Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsINDUSTRIAL SECTOR5 Marks
Question
Discuss steps of Government to Develop Industries.
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Answer
$1.$ Introduction:
India has adopted the method of planning since $1951.$
For speedy economic development since the second five-year plan industrialization was emphasized to build the base of industry progress.
Initially public sector was emphasized for industrialization.
But Since new economic policy of $1991,$ industrialization is given much more importance through privatization, liberalization and globalization.
Industrial development is the objective of Indian economy.
$2.$ Measures taken by Government for Industrial Development:
$(1)$ State Owned Enterprises:
For the base of industrialization basic and key industries are required.
A lot of capital is required to start these industries.
Risk factor is quite high.
Private sector is not ready to establish such industries.
The product of these industries are useful to other industries.
Therefore, State government runs these industries.
E.g. From Second plan started in $1956,$ government started iron and steel industries in Rourkela, Bhilai, Durgapur with collaboration of foreign countries.
Besides state owned enterprises are also started to maintain balance in industrial sector and for development too.
To avoid regional inequalities state government start such industries in backward areas of the country.
So that supporting industries also develop.
Such industries are started in backward areas especially for weaker section of society.
$(2)$ Encouragement to Private Sector Industries:
Development of private sector industries are equally important as the development of large scale industries.
Industrial progress of nation can rapidly grow with the effect of both.
Government provides help as encouragement to private sector by giving land at concessional rate, electricity, water supply, etc. Moreover, tax benefit is
Sanctioned till these industries are not self-sufficient.
Various financial institutions finance them at low rate of interest.
They provide them sufficient Finance for production of certain items.
Incentives are given by government to enter the sector.
Production of specific items is reserved for Small Scale Industries.
Since $1991,$ owning to adoption of new economic policy or privatization, liberalization and globalization, proper opportunities are given to private sector and obstacles to prevent its progress are removed.
$(3)$ Import Tariff $($Protection Policy$):$
Import tariff means tax on import.
Government protect local industries.
Primary industries use the means like import duty, import quota etc.
As a result, imported products become expensive and costly in our country.
Items produced in our country become competitive for sale and expense.
Industries of the nation become competitive to compete with foreign goods.
Industries of substitute for imported goods develop in the country.
For the industrial development, India too had emphasized in the starting of fourth decades regarding import substitution.
Quota for imported items is fixed or import is totally controlled.
In this way government has tried to protect domestic industries.
$(4)$ Technical Skill and Training:
Measures are taken by government to provide technical skills and training to domestic industries to sustain in keen competition with high tech industries.
Attempt is made impart training of global standard in new technology, new product, new system of sale and modem method of management.
So that domestic industries can compete with foreign industries at global level.
$(5)$ Economic Support:
Government provides economic support to industries to reduce production cost so that the product is sold at lower price in global market.
Owning to this economic support, production cost reduces, demand is maximized and profitability increases and industry is encouraged for development.
Government provides land, water, electricity, transportation at concessional rates.
Government provides subsidy to make the industry competent.
$(6)$ Infrastructural Facilities/Services:
Infrastructural facilities like road, water, electricity, banking, transportation, communication etc. are provided by government so that industry can reduce finance, time and compete in international market and manufacture the product at lowest possible cost.
E.g., In the last some years China provides infrastructural facilities and encourages their industries and has emerged as great economic power in the world.
India is also progressing after $1991$ to expand such facilities with help of private sector and public enterprise.
$(7)$ Various institutions and other policies:
Government forms various industrial policies, such as finance policy, import-export policy, fiscal policy, tax policy to encourage industries and make periodically changes as per requirement in it.
To fulfill the financial demand of the industry, government has setup institutions like $\text{IDBI, SIDBI, ICICI, IFCI, LIC, UTI,}$ etc.
Government has taken measures to attract foreign invests for capital investment.
Once government control has put on imported items but with changing time since $1991$ to encourage liberalization and privatization and considering international competition.
Government has taken measures to expand industrialization and to control it.
It has formulated industrial laws, company laws, banking laws and laws of competition and implemented them so that unfair competition is controlled.
$(8)$ Other Measures:
During planning, government set up special economic zones.
Considering the experience of China since 2000 government has set up $\text{SEZ,}$ and set up various Boards and Institutions for the development of Small Scale Industries.
Owning to all measures mentioned above India has emerged as great economic power in the let Century like China.
Of course we are very much behind in this direction against China.
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