industrial policy of india & financial institutions

7/31/2019 Industrial Policy of India & Financial Institutions

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INDUSTRIAL POLICY

OF INDIA &

DEVELOPMENT

FINANCIAL

INSTITUTIONS


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Financial Services : IFS 2 8/6/2012

Five Year Plans in India

I Plan (1951 - 1956)

II Plan (1956 - 1961)

III Plan (19611966)

Plan Holiday 1966-69

IV Plan (19691974) V Plan (19741979)

Break 1979 - 1980

VI Plan (19801985)

VII Plan (19851990)

Break 1990 - 1992

VIII Plan (19921997)

IX Plan (19972002) X Plan (20022007)

XI Plan (2007-2012)


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Financial Services : IFS 3 8/6/2012

Growth of GDP and major Sectors

(% per year)


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INDUSTRIAL POLICY OF INDIA

1. INDUSTRIAL POLICY RESOLUTION1948 (6 April, 1948)

2. INDUSTRIAL POLICY RESOLUTION,

(30th April, 1956)3. INDUSTRIAL POLICY FEB 2, 1973

4. INDUSTRIAL POLICY DEC 23, 1977

5. Industrial Policy Statement of July 19806. INDUSTRIAL POLICY, JULY 24, 1991

GOI Industrial Policies Banking and Finance 4


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1. INDUSTRIAL POLICY

RESOLUTION 1948

(6 April, 1948)The Resolution emphasized at the following:

1. The importance to the economy of securinga continuous increase in production

2. Its equitable distribution

3. State must play of progressively activerole in the development of Industries

GOI Industrial Policies 5Banking and Finance


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INDUSTRIAL POLICY

RESOLUTION 19482

4. It laid down that besides arms and ammunition,

atomic energy and railway transport, which

would be the monopoly of the CentralGovernment, the State would be exclusively

responsible for the establishment of new

undertakings in six basic industries-except

where, in the national interest, the State itselffound it necessary to secure the cooperation of

private enterprise



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INDUSTRIAL POLICY

RESOLUTION 19483

5. The rest of the industrial field was left

open to private enterprise though it was

made clear that the State would alsoprogressively participate in this field



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RESOLUTION, (30th April, 1956)1. Improving living standards and working

conditions for the mass of the people

2. To reduce disparities in income and

wealth

3. To prevent private monopolies and

concentration of economic power in

different fields in the hands of small

numbers of individualsGOI Industrial Policies 8Banking and Finance


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INDUSTRIAL POLICY

RESOLUTION, 19564. The State will progressively assume a

predominant and direct responsibility for

setting up new industrial undertakings andfor developing transport facilities.

5. Undertake State trading on an increasing

scale.6. At the same time private sector will have

the opportunity to develop and expand.



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INDUSTRIAL POLICY

RESOLUTION, 19567. The principle of cooperation should be applied

whenever possible and a steadily increasing

proportion of the activities of the private sectordeveloped along cooperative lines.

8. The adoption of the socialist pattern of society as

the national objective.

9. The need for planned and rapid development.



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INDUSTRIAL POLICY

RESOLUTION, 1956

10. All industries of basic and strategicimportance, or in the nature of public utilityservices, should be in the public sector.

11. It is always open to the State to undertake anytype of industrial production.

12. Categorization of industries:

i) In the first category will be industries the futuredevelopment of which will be the exclusiveresponsibility of the State.



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INDUSTRIAL POLICY

RESOLUTION, 1956ii) The second category will consist of

industries which will be progressively

state-owned and in which the State will,therefore, generally take the initiative in

establishing new undertakings, but in

which private enterprise will also beexpected to supplement the efforts of the

State.



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INDUSTRIAL POLICY

RESOLUTION, 1956

iii) The third category will include all theremaining industries, and their futuredevelopment will, in general, be left to theinitiative and enterprise of the private sector.

13.The Government of India would stress the roleof cottage and village and small scale industriesin the development of the national economy.

14. Disparities in levels of development betweendifferent regions should be progressivelyreduced.



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FEBRUARY 2, 1973

1. The Industrial Policy Resolution of1956 still remained valid, but certainstructural distortions had crept in the

system2. The new policies were hence directed

towards removing these distortions

3. It provided for a closer interactionbetween the agricultural and industrialsectors



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INDUSTRIAL POLICY, 1973

4. Accorded the highest priority to the

generation and transmission of power.

5. An exhaustive analysis of industrial

products was made to identify products

which are capable of being produced in

the small scale sector.

6. The list of industries exclusively

reserved for the small scale sector was

expanded from 180 items to more than

500 items.



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7. Within the small scale sector, a tiny sector was

also defined with investment in machinery and

equipment upto Rs.1 lakh and situated in townswith a population of less than 50,000 according

to 1971 census figures, and in villages.

8. Special legislation to protect cottage and

household industries was also proposed to be

introduced.



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9. It was also decided that compulsory exportobligations, merely for ensuring the foreign

exchange balance of the project, would no

longer be insisted upon while approving new

industrial capacity.

10. In the areas of price control of agricultural

and industrial products, the prices would beregulated to ensure an adequate return to the

investor.



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DECEMBER 23, 1977

1. Industrial Policy Highlights onproducing inputs needed by a large

number of smaller units and making

adequate marketing arrangements.

2. The nucleus plant would also work for

upgrading the technology of small units.

3. The Government would promote thedevelopment of a system of linkages

between nucleus large plants and the

satellite ancillaries.GOI Industrial Policies 18Banking and Finance


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4.To boost the development of small scaleindustries, the investment limit in the case oftiny units was enhanced to Rs.2 lakh, of a smallscale units to Rs.20 lakh and of ancillaries toRs.25 lakh

5.A scheme for building buffer stocks of essentialraw materials for the Small Scale Industries wasintroduced for operation through the Small

Industries Development Corporations in theStates and the National Small IndustriesCorporation in the Centre.



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6. Industrial processes and technologies

aimed at optimum utilisation of energy or

the exploitation of alternative sources ofenergy would be given special assistance,

including finance on concessional terms.


5 Th I d i l P li S f


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5. The Industrial Policy Statement of

July 1980,

It was based on the Industrial Policy Resolution of 1956

(i) Optimum utilisation of installed capacity;

(ii) Maximum production and achieving higherproductivity;

(iii) Higher employment generation;(iv) Correction of regional imbalances;

(v) Strengthening of the agricultural base through agrobased industries and promotion of optimum inter-

sectoralrelationship;

(vi) Promotion of export-oriented industries;



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Industrial Policy Statement of

1980(vii) Promotion of economic federalism

through equitable spread of investment

and dispersal of returns;

(viii) Consumer protection against high prices

and bad quality.



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6. INDUSTRIAL POLICY,

JULY 24, 1991

1. Government is pledged to launching areinvigorated struggle for social and economic

justice, to end poverty and unemployment and

to build a modern, democratic, socialist,

prosperous and forward-looking India

2. Such a society can be built if India grows as part

of the world economy and not in isolation.



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INDUSTRIAL POLICY,

JULY 24, 19913. While Government will continue to follow the

policy of self-reliance, there would be greater

emphasis placed on building up our ability to

pay for imports through our own foreign

exchange earnings.

4. Government is also committed to development

and utilisation of indigenous capabilities intechnology and manufacturing as well as its

upgradation to world standards.


INDUSTRIAL POLICY


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INDUSTRIAL POLICY,

JULY 24, 1991

5. Government will continue to pursue a soundpolicy framework encompassingencouragement of entrepreneurship,

development of indigenous technologythrough investment in research anddevelopment, bringing in new technology,dismantling of the regulatory system,development of the capital markets and

increasing competitiveness for the benefit ofthe common man.


INDUSTRIAL POLICY


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INDUSTRIAL POLICY,

JULY 24, 1991

6. The spread of industrialisation to backward

areas of the country will be actively promoted

through appropriate incentives, institutions and

infrastructure investments.

7. Government will provide enhanced support to

the small-scale sector so that it flourishes in an

environment of economic efficiency and

continuous technological upgradation.


INDUSTRIAL POLICY


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INDUSTRIAL POLICY,

JULY 24, 1991

8.Foreign investment and technologycollaboration will be welcomed to obtainhigher technology, to increase exports and toexpand the production base

9.Government will endeavour to abolish themonopoly of any sector or any individualenterprise in any field of manufacture, excepton strategic or military considerations andopen all manufacturing activity to competition


INDUSTRIAL POLICY


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INDUSTRIAL POLICY,

JULY 24, 1991

10. The Government will ensure that the public

sector plays its rightful role in the evolving

socioeconomic scenario of the country.

Government will ensure that the public

sector is run on business lines as envisaged

in the Industrial Policy Resolution of 1956

and would continue to innovate and lead in

strategic areas of national importance.


INDUSTRIAL POLICY


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INDUSTRIAL POLICY,

JULY 24, 1991

11.Government will fully protect theinterests of labour, enhance their welfareand equip them in all respects to dealwith the inevitability of technologicalchange.

12. Labour will be made an equal partnerin progress and prosperity.

13. Workers participation in managementwill be promoted.


INDUSTRIAL POLICY


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INDUSTRIAL POLICY,

JULY 24, 1991

14. Workers cooperatives will be encouraged toparticipate in packages designed to turn aroundsick companies

15. The major objectives of the new industrialpolicy package will be to build on the gainsalready made, correct the distortions orweaknesses that may have crept in, maintain a

sustained growth in productivity and gainfulemployment and attain internationalcompetitiveness


INDUSTRIAL POLICY


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INDUSTRIAL POLICY,

JULY 24, 1991

16. need to preserve the environment and

ensure the efficient use of available

resources.

17. Governments policy will be

continuity with change.


INDUSTRIAL POLICY


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INDUSTRIAL POLICY,

JULY 24, 1991

18. In pursuit of the above objectives, Governmenthave decided to take a series of initiatives in respect

of the policies relating to the following areas:

A. Industrial Licensing.

B. Foreign Investment.

C. Foreign Technology Agreements.D. Public Sector Policy.

E. MRTP Act.



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DEVELOPMENT FINANCIAL

INSTITUTIONS AFTER WORLD WAR II IN THE WEST

FROM 1948 ONWARDS IN INDIA

AN ACTIVE AGENT FOR PROMOTING ABALANCED AND VIABLE PROCESS OF

ECONOMIC DEVELOPMENT

AN INSTITUTION WHICH UNDERTAKES TO

PERFORM BANKING FUNCTIONS AS WELL

AS DEVELOPMENT FUNCTIONS



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A. BANKING FUNCTIONS

PROVIDING MEDIUM & LONG TERM

CAPITAL ECON DEV PROJECTS

INVESTMENT IN EQUITY OF BORROWERS GUARANTEEING OF LOANS

UNDERWRITING OF EQUITY AND

DEBENTURE ISSUES

FINANCIAL CONTRACTSWITHIN AND

OUTSIDE THE COUNTRY



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B. DEVELOPMENT

FUNCTIONS OVERCOMING THE SHORTAGE OF VIABLE

PROJECTS

DEVELOPMENT OF BUSINESS SKILLS FOSTERING CAPITAL MARKETS, ETC

-AS DEFINED BY JT DOCK HOUK IN HISBOOK FINANCING AND PROBLEMS OF

DEVELOPMENT BANKING



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DFIs IN INDIA

IFCI LTD, 1948 (COMPANY IN 1993)

LIC, ICICI, 1956 (MERGED IN 2002)

UTI, IDBI, 1964 (MERGED IN 2006)

SIDBI, 1990 (SMERA, 2005) IIBI, 1997 (FORMERLY IRCI, IRBI)

NABARD, 1982, EXIM BANK, 1982

TFCI, NHB, IDFC, IICFL, DICGC,ECGC, PFC, IRFC, ..

SFCs, SSIDCs, TCOs


industrial policy of india & financial institutions

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