Changes in Industrial Structure of India During Five year plans

Important changes that have occurred in the industrial structure during the planning era are discussed as follows-

Increase In overall production

Over the last 60 years, Industrial overall production went up by five times, making India the 10th most Industrial nation of the world. The industrial structure has been widely diversified covering broadly the entire range of consumer, intermediate and capital goods.

Building up of Infrastructure

Modern Industrial development is not possible without a substantial expansion of the Infrastructure of the Economy. Accordingly, massive efforts were directed towards the creation of basic facilities like power, transport, communication, ports, banking and finance, qualified and skilled Human Resources in the five years plans. Industries associated with this effort were naturally accorded a high priority. These included Heavy Electrical Equipment like transformers, switch gears, circuit breakers, boilers, etc.

Building up of Heavy and Capital Goods Industries

As noted earlier, the 2nd plan based on the Mahalanobis model gave pride of place to the development of Heavy Machine Building Industries and Capital Goods Industries with a view to strengthening the industrial base of the economy. Heavy Investment have since taken place in this sector with the result that the industrial base of the country is now much stronger than it was in 1950-51. A wide range of Engineering goods, Iron and Steel, Metals and Metal based products, etc., are now produced with the country itself and dependence on the other countries has considerably declined.

Growth of Elite, Non-Essential Consumer Goods Industries

There has been a noticeable growth of industries, which cater to the needs of High Income Urban based elite section of the society. Manmade fibres, fine varieties of textiles, beverages, cigarettes, motor cars, motor-cycles, scooters, refrigerators, TVs, air conditioners, fans, watches and cosmetics, etc., recorded significant growth after independence particularly since 1980.

The performance of Essential Consumer Goods Industries, which catered to the needs of masses, however, was not that encouraging. These include, cotton textiles, sugar, kerosene, vanaspati, tea etc. As a consequence, there have been frequent shortfalls in their production, which have pushed up their prices continuously.

Emphasis on Chemicals, Petrochemicals and Allied Industries in the Eighties

Whereas the fastest growing sector in the earlier period was industrial groups comprising of basic metal, metal products and machinery, both electrical and non-electrical, the role of prime movers during the 80s was taken over by the chemicals, petrochemicals and allied industries. As a result, metal based products and machinery industries lost their primacy in industrial growth during the 80s and face the prospects of further decline in future. The 80s could, in this respect, mark an important watershed in industrial development in the country.

Emergence and Expansion of Public Sector

There was no public sector worth the name in the pre-independence period. The entire range of activities in the industrial sector was controlled by the Private sector. After 1947, Public Sector has developed considerably. This will be clear from the fact that in the 1st plan we had just 5 public sector units with a total capital of Rs. 29 crore. Now, we have 240 central public sector units with a total capital of more than Rs. 2,30,140 crore. Public Sector Enterprises range from Basic and Strategic Industries like Steel, Mining and Metallurgical units, Oil Exploration and Refining, Basic and Intermediate Chemicals, Ship-Building, Heavy Machine Building for Steel Plants, Chemical fertilisers, Cement, Aluminium etc. Besides, Public Sector Enterprises also produce a variety of goods and services ranging from sophisticated electronic goods to products of mass consumption like bread, cloth and drugs.

Diversification of Private Sector

The capacity and strength of the private sector has grown considerably since Independence. There has been not only noticeable growth of the small-scale sector but also the dominance and strength of large ‘ and monopoly business houses have increased substantially. This will be clear from the fact that there were hardly two large Business Houses, Tatas and Birlas in 1951. By 1999-2000, the number went up to more than 80 large business houses with aggregate assets of more than Rs. 2,00,000 crore. Thus, there has been an increasing concentration of economic power in a few large business houses in the economy.

Research and Development

Remarkable Progress has been achieved on Science and Technology front. Many research and development centres have been set up under the CSIR (Council of Scientific and Industrial Research). R and D facilities have also been installed in public and private sector units. There has been a conspicuous infusion of foreign technology into the industrial sector through foreign collaborations. A wide range of sophisticated manufactured products which were previously imported are now being indigenously produced.

Increase in the share of Industrial sector in GDP

The share of the Industrial Sector in Gross Domestic Product has slowly but consistently increased over the planning period. The share of Industrial Sector in GDP increased from 15.5% in 1950-51 to 24.4% in 1980-81 and further to 27.5 in recent years (at 1980-81 prices). As per new series (at 1993-94 prices) the share of industry in GDP at factor cost was 23.7% in 1993-94, 24.7% in 1998-99 and 25.0% in 2000-01.