Industrial Policy – 1991
Introduction
The Industrial Policy announced on July 24, 1991 by the Finance Minister Dr. Manmohan Singh heralded the economic reforms in India and sought to drastically alter the industrial scenario in our country. The Industrial Policy Statement of 1991 stated that “the Government will continue to pursue a sound policy framework encompassing encouragement of entrepreneurship, development of indigenous technology through investment in research and development, bringing in new technology, dismantling of the regulatory system, development of the capital markets and increased competitiveness for the benefit of common man". It further added that "the spread of industrialization to backward areas of the country will be actively promoted through appropriate incentives, institutions and infrastructure investments”.
WHY THE POST-1990 REFORMS?
It is well known that from 1951 to 1991, Indian policy-makers stuck to a path of centralized economic planning accompanied by extensive regulatory controls over the economy. The strategy was based on an ‘inward-looking import substitution’ model of development. This was evident from the design of the country’s Second Five-Year Plan (1956-61), which had been heavily influenced by the Soviet model of development. Several official and expert reviews undertaken by the government recommended incremental liberalization of the economy in different areas, but these did not address the fundamental issues facing the economy.
India’s economy went through several episodes of economic liberalization in the 1970s and the 1980s under Prime Minsters Indira Gandhi and, later, Rajiv Gandhi. However, these attempts at economic liberalization were half- hearted, self-contradictory, and often self-reversing in parts. In contrast, the economic reforms launched in the 1990s (by Prime Minister P V Narasimha Rao and Dr. Manmohan