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SIX DECADES OF INDUSTRIAL DEVELOPMENT: GROWTH OF
MANUFACTURING SECTOR IN INDIA FROM THE 1940S.
C P Chandrasekhar (2011)
This article mainly concentrates on the growth trajectory of India’s manufacturing sector
during the post independent era. India is one of the classic examples of state led industrial
growth after the independence and became a role model for the newly independent third
world nations in Asia, Africa and Latin America. The first four decades of the industrial
development can be divided into three phases. This classification can be done either in
terms of growth rates or the nature of policy regime pursued during the respective time
periods.
The first phase is the period between 1950 to 1965. It was a period of high state regulations
and credible growth of industrial sector at around 5 percent. The Industrial Policy Resolution
1956 reserved 17 sectors under the purview of public sector including railways, air
transport, arms and ammunition, iron and steel, atomic energy etc. The role of the state in
industrial development had been exercised mainly in four ways.
1. Insulating the domestic market from excessive import competition.
2. Regulating the inflow of foreign capital and mediating the interaction of domestic
and foreign capital.
3. Invest in sectors including infrastructure where the private are not willing to come.
4. Reduce industrial concentration and ensure a more regionally dispersed industrial
sector.
According to the authors view, the credit of the industrial development in the first fifteen
years of independence goes to the active state intervention in the above mentioned ways.
The second phase of the industrial development lies between 1965 to 1980 during which
India was experiencing an acute deceleration of the industrial sector. There was no much
change in the policy regime pursued. But the roots of deceleration were arising from the
implementation difficulties mainly on account of a massive reduction in the public
expenditure. Since it was period of three wars, India had to allocate a major portion of the
revenue for defence spending. Drought years from 1966 to 1969 have accentuated the
deepness of the crisis. The years from 1980 to 1990 was characterised by an improved
performance of the industrial sector. It was mainly because of the expansion of public
expenditure.
Lastly the author describes about the growth of industry with special focus on the
manufacturing sector in the post liberalisation phase. It is true that some sectors such as
automobiles, pharmaceuticals etc could attain a global attention. On the other hand, India’s
traditional exports such as textiles which are more labour intensive have declined as a
percentage of total exports. Moreover it can be seen that the growth trajectory of the
industrial sector is more fragile in the post liberalisation period.