Brief notes on the new industrial policy of India

The new industrial policy announced by the Govt, recently ushered in a new era in the industrial sphere of the country. It paves the way for liberalization which again will result in a faster industrial growth as the industrial sector is being relieved of unnecessary control and regulation.

On the contrary, politics bureau of the CPM described the policy, the surrender to the IMF – World Bank pressures. Further, it represented a major victory for those agencies that had been systematically pushing the government to adopt the path of outright liberalization and privatization. However, the main drawbacks of new industrial policy are mentioned below.

1. Unresolved Issues:

The new industrial policy seems to have neglected some very important matters regarding the pattern of industrial development. There is a great need to reorient industrial production to confirm it to the country’s potentials. There are many industries which need to be provided support.

For instance, garment manufacturing which is labour intensive has a great potential for further increase in exports. But due to inadequate weaving and manufacturing facilities we have to export raw cotton on a considerable scale. In the same fashion, viability of engineering industry needs to be re-examined as its growth is declining.

2. No Exit Provision:

Another pitfall of the new policy is that it overlooked some important requirements without which the policy loses its strong hold in industrial sector. For instance, there are various relaxations which facilitate easy entry into the industry. But, in the new policy, there is little scope to exit if business makes losses and there is no scope for recovery.

3. Administrative Hurdles:

The new industrial policy represents the intentions and actions of the central Govt, which are important and not sufficient for the effective implementation of the liberal policy. But there are a number of things which are needed to be done at the state level and below.

For instance, an industrialist intending to establish a producing unit may not require license from the central Govt, but he has to get land, seek electricity and water connection and to get sanctioned building plans. For all these he has to approach administration at the state, district level.

4. Little for Labour:

The new industrial policy makes little provisions for labour. A practical exit policy requires co-operation from labour. This pre- supposes that provisions should be made to compensate labour to find jobs somewhere else.

Moreover, it is necessary that labour-employer relations should be placed on such basis which minimizes the conflict arising from changes in the industrial profile of the country.

5. Overlooking Employment:

The generation of employment opportunities to cope with the increase in labour force has been neglected in the new industrial policy. In the eighties, the employment generation in the large and medium industries was as slow as 1.55 per cent a year while the labour force grew at 2.1 per cent a year.

Similarly, in the organized public sector also the annual employment growth rate dropped from 5 per cent in sixties to 2.6 per cent in 1980’s. Thus, the new policy seems to turn its focus away from this problem and displays the same fetish for growth alone as has been during the eighties.

6. Uncertain Prospects for SSI:

In the new industrial policy the future of small sick units is not clear. As, regarding the supply of credit, it stresses on the adequacy of credit rather than cheap credit. Similarly, this policy in its zeal to integrate the production programmes of these industries with large industries may actually make them dependent on big industries.