INDUSTRIES (DEVELOPMENT AND REGULATION) ACT -1951
Introduction
The Industries (Development and Regulation) Act, 1951 is one of the main
legal instruments used by the government to regulate and control
industrial development in India. It was enacted to empower the central
government to take steps for industrial growth and regulate industrial
activities.
Objectives
The main objectives of the Act are:
To empower the government to take necessary measures for
industrial development.
To regulate the pattern and direction of industrial growth.
To control the performance and activities of industrial undertakings
in public interest.
Main Provisions
Development Measures
The Act provides for advisory councils to advise the government on
industrial development.
It enables setting up of development councils for industries to
recommend measures for improving performance.
Regulation of Entry and Growth
The Act empowers the government to regulate industrial entry and
expansion through licensing and exemptions.
Supervision and Control
The government can investigate falls in output, quality issues or
price rises in any industry.
It can issue directions to regulate production, standards, steps for
development, practices harming output, and price control.
The government can inspect premises, examine documents and
records, and question employed persons.
Takeover of Management
The government can take over management of non-compliant or
detrimental undertakings.
It can take over undertakings of companies under liquidation.
It can liquidate or reconstruct such companies.
Price and Distribution Control
The Act empowers price and distribution control of articles to ensure
fair prices and availability.
Exemptions
Exemptions can be given from provisions of the Act in public
interest.
Licensing Provisions
Licensing was required for setting up industries based on
investment limits.
Liberalization in 1991
Licensing abolished for all except 18 industries like alcohol, tobacco,
chemicals etc.
IEM filing required for exemption from licensing.
Locational policy made flexible except for metro cities.
Conclusion
The extensive controls under this Act have been criticized as being
detrimental to industrial growth.
With liberalization, the role of states has increased in industrial
promotion.
But the Act provides regulatory powers if needed in public interest.
CORPORATE SOCIAL RESPONSIBILITY AND RELATED MODELS
Corporate Social Responsibility
Corporate social responsibility means voluntary company activities
benefiting society beyond statutory requirements, reflecting moral
obligations. It implies businesses, like citizens, must uphold social norms
as corporate citizens.
Operations utilize societal resources and impact stakeholders -
shareholders, suppliers, consumers, community, and society. So firms
must balance opposing stakeholder interests responsibly.
Industry is now a joint enterprise of various interests needing a common
purpose. If private enterprise is to survive, it must serve the larger public
interest. Trusteeship and social responsibility correlate.
Social responsibility arises from:
Business being more than profit-making - it has social duties
Following ethics like obeying laws, maximizing quality goods,
ensuring supplies, paying taxes and fair wages/dividends etc.
Undertaking investments dispersing economic activity, like
ancillarisation and backward area industries
Directly playing a welfare role for the community
Classical vs Contemporary Views
The classical view holds business has only economic objectives, no other
responsibilities. Milton Friedman argued social responsibility harms free
markets and is subversive.
The contemporary ecological view sees business as an integral societal
institution serving social purposes. Business cannot isolate itself from
society.
A balanced approach meets stakeholder expectations without jeopardizing
profitability, recognising long-term social good benefits all, tackles
problems where competent, and absorbs reasonable costs.
Social Responsibility Models
Carroll's model has four obligations - economic, legal, ethical,
discretionary. Economic responsibility is foremost. Legal compliance
is fundamental. Ethical norms are expected. Discretionary
contribution to social causes is voluntary. The responsibilities form a
pyramid in that order.
Halal's model recognises diverse stakeholder interests, needing
reasonable tradeoffs. Beyond a level, economic and social aims
conflict.
Ackerman's model has stages of social issue recognition, study, and
implementation.
Social Orientation
Companies' social orientation and involvement vary widely, often
changing over time:
Anti-social: Unfair, unscrupulous; circumvent rules
Indifferent: No orientation beyond legal compliance
Peripheral: Little, token orientation
Socially-oriented: High orientation, limited involvement
Committed and active: High orientation and involvement
