Progress of Indian Industries during Five Year Plans

The analysis of progress of Indian Industries during the five year plans should be done in the light of achievements and failures during planning era. The achievements and failures are shown in the below graphics:

Industrialization helped in development of strong industrial base

At the time of Independence, India was an underdeveloped economy. Even today, India is developing but due to the consistent efforts made during Five Year Plans, a strong industrial base emerged. There is hardly any area where Indian Industry is missing its presence. Further, the five year plans helped the Indian economy to redeem itself from the cobweb of conventional industrial structure which focussed mostly on consumer goods and catered the local / regional markets. Today, India is among top 10 industrial countries and produces a wide range of goods for domestic as well as international markets.

The public sector got tremendous policy support during almost all five year plans except the first one. This helped it to emerge as big-brother in the Indian industrial scenario. There was also great development in the industrial infrastructure including transport, communication, roads, dams, bridges, generation of power etc. Further, there was a perceptible rise in Industry’s contribution in GDP. The share of industrial GDP in overall GDP was 16% in 1951 and it stands near 30% today. This indicates a structural shift in the economy. Further, Industrial production recorded substantial increase during the five year plans.

There was a huge gap between targeted and achieved growth rates

However, there a few dark aspects also of the above achievements. There was hardly any plan in which the targeted growth was achieved. Further, the growth in industries has not been stable but erratic and in zig-zag pattern. The below graphics shows the average annual growth rate of industries in all five year plans so far.

Within a five year plan itself, the annual change in industrial growth rate has been erratic. For example, while it was 8.5% in 2007-08, it was 2.4% in 2008-09. The same erratic behaviour continues  even in the current year:

Frequent recessions, industrial sickness, rising NPAs in PSUs further aggravate the problem.

Inefficiency of the Public Sector

The main reason of inability to achieve targeted growth was operational deficiencies in the public sector and excessive control over private sector. The PSUs were marred by low productivity, inefficiency, corruption and Industrial sickness. The public sector grew in size but not in efficiency. It was the inefficiency of the public sector that largely compelled the government to move towards privatisation, besides liberalisation. Further, since most of the PSUs are supported by the central government and hold monopoly positions in domestic market; it led to rise of monopolistic tendencies in both public as well as private sector.

Industrial Process was growth oriented but not development oriented

The process of Industrial development in India remained “growth oriented” and not “development oriented”. It was confined to few states such as Maharashtra, Gujarat and Tamil Nadu; it did not bridge the regional imbalance and it did not bring substantial change in the quality of life of common people. The growth process of industrialization was hijacked by large industrialists and this led the small scale industries to get lost into insignificance. It failed to generate enough employment for increasing job seekers. Last but not the least, the common people and small businessmen could not become a party to the Industrial development and industrial growth failed to be inclusive.