Overview of Industrial Policy 1977:

In March 1977, the first non-Congress government was at the center. The Janata Party assumed power and Morarji Desai, a staunch Gandhian, became the Prime Minister. The new government declared a new industrial policy, 1977.

The Janata government was in the opinion that during the last 20 years the excessive emphasis on the heavy industry had to be corrected; Emphasis has been placed on heavy industry, and to curb unemployment and poverty, the small-scale industry must be promoted. As a result, the number of items reserved for the small scale increased significantly. The main elements of the Industrial Policy 1977 were:

Development of the small-scale sector:

The policy of the Janata government was that anything that could occur in the small-scale industry should be produced only by them. As a result, the articles reserved for the small-scale industry increased from 180 to 807 in 1978.
The small-scale sector was classified into three categories:

  1. Home and domestic industries that provide large-scale self-employment.
  2. The small-scale sector, including investment in industrial units, machinery and equipment of up to 1 lakh, and located in cities with a population of less than 50,000 inhabitants.
  3. Small-scale industries comprising industrial units with an investment of up to 10 lakh and, in the case of auxiliaries, with an investment in fixed capital of up to 15 lakh.

The government established District Industries Centers (DIC) in each district for the development of small-scale and artisanal industries. The objective was to provide authorization for small-scale industrial projects under one roof. A separate IDBI wing was established to meet the credit requirements of the small-scale industry. Khadi and the village industries were renovated.

Large scale industry:

The industrial policy, 1977 prescribes the following areas for the large-scale sector:

  1. Basic industries, essential to provide infrastructure, as well as the development of small-scale and village industries, such as steel, non-ferrous metals, cement, oil refineries.
  2. Capital goods industries to meet the machinery requirements of basic industries, as well as small-scale industries.
  3. High-tech industries that required large-scale production and that were related to agriculture and small-scale development, such as fertilizers, pesticides, petrochemicals, etc.
  4. Other industries that were outside the list of items reserved for the small-scale sector and that were considered essential for the development of the economy, such as machine tools, organic and inorganic chemicals.

Also read: Industrial policy 1948

Large business houses:

The industrial policy of 1977 established that funds from financial institutions and public sector banks should be dedicated to the growth of small and medium-scale units. Therefore, large companies have to rely on their internally generated resources to finance new projects or the expansion of existing ones.

Public sector:

The Janata government was not satisfied with the role of the public sector then. It considered that the public sector should not limit its role to strategic and heavy goods, but was of the opinion that the public sector should venture into consumer goods. It should encourage the development of a wide range of auxiliary industries and contribute to the growth of decentralized production by making available its experience in technology and management for the small-scale and artisanal industries. This is why the government launched a soda called “Double Seven”.

Also read: Industrial Policy 1956


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