What is the role of Industrialization in India for nation development?

Industrial policy refers to those principles and activities being pursued and performed to industrialize a country. It studies taxation system, protection policy, labour and capital, cottage and small industries, foreign capital and all other related matters concerned with industries of a country.

Prior to independence, government was guided has by the principle of laissez-faire and industrial development was left exclusively to the private control.

It is only after independence that government has taken keen interest to develop industries of the country. At present, industrial development is fully controlled in and regulated by the government.

Role of Industrialization

There is no second opinion to say that industrialization is an effort of finding solution to the problem of poverty, insecurity, over population and ending backwardness. However, its role is explained as under:

1. Leading Sector to Economic Growth:

industrialization is considered crucial to development strategy as it lifts our stagnation. It brings forth both backward and forward linkage effort.

The success of western countries followed by Asian countries, Japan is the standing instance of what industrialization can do to a nation.

2. Gainful Employment Opportunities:

No wonder, industrial development can greatly increase gainful employment opportunities especially in less developed countries. Generally, these countries are characterized by the existence of surplus labour. Thus, it opens avenues for employing the surplus labour.

3. Raising Productivity:

The modern industry can directly or indirectly help to raise productivity of the economy. This is due to better organization and technology. Moreover, it is accompanied by the expansion of tertiary sector.

4. Development of Agricultural Sector:

In fact, agricultural and industry are the two arms of an economy. Both are interdependent and the development of one sector promotes the other.

The interdependence relates to (i) supply of raw material and inputs from agriculture to industry and vice versa (ii) supply of wage goods to industrial sector (Hi) the supply of materials for building up economic and social overheads in the agricultural sector and (iv) the supply of basic consumption goods to the agricultural population.

5. Useful for Foreign Trade:

The nature of foreign trade also undergoes a change with industrialization of the country. It has been noticed that foreign trade of less developed countries is dominated by primary products but industrial development may lead to a change in the composition and direction of foreign trade.

This is clear from the fact that India witnessed a spectacular increase in non-traditional items of export on account of industrial development.

6. Higher National Income and Per Capita Income:

As there is proper utilization of natural resources with the adoption of latest and modern techniques of production. It leads to higher national income and per capita income, increased employment and greater production which further leads to national prosperity.

7. Capital Formation:

Industrialization promotes capital formation that is crucial catalyst of economic prosperity. Truly, industrial development brings in good profit and more income which in turn leads to greater saving and investment. One of the reasons of Japan’s industrialization is that it ranks first as far as capital formation is concerned.

8. Sign of Higher Standard of Living and Social Change:

A country cannot produce goods and services of high quality in order to attain decent living standard without the progress of industrial sector. In other words, industrialization has been regarded as a vital instrument for eradicating poverty and misery of poor lots.

9. Useful for Defense:

Industrial development is also helpful for the defense of a country. The more an industrialized country, more arms and ammunition it produces and thus, strengthens its defense.

10. Specialization and Division of Labour:

Industrialization involves specialization and division of labour. In fact, specialization is based on the application of modern technology. Therefore, industrialization results in all round progress of the country.

After independence, need for a new, well planned and clear industrial policy was felt. To meet this need, four industrial policies consisting Industrial Policies of 1948, 1956, 1977, 1980 and 1991 have been formulated. But we small discuss only the policies of 1956, 1991.