SIX DECADES OF INDUSTRIAL DEVELOPMENT: GROWTH OF MANUFACTURING SECTOR IN INDIA FROM THE 1940S.

C P Chandrasekhar (2011) This article mainly concentrates on the growth trajectory of Indias manufacturing sector during the post independent era. India is one of the classic examples of state led industrial growth after the independence and became a role model for the newly independent third world nations in Asia, Africa and Latin America. The first four decades of the industrial development can be divided into three phases. This classification can be done either in terms of growth rates or the nature of policy regime pursued during the respective time periods. The first phase is the period between 1950 to 1965. It was a period of high state regulations and credible growth of industrial sector at around 5 percent. The Industrial Policy Resolution 1956 reserved 17 sectors under the purview of public sector including railways, air transport, arms and ammunition, iron and steel, atomic energy etc. The role of the state in industrial development had been exercised mainly in four ways. 1. Insulating the domestic market from excessive import competition. 2. Regulating the inflow of foreign capital and mediating the interaction of domestic and foreign capital. 3. Invest in sectors including infrastructure where the private are not willing to come. 4. Reduce industrial concentration and ensure a more regionally dispersed industrial sector. According to the authors view, the credit of the industrial development in the first fifteen years of independence goes to the active state intervention in the above mentioned ways. The second phase of the industrial development lies between 1965 to 1980 during which India was experiencing an acute deceleration of the industrial sector. There was no much change in the policy regime pursued. But the roots of deceleration were arising from the implementation difficulties mainly on account of a massive reduction in the public expenditure. Since it was period of three wars, India had to allocate a major portion of the

revenue for defence spending. Drought years from 1966 to 1969 have accentuated the deepness of the crisis. The years from 1980 to 1990 was characterised by an improved performance of the industrial sector. It was mainly because of the expansion of public expenditure. Lastly the author describes about the growth of industry with special focus on the manufacturing sector in the post liberalisation phase. It is true that some sectors such as automobiles, pharmaceuticals etc could attain a global attention. On the other hand, Indias traditional exports such as textiles which are more labour intensive have declined as a percentage of total exports. Moreover it can be seen that the growth trajectory of the industrial sector is more fragile in the post liberalisation period.