Agricultural and Industrial Policies of India notes-CSEET
Agricultural and Industrial Policies of India:
ICSI CSEET: The Council of the ICSI has released a notice regarding CSEET on the day of the inauguration of ICSI Golden Jubilee Celebrations on 4th Oct 2017.
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We are now going to discuss the details of CSEET Paper-3 Economics and Business Environment notes – Agricultural and Industrial Policies of India
Agricultural and Industrial Policies of India notes:
(A) Agricultural Polices
The agricultural development policies during five year plans are as under:
(1) Five-year plan (1951-56) : The highest priority was accorded to increase of agricultural production. Nearly one third or 31 per cent of total plan funds were allocated to agriculture sector. River valley projects were taken up. Irrigational facilities and fertilizer plants were established. Consequently, production of food-grains increased by 36 per cent in a short span of five years.
(2) Second five-year plan (1956-61) : It focused on industrial growth and only 20 per cent of planallocation was devoted to agriculture. Still food-grains production exceeded the target due to extensionof irrigation facilities and use of chemical fertilizers.
(3) Third Five Years Plan (1961-66) : The priorities were on self-sufficiency in food grains, meeting the raw material needs of industries and increase in ex-ports. During this period, Green Revolution programme was started on a small scale. But this plan failed to meet the target due to Chinese aggression (1962), Indo-Pak war (1965) and severe and prolonged drought during 1965-66. There were a great crisis of food that forced the Prime Minister L. B. Shatri to appeal to people to observe fast once a week. During next three annual plans (1966-69) agriculture recorded 6-9 per cent annual growth under the impact of Green Revolution. The production of food grain touched 94 million tonnes.
(4) Fourth Five Years Plan (1969-74) : It aimed at 5 per cent annual growth in food grains. High Yielding Variety (HYV) of seeds, fertilizer use, new agriculture techniques and irrigation facilities provided to expand area of Green Revolution. The production of wheat increased sharply but growth in rice, oilseeds and coarse grains were nominal resulting in only 3 per cent annual growth against the target of 5 per cent.
(5) Fifth Five Years Plan (1974-79) : It emphasised on self-sufficiency in food production and poverty eradication. Stress was laid on the extension of irrigation, expansion in cultivated area under HYV seeds and grant of loans and subsidies to farmers. Dry farming was propagated. This plan achieved its target successfully with 4.6 per cent growth. Almost all food grains except pulses witnessed increase in production.
(6) Sixth Five Years Plan (1980-85) : It emphasised on land reforms, use of HYV seeds, chemical fertilisers and groundwater resources and improving post harvest technology as well as marketing and storage facilities. The annual growth rate was 6 per cent, highest ever during plan periods. The food-grain production reached 152 million tonnes.
(7) Seventh Five Year Plan (1985-90) : During this period, the highest growth in foodgrain, pulses and coarse cereals was recordedshowing over all annual growth rate of 4 per cent.The areas of Green Revolution were expanded duringthe period.
(8) Eight Five Year Plan (1992-97) : This witnessed a tendency of stagnation in foodgrain production while oilseed registered a rapid growth.
(9) Ninth Five Year Plan (1997-02) : The ninth fiveyear plan witnessed a mixed success. There were fluctuations in the foodgrain production. During this plan period National Agricultural Policy, 2000, was framed and several measures were announced including, watershed management, development of horticulture, agricultural credits and insurance scheme for crops.
(10) Tenth Five Year Plan (2002-07) : In the Tenth Plan (2002-2007) focus was placed on (i) sustainable management of water and land resources, (ii) development of rural infrastructure to support agriculture, (iii) dissemination of agriculture technology, (iv) credit flow to agriculture sector, and (v) agricultural marketing reforms. The New Agricultural Policy The Government of India has announced (28th July 2000) a new National Agricultural policy, 2000, in the light of changes arising out of economic liberalization and globalization.
The main aims of the policywere:
(i) achieving more than 4 per cent per annum growth rate in agriculture sector,
(ii) growth based on efficient use of resources and conservation of soil, water and biodiversity,
(iii) growth with equity in region and among the farmers,
(iv) growth that caters to domestic market and maximizes benefits from exports of agricultural products and
(v) technologically, environmentally and economically sustainable growth.
(11) Eleventh Five Year Plan (2007-12) : The 11th Five Year Plan (2007-12) emphasised ‘Inclusive growth’ to achieve a target growth of 4 per cent per annum in GDP from agriculture and allied services. Globally, studies indicate that a higher GDP in agriculture is more effective in alleviating poverty in comparison with higher GDP in other sectors.
To achieve ‘Inclusive growth’, the 11th plan aimed at the following:
(i) Improving accessibility of technology to farmers to increase production and ensure optimum use of natural resources.
(ii) Attracting higher public investments and ensuring efficacy of such investments.
(iii) Promoting diversification for higher value crops and livestock.
(iv) Addressing issues pertaining to food security.
(v) Decentralising decision making to come up with customised solutions to specific local problems and to improve the accessibility of land, credit, skills and scale to the poor.
One of the major accomplishment of Eleventh Five Year Plan was launching of National Food Security Mission (NFSM) launched in 2007 and introduction of Rashtriya Krishi Vikas Yojana (RKVY) in financial year 2008.
National Food Security Mission (NFSM) : In 2007, the Government of India launched the National Food Security Mission (NFSM) initiative to improve the country’s overall crop production, especially thatof rice, wheat and pulses. The primary objective of NFSM is to introducetechnological components that include farm machines/implements as well asimproved variants of seeds, soil ameliorants, plant nutrients and plant protectionmeasures.
The government aimed to increase production of rice, wheat and pulses by 10 million tons, eight million tons and two millon tons, respectively, by end 2012. It had allocated Rs 4,883 crore (US$ 915.7 million) to NFSM, of which Rs 3,381 crore (US$ 634 million) was spent until 31 March 2011. Through NFSM, 25 million tonnes of additional food grain was produced in the 11th Five Year Plan.
The following are the major achievements of the initiative:
(i) Implemented in about 312 districts, spread across 17 states.
(ii) Wheat production increased from 71.3 million tons in FY07 (terminal year of 10th plan) to 80.3 million tons in FY10.
(iii) Rice production increased from 89.4 million tons in FY07 to 99.2 million tons in FY09; however, it declined to 87.6 million tons in FY10.
(iv) Pulse production increased from 13.6 million tons in FY07 to 14.7 million tons in FY10.
(v) Different districts were able to increase the food basket of the country.
Rashtriya Krishi Vikas Yojana (RKVY): In FY08, the government introduced Rashtriya Krishi Vikas Yojana (RKVY), with an outlay of Rs 25,000 crore (US$ 4.7 billion), to encourage states to increase public investment in agriculture and allied services. The programme enables adoption of national priorities as sub schemes, thereby providing flexibility in project selection and implementation to state governments. Various sub schemes under RKVY are as follows:
(a) Green revolution in the Eastern region.
(b) Combining development of 60,000 pulses villages in rain fed areas.
(c) Encouraging the use of palm oil.
(d) Initiative on vegetable clusters.
(e) Nutri cereals.
(f) National Mission for Protein Supplements initiative.
(g) Accelerated Fodder Development Programme.
(h) Rain fed Area Development Programme.
(i) Saffron Mission.
(12) Twelfth Five Year Plan (2012-17) : Agriculture sector grew by an average 1.6 percent per annum in first four years as against the targeted 4 percent annual growth due to lower production. However, Government of India took several steps for increasing investment in agriculture sector such as enhanced institutional credit to farmers, promotion of scientific warehousing infrastructure for increasing shelf life of agriculture produce, setting up of agritech infrastructure fund for making farming competitive and profitable, developing commercial organic farming.
(B) Industrial Policies
Industrial policy is a statement of objectives to be achieved in the area of industrial development and the measures to be adopted towards achieving these objectives. The industrial policy thus formally indicates the spheres of activity of the public and the private sectors. It lays down rules and procedures that would govern the growth and pattern of industrial activity.
(1) Industrial Policy Resolution 1948
After having attained independence, the Government of India declared its first Industrial Policy on 6th April, 1948.
Salient Features of Industrial Policy, 1948
Under this policy, the large industries were classified in four categories viz. Strategic Industries, Basic / Key industries, Important Industries andother industries which respectively referred to Public Sector; Public-cum-Private Sector; Controlled Private Sector and Private & Cooperative sector.
(i) Strategic Industries (Public Sector) : This category included three industries in which Central Government had monopoly. These included Arms and ammunitions; Atomic energy and Rail transport.
(ii) Basic / Key Industries (Public-cum-Private Sector) : Six industries viz. coal, Iron and Steel, Aircraft manufacturing, Ship-building, Manufacture of telephone, telegraph and wireless apparatus, and Mineral oil were designated as “Key Industries” or “Basic Industries”. It was decided that the new industries in this category will henceforth only beset-up by the Central Government. However, the existing private sector enterprises were allowed to continue.
(iii) Important Industries (Controlled Private Sector) : Eighteen industries were kept in the “Important Industries” category. Such important industries included heavy chemicals, sugar, cotton textile and woollen industry, cement, paper, salt, machine tools, fertiliser, rubber, air and sea transport, motor, tractor, electricity etc. These industries will continue to remain under private sector however, the central government, in consultation with the state government, will have general control over them.
(iv) Other Industries (Private and Co-operative Sector) : All other industries which were not included in the above mentioned three categories were left open for the private sector. However, government couldimpose controls on these industries also if any of them was not working satisfactorily.
- The Industries (Development and Regulation) Act, 1951
Industries (Development and Regulation) Act, 1951 was passed by parliament in Oct, 1991 to control and regulate industrial development in the country. Its objectives were:
- The regulation of industrial investment and production according to planned priorities and targets
- The protection of small entrepreneurs against the competition from larger industries
- Prevention of monopoly and concentration of ownership industries
- Balanced regional development with the view to reduce the disparity level of development of different regions of the country
Provisions of the Act
The act laid down two provisions:
- Restrictive provisions : Under this category, all the measures were designed to curb the unfair practices adopted by industries
o Registration and licensing of industrial undertakings
o Enquiry of listed industries
o Cancelation of registration license
- Reformative provisions
o Direct regulation and control by government
o Control on price, distribution and supply
o Constructive measures
- Industry Policy Resolution (IPR), 1956
Industrial Policy Resolution, 1956 replaced the IPR, 1948. It stressed on:
- Speeding up the pace of industrialization, particularly heavy industries.
- Expansion of public sector and growth of co-operative sector.
- State to take up the responsibility of setting up new industrial set up and development of transport facilities.
- Prevent private monopolies and concentration of economic process in hands of few number of individuals.
- New Industrial Policy of India, 1991
The new Industrial Policy was announced in July, 1991 in the midst of severe economic instability in the country. The objective of the policy was to raise efficiency and accelerate economic growth.
Features of New Industrial Policy
- Strengthening of Private Sector
- Abolition of licensing system for large number of industries
- Greater role of private sector envisaged
- Contraction in field of operations for public sector
- Dismantling of controls
- Dispersing Industries
- Policy to shift industries away from big congested cities to rural and backward areas
- Incentives were brought to attract industries to village and backward regions
- Favoured agro-based industries near the farming areas
Limiting role of public sector
- Policy pointed out the grey area which were not fit for PSUs and needs to be vacated by them
Liberalization of foreign investments
- Foreign investment in the form of FDI allowed up to 50% with automatic approval
- Foreign investment in export promotion activities
Foreign technology had been made easy by allowing automatic approvals for technology related agreements
Promotion of Small Scale Industries (SSI)
- It ensured adequate supply of credit these industries based on their needs
- To enable modernization and technical up gradation, the policy allows equity participation by other non-SSI undertakings in SSI sector
- Limited partnership was allowed to enhance the supply of risk capital to the SSI sector
- It ensured the speedy payment towards the sale of products by SSI sector
Domestic Regulatory Reforms
- Reduced the number of reserve industries
- Security and Industries of strategic concern were reserved for public sector.
Abolition of Industrial Licensing : It abolished industrial licensing system for all industries except few such as security and strategic concerns, social concerns, related to safety and manufacture of hazardous industries.