How has the ‘New Industrial Policy’ been able to maintain a sustainable growth in productivity and gainful employment? Explain.
New Industrial Policy has three main dimensions: liberalisation, privatisation and globalisation.
(i) The industrial licensing system has been abolished for all except six industries related to security, strategic or environmental concerns. At the same time, the number of industries reserved for public sector since 1956 have been reduced from 17 to 4.
(ii) In the new industrial policy, Foreign Direct Investment (FDI) has been seen as a supplement to the domestic investment for achieving a higher level of economic development. FDI benefits the domestic industry as well as the consumers by providing technological upgradation, access to global managerial skills and practices, optimum use of natural and human resources, etc.
(iii) The industrial policy has been liberalised to attract private investor both domestic and multi-nationals. New sectors like, mining, telecommunications, highway construction and management have been thrown open to private companies.
(iv) Globalisation means integrating the economy of the country with the world economy. Under this process, goods and services along with capital, labour and resources can move freely from one nation to another. The thrust of globalisation has been to increase the domestic and external competition through extensive application of market mechanism and facilitating dynamic relationship with the foreign investors and suppliers of technology.
(v) A breakup of foreign collaboration approval reveals that the major share went to core, priority sectors while infrastructural sector was untouched. Further, gap between developed and developing states has become wider. Major share of both domestic investment as well as foreign direct investment went to already developed states.
