Overview of Industrial Policy 1956:
The draft of the industrial policy, 1956 was very complete. This emphasized the establishment of a socialist pattern of society. This policy also emphasized that the country’s industrial development should be guided by the Principles of the Constitution.
The industrial policy 1956 emphasizes, among other things, the need to expand the public sector, build a large and growing cooperative sector and encourage separation of property and management in private industries and, above all, prevent the emergence of private monopolies.
The industrial policy 1956 was considered the “economic constitution of India.” The 1980 policy statement paid the highest tribute when it stated that “the 1956 industrial policy announcement reflects our country’s value system and has conclusively demonstrated the merit of constructive flexibility.”
Objectives of the 1956 industrial policy:
- Accelerate the growth rate and accelerate industrialization.
- Build a cooperative sector.
- Expand the public sector.
- Develop heavy industry and machines.
- Expand the artisanal, rural and small-scale industry.
- Check the concentration of economic power in a few hands.
- Reduce the imbalance in the distribution of income and wealth.
- Achieve a balanced regional development and other socio-economic objectives.
Characteristics of Industrial Policy 1956:
The 1956 resolution divided industries into three categories:
1. The monopoly of the State.
2. Mixed sector (public and private, both allowed)
3. Industries left for the private sector
The state monopoly:
In this list (Schedule A) included industries whose future development would be the sole responsibility of the state. The 17 industries listed in these categories were: weapons and ammunition, atomic energy, iron and steel, heavy smelting, heavy machinery, heavy electrical industries, coal, mineral oils, iron ore and other important minerals such as copper, lead and zinc, airplanes, air transport, rail transport, shipbuilding, telephony, telegraph and generation of wireless equipment and distribution of electrical energy.
A mixed sector of public and private companies:
In this section, 12 industries (listed in Schedule B) were included. These will be progressively state-owned and, in general, the State will take the initiative to establish new businesses. But these private companies are also expected to complement the efforts of the State. Minerals (except minor minerals), road transport, maritime transport, machine tools, basic and intermediate products required by chemical industries such as manufacturing of drugs, dyes and plastics, antibiotics and other essential drugs, fertilizers, synthetic rubber, chemical pulp, carbon, and aluminum carbonization and other non-ferrous metals are included here. In these industries, the State would increasingly establish new units and increase their participation, but would not deny the opportunities of the private sector to establish units or expand existing units.
Industries left for the private sector:
All remaining industries and their development were left to the private sector. The division of industries was not very strict. That is, there may be overlap, for example, licenses were later granted to the private sector to invest in mining and oil. The government also invested in areas that remained for the private sector. The 1956 policy increased the area of operation of the State. From then on, the State began to be very interested in the development of heavy industry and invested a good amount of money and resources. Not only this, but it also promoted the private sector to work together as a manufacturer and supplier and also as a user of by-products. The State accepted the role of the private sector and established and encouraged financial institutions to provide assistance to the private sector.
The 1956 policy provided for the rapid growth of villages and small industries. To eliminate regional disparities, this policy emphasized balanced regional growth. For this, it encouraged the establishment of industries in backward areas. This policy was intended to improve the working conditions of workers and the expected industry to take care of the working conditions of workers and ensure industrial peace for their rapid development. Like 1948, its Policy also accepted the importance of foreign capital in national development but maintained that the main interest and effective control must always be with the Indians.