1. INDUSTRIAL DEVELOPMENT DURING PLANNING PERIOD

2. Introduction
Before the arrival of Britishers, India was industrially more advanced as compared to the economies of the West European countries. The Britishers systematically destroyed the industrial base of India. As a result, India inherited a weak industrial base. Industrial Development Since Independence: Since Independence, India is trying to build up a sound industrial base. In post-independence period, India started to develop different types of industries with the help of economic planning. The contribution of the industrial sector to the gross domestic product (GDP) of the country which was 15% in gradually increased to 22.3% in and then to 24.1% in But in spite of all its efforts, India is still considered as an industrially backward country.

3. Industrial Development During The Five-year Plans
After the introduction of planning in India, the industrial sector of the country started to develop at a considerably higher rate. On the eve of first plan, the industrial development in India was confined largely to the consumer goods sector. Thus, the industrial structure exhibited the features of an Under-developed economy. Industries manufacturing ‘intermediate goods’ like coal, cement, steel, power, alcohol, chemicals etc. were also established but there production was small as productive capacity was considerably below the requirements. On the whole, while consumer goods industries were well established, producer goods industries lagged considerably behind.

4. INDUSTRIAL DEVELOPMENT UNDER FIVE-YEAR PLANS
OBJECTIVE
ACHIEVEMENT
FAILURE
First Plan
( )
Emphasis of the first plan was on increasing the capacity of the then existing industries rather than establishment of new industries.
The first plan was a great success as the production targets were more than fulfilled. Important projects established during this plan include-Hindustan Machine Tools, Hindustan Antibiotics, Hindustan Cables etc.
The fist plan did not envisage any large scale programmes of industrialization. The main thrust of the first five year plan was on agricultural development.
Second Plan ( )
The second plan set out the task of establishing basic and capital goods industries on a large scale.
The second plan successfully achieved the dispersal of industries into the backward areas.
The second plan failed to achieve its target growth rate of 10.5%. The annual growth rate during this plan was 7.25%.

5. OBJECTIVE ACHIEVEMENT FAILURE Third Plan (1961-66)
The third plan tried to obtain an integrated and balanced development of industries so that the growth of the economy in the subsequent plans could become self-sufficient.
The third plan was a realistic and more balanced of the first two plans. The third plan accorded top-most priority on the completion of ongoing projects initiated during the second plan.
The third plan was a thorough failure because the country suffered from one of the severest famines during this plan. Besides, India had to go through two major conflicts with China and Pakistan.
Fourth Plan ( )
During the Fourth plan, there was much emphasis on the agro-based industries such as sugar, cotton, jute, vanaspati metal based and chemical industries etc.
It was during the fourth plan when much progress was made in alloys, aluminium, automobile-tyres, electric goods, machine tools, tractors and special steel.
During the Fourth plan, the performance of industrial sector was not at all encouraging. The rate of growth of industrial production during this plan was restricted to only 5% as against the target growth rate of 9% per annum.

6. OBJECTIVE ACHIEVEMENT FAILURE Fifth Plan (1974-79)
The fifth plan started with its twin objectives of achieving self-reliance and growth with social justice. The main stress of this plan was on rapid growth of steel plants, export oriented articles and goods of mass consumption.
The steel authority of India (SAIL) was constituted during this plan. Moreover, drug manufacturing, oil refining, chemical fertilizers and heavy engineering industries made steady progress.
The fifth set a target of annual growth rate of 8.2% in the industrial sector but the actual average growth rate realised during the plan period ( ) to ( ) was only 6.0% which was much below the target.

7. OBJECTIVE ACHIEVEMENT FAILURE Sixth Plan (1980-85)
The sixth plan finalized its strategy for industrial development in order to achieve structural diversifications, modernization and self-reliance. The main emphasis in this plan was on producing goods to exploit the domestic and international markets.
During this plan, the Indian economy made an all-round progress and most of the targets fixed by the planning commission were realised. The sixth plan noted that the industrial production had increased by about five times during this period.
The new industries had tended to gravitate towards existing centers and the backward areas had remained substantially untouched by planning. During this plan, the annual growth rate of industrial output was merely 6% as against the target of 7.0%.

8. OBJECTIVE ACHIEVEMENT FAILURE Seventh Plan (1985-90)
The Seventh plan attempted to accelerate the growth in foodgrains production, increase in employment opportunities and raise productivity. In other words, the focus of the seventh plan was Food, Work and Productivity.
The seventh was a great success because the Indian economy recorded about 8.5% annual growth rate of industrial development as against the target of 5%.
During the seventh plan, the pattern of industrialization in the country has been resulting in concentration of economic power in the hands of few large industrial houses and thus failed to achieve the objective of planning in reducing concentration of wealth and economic power.

9. OBJECTIVE ACHIEVEMENT FAILURE Eighth Plan (1992-97)
The main emphasis of the eighth plan was on the removal of regional imbalances and encouraging the growth of employment in small and tiny sectors.
During the eighth plan the policy of liberalisation was adopted for the investment of foreign multi-national companies
During the eighth plan, the share of the public sector in total investment had declined considerably to about 34 per cent.
Ninth Plan ( )
The development strategy of ninth plan envisaged an important role for the private sector and for market forces. The main emphasis of the ninth plan was on cement, coal, crude oil, consumer goods, electricity, refinery etc.
The ninth plan put adequate stress on the industrial sector. The govt. undertook some serious measures to make necessary economic reforms in the industrial structure of both the public as well as private sector of the country.
It is observed that although the ninth plan had set a target to achieve annual growth rate of 8.5% in the industrial sector but the achievement remained far below the target envisaged.

10. OBJECTIVE ACHIEVEMENT FAILURE Tenth Plan (2002-07)
The development strategy of the tenth plan was to liberalise and privatise and to give more space to the private sector to expand its activities.
During this plan period, steps were taken for removing infrastructural constraints, liberalization of industrial licensing policy and other regulations and also for making provision of incentives for rapid development of key areas.
The tenth plan failed to achieve its target annual growth rate of 10%. The annual growth rate attained in the industrial sector was 8.2%.

11. OBJECTIVE ACHIEVEMENT FAILURE Eleventh Plan (2007-12)
During the eleventh plan, target for growth in the industrial sector was kept at 10% per annum. The eleventh plan gave priority to agriculture, irrigation and water resources, education, health, infrastructure and employment.
During this plan, huge investments were made in the public sector in backward states for their industrial development. Various fiscal incentives, capital subsidies and other facilities were introduced for industrial development of backward areas.
Govt. has realised that in recent years although economic growth has accelerated but it has failed to be ‘inclusive’. In other words, benefits of growth have not reached all the sections of population particularly small farmers, landless labourers and persons working in unorganised sector have remained beyond the benefits of development

12. Twelfth Five-Year Plan (2012-17)
The Twelfth Plan proposes an outlay of Rs. 3,77,302 crore for the industrial sector which is 4.9% of the total outlay of Rs. 76,69,807 crore.
The target for industrial growth has been kept at 10% per annum.
The twelfth plan stresses the importance of infrastructure development especially in the power sector and removal of bottlenecks for high growth and inclusiveness.
It also sets targets for various economic and social sectors relating to poverty alleviation, infant mortality, job creation etc.

13. Industrial Growth In India -Four Distinct Phases
Industrial development during the period of planning can be divided into the following distinct phases:
Phase I which covered the period of the first three phase (i.e. the period from 1951 to 1965)
Phase II which covered the period from 1965 to 1980 was marked by industrial deceleration and structural retrogression
Phase III which covered the period of 1980’s ( to ) was marked by industrial recovery
Phase IV covering the post-reform period (i.e. the period onwards)

14. PHASE I (1951-65) Building up of Strong Industrial Base
The First Phase of industrial growth broadly consists of the first three plan periods which had built a strong industrial base in India. Phase I laid the basis for industrial development in the future. The second plan, based on Mahalanobis model, emphasized the development of capital goods industries and basic industries. Accordingly, huge investments were made in industries like iron and steel, heavy engineering and machine building industries . The same pattern of investment was continued in the third plan as well. As a result, there occurred a noticeable acceleration in the annual compound growth rate of industrial production over the first three plan periods upto 1965 from 5.7 % in the first plan to 7.2 % in the second plan and further to 9.0 % in the third plan.

15. TABLE
Annual Compound Growth Rates In Index Numbers of Industrial Production, 1951 to 1965 (Phase I)
Use Based or Functional Classification
(4 years)
1. Basic Goods
4.7
12.1
10.4
2. Capital Goods
9.8
13.1
19.6
3. Intermediate Goods
7.8
6.3
6.9
4. Consumer Goods
4.8
4.4
4.9
(a). Durables
----
(b). Non Durables
5. General Index
5.7
7.2
9.0

16. PHASE II (1965-80) Industrial Deceleration & Structural Retrogression
The Second Phase of industrial growth broadly covers the period of three Annual Plans , the Fourth Plan and the Fifth Plan. The period from 1965 to 1976 was marked by a sharp deceleration in industrial growth. The annual compound rate of growth fell steeply from 9.0 % per annum during the third plan to a mere 4.1 % per annum during the period 1965 to The last year of Phase II i.e recorded a negative rate of growth of industrial production of -1.6 % over the preceding year. The Second Phase clearly experienced a fall in annual growth rate of capital goods industries and basic industries which was a clear case of structural retrogression.

17. TABLE
Annual Compound Growth Rates In Index Numbers of Industrial Production, 1965 to 1980 (Phase II)
Use Based or Functional Classification
(Fifth Plan Average)
1. Basic Goods
6.5
8.4
-0.5
2. Capital Goods
2.6
5.7
-2.3
3. Intermediate Goods
3.0
4.3
1.9
4. Consumer Goods
3.4
5.5
-4.4
(a). Durables
6.2
6.8
5.6
(b). Non Durables
2.8
5.4
-6.1
5. General Index
4.1
6.1
-1.6

18. Causes of Deceleration and Retrogression
The main causes of deceleration and structural retrogression during the Second Phase include:
Exogenous factors such as the wars of 1962, 1965 and 1971;
Oil crisis of 1973;
Unsatisfactory performance of the agricultural sector;
Unequal distribution of income and wealth;
Wrong industrial policies, complex bureaucratic system of licensing, irrational and inefficient system of controls;
Supply constraints like infrastructural bottlenecks;
Successive droughts of and etc.

19. PHASE III (1981-1991) The Period of Industrial Recovery
The Third Phase of industrial growth in India covers the entire period of 1980’s consisting of both the Sixth and Seventh Plan. This period of 1980’s can broadly be termed as a period of industrial recovery. During this phase, the consumer durables industries had recorded a considerable growth in its output. Chemicals and petrochemicals played a dominant role in determining the growth of industrial sector in general. Thus, during this third phase, there is a clear shift in the pattern of industrialization in the country.

20. TABLE
Rate of Growth of Industrial Production (Use-based) during Phase III ( )
Use Based or Functional Classification
1. Basic Goods
8.7
7.4
3.8
2. Capital Goods
6.2
14.3
17.4
3. Intermediate Goods
6.0
6.4
6.1
4. Consumer Goods
5.1
7.3
10.4
(a). Durables
11.6
14.8
(b). Non Durables
9.4
5. General Index
8.5
8.3

21. Causes of Industrial Recovery
The main causes of industrial recovery during the Third Phase i.e. during 1980’s are as follows:
New Industrial Policy and Liberal Fiscal Regime;
Contribution of the agricultural sector;
Growth of Service Sector and
The Infrastructure Sector

22. PHASE IV The Period from 1991-92 onwards
The year 1991 ushered in a new era of economic liberalization. Major liberalization measures designed to affect the performance of the industrial sector were – wide-scale reduction in the scope of industrial licensing, simplification of procedural rules and regulations, reductions of areas exclusively for the public sector, disinvestment of equity of selected public sector undertakings, enhancing the limits of foreign equity participation in domestic industrial undertakings, liberalization of trade and exchange rate policies, rationalization and reduction of customs and excise duties and personal and corporate income tax etc. The performance during the later half of 1990’s deteriorated considerably as compared with the first half of 1990’s Thus the performance of the industrial sector during the post-reform period has been highly unsatisfactory.

23. Average Annual Growth Rate of Industrial Production in Pre-reform and Post-reform Decade
Use-based or Functional Classification
(1) to
(2)
to (eighth plan)
(3)
to (ninth plan)
(4)
to (tenth plan)
(5)
to (eleventh plan)
(6)
1. Basic Goods
7.4
6.8
4.1
6.6
5.4
2. Capital Goods
9.4
8.9
4.7
14.4
14.3
3. Intermediate Goods
4.9
8.5
5.8
6.2
4.0
4. Consumer
Goods
6.0
5.5
9.6
7.8
Durables
10.8
13.4
10.7
8.8
15.6
Non Durables
5.3
4.8
3.8
10.0
3.4
5. General Index
5.0
8.2
6.9

24. Causes of Unsatisfactory Performance in the Post–reform Period
The main causes for unsatisfactory performance of the industrial sector in the post-reform period are as follows:
Exposure to external competition;
Slowdown in investment;
The infrastructural constraints;
Difficulties in obtaining funds for expansion;
Contraction in consumer demand;
Sluggish growth in exports ;
Anomalies in tariff structure etc.

25. Trends In Industrial Production In India
In India, industrial sector has achieved a significant achievement in diversifying its productive capacities. In respect of almost all consumer goods both durables and non-durables, the stage of self-sufficiency has already been attained. The country has also achieved an impressive industrial productive capacity in respect of mining and metallurgical industries. Moreover, significant progress has also been achieved in building basic infra-structural facilities, research and development (R&D) capability, project management services etc. Thus, after more than sixty years of planning the industrial production of the country has totally been diversified. The volume of industrial production in physical terms has also been multiplied.

26. Problems and Obstacles to Industrial Development in India
The following are some of the major problems and obstacles that are being faced in the process of industrialization of the country:
Poor capital formation;
Lack of Infrastructural facilities;
Poor performance of the agricultural sector;
Gaps between targets and achievements;
Dearth of skilled and efficient personnel;
Industrial Sickness;
Regional Imbalances;
Poor performance of the public sector;
Concentration of Wealth etc.

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