP AIR 1954 SC 728; (1955) SCR 707 200,349

Samatha v State of A.P. (1997) 8 SCC 191 384,391

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Sanjit Roy v State of Rajasthan AIR 1983 SC 328 219,373

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Sri Radhy Shyam (Dead) through LRs and others v State of UP and others (2011) SCC L Com 189 214,220

(xxviii) Industrial Policies in India: Constitutional Vision of Socialism

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Standard Vacuum Refining Co. of India v Its. Workmen AIR 1958 SC 578 335,369

State of Bihar v Kameswar AIR 1952 SC 252:1952 SCR 889 199

State of Bombay v Hopsital Mazdoor Sabha AIR 1960 SC 60 368

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State of Maharashtra v M.P. Vashi AIR 1996 SC 1 218

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Subodh Gopal Bose's case AIR 1951 SC 92: (1954) 1 SCR 587 200

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Vajravelu Mudaliar (P.) v Special Deputy x

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Vrajilal & Co. v State of M.P. AIR 1970 SC 129

Waman Rao v Union of India AIR 1981 SC 271

Workmen of Dima Kuchi Tea Estate v Management of Dima Kuchi Tea Estate AIR 1958 SC 353

Workmen of Subong Tea Estate v Subong Tea Estates (1964) ILRJ 333 (SC)

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