Programmes of industrial development in the Fifth Plan were formulated keeping in view the objectives of rapid growth, self-reliance and social justice. The major emphasis was on the following:
(a) Rapid growth of core sector industries by giving high priority to steel, non-ferrous metals, fertilisers, mineral oils, coal and machine building.
(b) Specific preferential policy for the location of industries in industrially backward areas in order to reduce inter-regional disparities.
(c) Development of industries which promise a rapid diversification of and growth of exports.
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(d) Enlarging the production of industries supplying mass consumption goods, viz., cloth, edible oils, vanaspati, sugar, drugs, and bicycles. For this purpose 21 industries were relicensed.
(e) Restraint on the production of inessential goods, except for exports.
(f) Development of small industries by reserving 124 items exclusively to the small-scale sector, and promoting the growth of unit’s ancillary to the large industries.
(g) The plan envisaged speedy completion of the projects in hand and maximisation of output from existing plants.
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The Fifth Plan provided a total outlay of Rs. 10,135 crores on organised industry and mining- Rs. 9,600 crores in the public sector and Rs. 535 crores for village and small industries (26 per cent of the total plan outlay).
Against the targeted growth rate of 8.1 per cent in the industrial sector the annual growth rate was only 5.3 per cent during the plan (2.6 percent in 1974-75, 5.7 per cent in 1975-76, 9.5 per cent in 1976-77, and 3.9 per cent in 1977-78).
The main factors responsible for this slow growth of industrial production were: lack of capacity in industries like cement, paper and fertilizer; shortage of power, transport and fuel; unremunerative administered prices; disturbed industrial relations and in some cases poor management.