The post-war period was characterised industrial crisis. With the resumption of import ‘ the withdrawal of war orders production most’ the industries declined and many factories were closed down.
In 1947 the number of factories into provinces of British India was reduced by 556. Mali factories started cutting down the volume of the output. The condition was appalling in cotton ten tiles, sugar, cement, paper and steel industries duel scarcity of raw material, worn out machineries, of modernization, decreasing demands and inflationary trends. There was acute shortage of cot summer goods.
After independence, the Government of Indi realised the need of an appropriate industrial policy F which led to the declaration of first Industrial Policy, Resolution (IPR) in 1948. It marked a fundamental break from the pre-independent laissez-faire policy of the British.
According to this policy the conceptual mixed economy was introduced in which the State and the private enterprise were allowed to co-exist and co-prosper in the fields demarcated for them, This resolution divided the industries into four groups and distribution of industries between state and public sector.
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This policy continued to guide the industries for eight years. Experience of these years and government’s declaration to achieve “socialistic’ pattern of society” paved the way for the Industrial Policy Resolution in 1956 which was based on P.C. Mahalanobis model. Its objective was to speed up industrialisation, to develop heavy industries and machines making industries, to expand public sector, to reduce disparity in income and wealth and to prevent monopoly. IL also emphasised the role of small scale industries as a means of equitable distribution of income and wealth, along with other modern industries.