Industrial growth rate has lagged-behind in the overall growth of Gross-Domestic-Product (GDP) in the port-reform period. Give reasons. How far the recent changes in Industrial Policy are capable of increasing industrial growth rate?
The industrial policy of 1991, which is considered to be a process rather than a policy, had introduced some liberalization policies like compulsory licensing for 5 industries, the abolition of MRTP, Foreign Direct Investment, the concept of equity share, replacing FERA by FEMA (Foreign Exchange Management Act), etc. But, the industrial growth rate failed to match the momentum of the overall growth of GDP.
Hindrance to Industrial growth: There are several factors present that are creating impediments to industrial development.
- The problem of capital formation resisting the overall growth to achieve the desired goals.
- Since the time of the British rule in India, industrial development faced immense negligence.
- Lack of essential infrastructural facilities like transportation, communication put an end to all possibilities of industrial development.
- Shortage of skilled and efficient manpower
- Public sector undertakings are incurring huge losses.
- Complicated labor laws are overprotective in nature.
- The distribution of the industrial sector in the states is uneven. Thus it is creating regional Imbalances
Recent announcements: In 2019, the Department for Promotion of Industry and Internal Trade (DPIIT) had proposed a new industrial policy with the following aims and objectives
- More employment generation for the next two decades
- The attraction of $100 billion FDI annually.
- Maintenance of sustained growth in productivity.
- More impetus to the sectors like automobiles, electronics, renewable energy, banking, software, tourism, etc.
- Special focus on emergency medical devices, renewable energy, green technologies, financial services, etc.
The government had already constituted a working group to conduct the implementation of the new industrial policy. It will definitely give a boost to make India a manufacturing hub.