INDUSTRIAL DEVELOPMENT STRATEGY
THE ROLE OF INDUSTRIAL POLICY
The government's industrial policies have always played a big part in
guiding our economic development agenda. Some key aspects that come
through are:
Public Sector Dominance
In the early days, key industries were largely run by the state. This helped
the country gain control over important sectors.
Balanced Growth
The plans aimed to evenly develop both large corporations as well as
small businesses. Special support was given to help small firms.
Regional Equality
Priority was placed on boosting poorer regions and ensuring more
balanced growth across states.
New Entrepreneurs
The policies encouraged new entrepreneurs and wider shareholder
participation in industries.
Limits on Large Firms
Rules were in place to prevent any company from getting too big and
powerful.
Self-Reliance
The focus was on building industries that reduced imports and made India
more self-sufficient.
Cooperatives
This sector involving farmer partnerships was also promoted.
Import Substitution
Industries that replaced imports got special attention, as did those
exporting more goods.
Balanced Sectors
Goals were set to evenly develop both capital-intensive and consumer
goods industries.
Synchronized Growth
All sectors like farming, manufacturing etc had to develop together in a
coordinated manner.
Private Sector Control
Till 1991, the private sector faced heavy regulation and licensing. This
slowed progress but the state kept certain industries under its control.
Capital vs Consumption
More priority was initially given to large capital industries versus
consumer goods. This created imbalances but did help strengthen
infrastructure over time.
The reforms in the 90s reduced the public sector's role and deregulated
private businesses more. Overall, policies aimed to allocate resources
according to India's long term strategic needs.
Rural and Small Firms
While small firms were encouraged, some feel not enough resources went
towards boosting village industries.
Import Substitution
This let India produce more domestically but import controls impacted
costs, quality and export potential at times.
Capacity Utilization
Underutilizing factories wasted resources so improving infrastructure,
supplies and demand became priorities.
Regional Disparities
Policies tried reducing imbalances with more investments and incentives
targeted to backward areas but progress was still lacking.
Over the decades, industrial strategies steered India's path while the
1990s reforms opened up the economy significantly. Balanced planning
still plays an important part.
QUALITY CIRCLES
Quality Circles have been a great way for companies to improve quality
and productivity by tapping into the knowledge of their employees. While
the basic idea started in the US decades ago, it really took off in Japan in
the 1960s when experts like Deming and Juran visited and shared their
quality techniques. Japanese companies started forming groups for
employees to meet regularly and discuss how to reduce errors and make
things better.
It was Ishikawa who helped establish the model we still use today. He got
people volunteering in small teams based on their work areas. This
allowed them to really understand the issues and come up with creative
solutions. It made a huge difference for Japanese industries known for not
having the highest quality before. Other places soon saw the value in it as
well.
India first adopted the approach in 1980 at a factory owned by BHEL. More
and more companies then began trying it out to harness the potential of
their people. Having circles allowed management and staff to work
together on problems in a collaborative way.
Ideally you want around 10 folks on a quality circle so everyone can
actively participate in their weekly or bi-weekly meetings. Organizations
might have multiple circles depending on size. It's important to have
leaders and facilitators to run things smoothly too. The circles identify
challenges, deeply analyze root causes, and present well-thought out
recommendations to implement improvements.
For it to be really effective, top management has to fully buy-in and
support the efforts. Proper training is also key so everyone understands
the process. Jumping into too many circles too quickly can cause issues.
It's best to start small and build on early wins. Lack of commitment or
knowledge often undermines results.
Many Indian companies found quality circles saved them a lot of money by
minimizing waste and flaws. Productivity, quality, communication and
workplace satisfaction tended to rise as well. As long as done right with
the right environment, it can do wonders for any organization. It's all
about empowering those closest to the work to constantly enhance how
things are done.
FIVE YEAR ECONOMIC PLANS IN INDIA
India's path of economic growth has always had a big influence from
government planning. The Five-Year Plans determine the focus and
funding priorities for different industries and sectors. So whatever
businesses or areas want to develop rely a lot on what gets emphasized in
the latest Plan.
Planning Commission
The Planning Commission was created back in 1950 to assess resources,
figure out what's needed for development, and design the best strategy.
They form guidelines and the National Development Council, made up of
top ministers and leaders, helps approve and monitor progress.
NITI Aayog
After six decades, the Planning Commission was replaced in 2015 by NITI
Aayog to help guide a new vision. Their goals include fostering
cooperation between central and state governments, ensuring security is
considered in economic strategies, focusing on disadvantaged groups, and
constantly evaluating what's working. But some argued the change was
unnecessary and that national planning is still important for India's
progress.
State Plans
About half the total government funds go towards State Plans which
handle important stuff at that level like farming, infrastructure, education
and services. Each state has a planning board to coordinate between
departments and align with the national goals.
Plan Formulation Process
Developing a Five Year Plan takes a couple years. First they look at past
trends and get preliminary feedback. Then sector-wise target groups study
needs and challenges. After discussions with politicians and experts, a
draft plan lays out the broad ideas. More talks happen before a final
detailed document gets parliamentary approval to implement.
Plan Objectives
The key goals have always been utilizing resources properly based on
priorities, reducing unemployment and poverty, and improving living
standards. Other focus areas evolved over time like boosting certain
industries or self-reliance. Recent Plans emphasized inclusive growth, rural
welfare, and human development indicators.
11th Plan Vision
Aiming for around 10% annual economic growth, more productive jobs,
robust farming at 4%, lower regional disparities with universal
infrastructure and services access. Also recognizing gender equality,
individual rights and grassroots participation in progress.
12th Plan Targets
Instead of just GDP, the 12th Plan from 2012-2017 adopted 25 social
targets covering economic and human welfare goals. These included
poverty reduction, education and literacy targets, health outcomes like
infant/maternal mortality, infrastructure coverage and quality living
standards for all.
The Five Year Plans have been instrumental in systematically developing
India's economy over decades. While the approach has evolved, national
planning still plays an important role in allocating resources fairly
according to the country's priorities and raising living standards over time.
