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Mar 12, 2009

Industrial growth in India: An overview

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The industrial growth in India is very impressive. Post independence era in India has witnessed the sea change in the industrial growth. Various models were adopted in India for the rapid industrialization.

The government came with various industrial polices in order to build strong industrial base in India. The Industrial Policy Resolutions of 1948 and 1956 can be said as foundation for industrial policies in India. These resolutions involved heavy investments in basic and heavy industries besides those in consumer goods industries.

As a result of efforts for rapid industrialization, a firm industrial base has been achieved. Industrial production grew by about five times and India now is the tenth most industrial country in the world. India now has a well-diversified industrial sector covering the entire range of consumer, intermediate and capital goods industries.

The progress the country has made in the respect of industrial sector is clearly reflected in the commodity composition of India’s foreign trade. The share of imports of manufactured goods in foreign trade has steadily declined, while industrial products, particularly engineering goods have become a growing component of India’s exports.

Further, the rapid progress in industrialization has been accompanied by corresponding growth in modern and sophisticated industries and also for planning, designing and construction of such industries.

India could achieve self-sufficiency in consumer goods. Growth of basic and capital goods industries has been particularly impressive. India can now sustain the failure growth of key sectors of the economy primarily through domestic production, with only marginal imports. Further, the infrastructure including Research and Development capability, consultancy and design engineering services, project organization services and innovative capabilities to improve and adapt technologies to suit the domestic factor endowment had shown an impressive record of progress.

During the Third plan period, but for the concluding year of the plan period, the annual growth rate exceeded 8 per cent. The average annual growth rate during the period was 8.22 per cent. During the subsequent three annual plans the growth rates fell significantly, except during 1968-69 when the growth rate was 6.7 per cent.

The period was marked by low growth rates, the average growth rate for the period being 2.83 per cent. The industrial growth rate during the period (4.4 per cent) was significantly lower than that during the Third Plan period (8.22 per cent).

The industrial growth performance during the Fifth plan was significant improvement over the proceeding years after the Third plan period. The average growth rate during Fifth plan period was 6024 per cent. During the period highest growth rate was recorded during 1976-77 at 9. 5 per cent. Subsequent to the fifth plan, the growth rate recorded during the annual plan 1979-80 was negative i.e., -1.6 per cent.

During the sixth plan the industrial sector not only recovered but registered an annual growth rate of 5.9 per cent. During the subsequent Seventh Plan (1985-90) the industrial growth proceeded at a substantial rate and average annual growth rate during the period was 8.5 per cent, the highest growth rate achieved since the end of the Third Plan.


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