Why the Industrial Policy of 1948 is called "socialization of vacuum"? Justify the place given by it to private sector in the light of contemporary economic conditions.
Published: February 6, 2016
Socialist economy is an economy where major industries are controlled by State or government but, Industrial policy 1948 emphasized the government investment in sectors which were totally unoccupied or inadequately occupied by private sector. Public ownership of few industries like atomic energy, railways, shipbuilding, iron & steel etc was strategic. The government also kept those sectors in its hand where it believed that the private sector would not be able to make adequate investment. Only the industries opened to Private sector included where government believed that private sector would be able to make investments. Hence it was called “socialization of vacuum”.
Nehru’s this approach could be justified by reason that; at that time, private enterprise alone were not capable of dealing large scale industries and government was unable to cope with burden of financial instability, lack of technology and lack in management resources. So, adopting mixed economy was the only approach left.
Model Questions Category: 075 - Changes in Industrial Policy and Their Effects On Industrial Growth