The Industrial Policy Resolution of 1956 significantly emphasized the role of which sector in India's industrialization?
- AOption (a)
Private sector, with minimal government intervention
- BOption (b)
Cooperative sector, with decentralized production
- COption (c)
Public sector, as the primary engine of growth
- DOption (d)
Joint sector, with equal partnership between state and private entities
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Correct answer
Public sector, as the primary engine of growth
Why this answer is correct
The correct answer is Public sector, as the primary engine of growth.
Key Points
- The Industrial Policy Resolution (IPR) of 1956 served as the Economic Constitution of India and laid the foundation for the socialistic pattern of society.
- The policy categorized industries into three distinct schedules: Schedule A (17 industries exclusively owned by the State), Schedule B (12 industries progressively state-owned), and Schedule C (remaining industries left to the private sector under state regulation).
- The Public Sector was envisioned as the lead driver of industrialization to control the commanding heights of the economy, particularly in heavy and basic industries like iron and steel, heavy engineering, and atomic energy.
- The resolution emphasized that the State must take direct responsibility for future development over a wide area of the industrial field to accelerate the rate of economic growth and reduce income inequalities.
- It introduced a strict licensing system for the private sector to ensure that industrial investment was directed toward national priorities and to prevent the concentration of economic power.
Additional Information
- Mahalanobis Model:
- The IPR 1956 was the operational framework for the Second Five-Year Plan, which was based on the P.C. Mahalanobis strategy of prioritizing capital goods industries over consumer goods.
- It aimed for self-reliance by building a domestic industrial base to reduce dependence on foreign imports.
- Regional Balanced Growth:
- The policy used Public Sector Undertakings (PSUs) as a tool to develop backward regions by offering tax benefits and lower electricity tariffs to industries established in those areas.
- Small-Scale Industries (SSI):
- In 1955, the Karve Committee (Village and Small-Scale Industries Committee) highlighted the role of small-scale industries in promoting rural employment, which was supported by the 1956 resolution through product reservations.