Post on 03-Jun-2018
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INDUSTRIAL DEVELOPMENT SINCE 1951
INDIA
Presentation by:
ITM BATCH NO 18 (Sunil, Ajay, Yogesh, Preeti, Kedar, Ganesh)
GROUP 2
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This presentation focuses on the pace and pattern of industrial development in India post
independence period, explains the key reform measures undertaken for development of
industry in the wake of economic liberalisation, issues pertaining to the vital sector of the
Indian economy and future prospects for the Indian Industry.
The presentation is divided into seven sections, with each section focusing on the turning
points that have taken place during that Phase and the impact on Industrial Growth.
The last section appraises the countrys medium term growth prospects and points to
some risk and vulnerabilities that could stall the current dynamism if correction action is
not taken.
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Presentation Structure
Industrial Development during Planning Period
Building a strong Industrial Base
Industrial Deceleration
The Period of Industrial Recovery
New Era of Economic Liberalization
Current Growth Momentum in Industrial Production
What lies ahead for Indian Industry?
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THE INDIA STORYINDUSTRIAL DEVELOPMENT DURING PLANNING PERIOD
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Industrial Development During
Planning Period
Industrial Growth in India during Independence
Factors for Weak Industrial Base and Stagnant Economy
Setup of Planning Commission in 1950
Advent & Impact of Industrial Policy Resolution of 1948
Launch of First Five Year Plan in 1951
Increase of Industrial Output by 17.4% during 1946-1951
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THE INDIA STORYBUILDING A STRONG INDUSTRIAL BASE
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Building a Strong Industrial Base
(1951-65)
This phase represents the period of three 5-year plans.
Emphasis on development of capital goods and basic industries
Sharp rise in Public sector investment
Acceleration in CAGR of Industrial Production from 5.7% to 9.0% per annum
GDP Growth up from 3.6% to 5.6%
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Building a Strong Industrial Base
(1951-65)
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THE INDIA STORYINDUSTRIAL DECELERATION
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Industrial Deceleration
(1965-80)
Factors that led to sharp deceleration of Industrial Growth :
Wars of 1965 and 1971
Currency Devaluation in 1966 due to foreign crisis
Drought condition in 1965, 1966, 1971 & 1972
Oil Crisis of 1973
Internal Emergency was clamped
Sharp decline in industrial growth from 9% to 4.1%
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THE INDIA STORYPERIOD OF INDUSTRIAL RECOVERY
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Period of Industrial Recovery
(1981-91)
New Industrial Policy (year) and Liberal Fiscal Regime
Reducing domestic barriers to entry
Easier access to technology and material imports
Contribution of Agricultural Sector
Growth of Service Sector
The Infrastructure Sector
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THE INDIA STORYTHE NEW ERA OF ECONOMIC LIERALISATION
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Severe Macroeconomic Crisis
Against a background of low export/GDP ratio, rising trade and current
account defecits and a detoriating external debt profile, the 1990 gulf
war and consequent oil price spike tipped Indias Balance of
Payment(BOP) into crisis in 1990/91.
The new congress government had to take emergency measures to
restore external and domestic confidence in the economy and its
management. The rupee was devalue, fiscal defecit was cut and special
balance of payment financing mobilized from IMF and World Bank. This
compeled the govt to introduce an array of economic reforms
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New Era of Economic Liberalisation
(1991-92 onwards)
Major Liberalization measures including :
Wide-scale reduction in the scope of industrial licensing
Simplification of procedural rules and regulation Reduction of areas exclusively reserved for public sector
Disinvestment of equity of selected public sector undertaking
Enhancing of limits of foreign equity participation in domestic industrial
undertaking
Rationalization of reduction of customs, excise duty, personal and corporate
income tax
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New Era of Economic Liberalisation
(1992-2002 onwards)
Increase in Industrial Production from 2.3% in 1992-93 to respectable
13% in 1995-96
Decline in momentum of growth during 1997-2002 to 5% due tofollowing factors
Slowdown in domestic and global demand
Decline in Investment by Private Sector
Slow Growth of World Economy
Slowdown in Manufacturing Exports
Significant worsening of the fiscal deficit
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THE INDIA STORYCURRENT GROWTH MOMENTUM IN
INDUSTRIAL PRODUCTION
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Current Growth Momentum in Industrial
Production (2002-07)
Main Drivers of Recent Economic Growth:
The momentum of a quarter of a century of strong economic growth;
A much more open economy (to external trade and investment)
A growing middle class fuelling domestic consumption;
The demographic dividends of a young population;
Strong companies in a modernized capital market;
A supportive international economic environment.
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Current Growth Momentum in Industrial
Production (2002-07)
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Current Growth Momentum in Industrial
Production (2002-07)
Industrial Index Output Echoes Indias Growth Story
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THE INDIA STORYWHAT LIES AHEAD FOR THE INDIAN INDUSTRY?
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What lies ahead for Indian Industry?
(2011-12)
Govt. Planning Commission estimates GDP growth projections of 8 t0 9% and
foresees 10% growth as almost inevitable
Ensure sustenance of 8% growth enjoyed by India since 2003. However, these
may include some risks such as :
Renewed fiscal stress from populist policies;
Infrastructure bottlenecks;
Labour market rigidities;
Weak performance of agriculture;
Pace of economic reforms;
Weaknesses in human resource development programmes;
The international economic environment
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What lies ahead for Indian Industry?
(2002-07)
Figure 3: India's GDP Growth
0
1
2
3
4
5
6
7
8
1955-56
1958-59
1961-62
1964-65
1967-68
1970-71
1973-74
1976-77
1979-80
1982-83
1985-86
1988-89
1991-92
1994-95
1997-98
2000-01
2003-04
2006-07
Year
Percentage
Rolling Average (5 year)
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What lies ahead for Indian Industry?
(2002-07)
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F inal Thoughts
Realising India's growth potential would call for overcoming some of the widely
accepted problems currently faced by the industrial sector.
Industrial output growth has decelerated since around the mid-1990s.
Constraint on growth seems to be mainly from the demand side as agriculture growth
slowed down in the 1990s, and infrastructure investment has steadily declined since the
late 1980s. Further, small enterprises and unregistered manufacturing have been
adversely affected by lack of credit and its high cost.
India has to step up investments in infrastructure and agriculture, strengthen its labour-
intensive manufacturing sector to realise its export potential.. An increase in investment
would improve demand for the domestic capital goods industry that has been suffering
from excess capacity. Access to long-term finance for promoting industrial investment
needs to be revived with performance guarantees as in east Asia
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THANK YOU
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Building a Strong Industrial Base
(1951-65)
Launching of First Five Year Plans (1951-56)
Emphasis on building basis services like power and irrigation
Genesis of public sector
Pro-Public Sector Industrial Policy (1956-61)
Progress in public sector / Industrial Priorities
Progress in village and small scale industries
Controls and Restrictions on Private Sector (1961-65)
Role in planned development
Public sector programmes