(i) “The Industrial Policy Resolution 1956, gave primacy to the government, making it responsible for the industrial development.”
Briefly outline the classification of industries into various categories.
(ii) “Economic reforms of 1991 failed miserably on the agricultural front.”
Justify the given statement, giving valid reasons in support of your answer.
(i) “The Industrial Policy Resolution 1956, gave primacy to the government, making it responsible for the industrial development.”
Briefly outline the classification of industries into various categories.
(ii) “Economic reforms of 1991 failed miserably on the agricultural front.”
Justify the given statement, giving valid reasons in support of your answer.
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Solution and Explanation
The Industrial Policy Resolution 1956 gave the government the lead role in industrial development. It divided industries into three categories.
Category 1 (Schedule A): industries owned exclusively by the government.
Category 2 (Schedule B): industries where the private sector could add to the effort of the public sector, while the government alone started new units.
Category 3: all the remaining industries. Their growth was left to the initiative and enterprise of the private sector.
Step 2: Part (ii): position on the statement:
The statement says the 1991 reforms failed in agriculture. We justify it, because the reforms hurt the sector in three ways.
Step 3: Reason 1: fall in public investment:
Public investment in agriculture, especially in infrastructure such as irrigation, roads and power, fell to a great extent after the reforms.
Step 4: Reason 2: fertilizer subsidy:
The fertilizer subsidy was removed in part. This raised the cost of production and hit small and marginal farmers badly.
Step 5: Reason 3: shift to export crops:
Production moved from the domestic market towards export-oriented cash crops.
This put pressure on the prices of food grains and made them dearer.
Final Answer:
(i) Industries were grouped into Schedule A (government only), Schedule B (government led, private supplementing) and the remaining industries (private). (ii) The statement is justified because public investment fell, the fertilizer subsidy was cut and cash crops replaced food grains.
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