This new policy deregulates the industrial economy in a substantial manner. The major objectives of the new policy are to build on the gains already made, correct the distortions or weaknesses that might have crept in, maintain a sustained growth in productivity and gainful employment, and attain international competitiveness. In pursuit of these objectives, the government announced a series of initiatives in the new industrial policy as outlined below:
Common instruments of Industrial Policy Evolution and Changes in Industrial Policy in India Introduction One of the most important tasks of the government is to manage economy of the country.
It has to decide the means and methods to be used towards this. However, this job was taken up by almost all countries only after great depression.
In pre depression era, there was faith in laissez Faire model of economy, which literally means — no intervention and let market forces of demand and supply have free hand. This is also known as capitalist mode of economy, where goods and services to be produced are decided by purchasing power of the people.
If there are any mismatches in demand and supply, then price of the products will fluctuate in order to rope in or out suppliers and consumers and consequently there will be demand supply equilibrium. Great depression brought spiraling hyperinflation which rendered wide range of commodities unaffordable to the masses.
With this accompanied massive unemployment. It belied excessive faith placed in free markets and it demonstrated that markets are not sacrosanct as there was a big market failure.
Famous economist John Keynes made out compelling case for government intervention, through incurring fiscal deficit to create demand. It was clear that government will have to manage production patterns of economy and promote production of specific goods in interest of consumers and employment.
Another major factor was of Russian Revolution. With establishment of socialist government in Russia, there was a sentimental wave against concept of free markets.
Governments all over world extended franchise voting rights to working class in this period and limited the influence of capitalists. Henceforth it became easy and must for such governments to intervene in interest of all.
This started era of planning to different degree in different countries. Under this, as already explained, government attempts to promote particular industries in interest of consumers and employment.
After Decolonization many countries along with India, had uphill task of socio economic development. Their economies were in past deliberately made heavily dependent on respective colonial ruling powers.
Industries and markets were in infancy. New governments had to mark preferences for channelizing their scarce resources to achieve long term holistic development.
Due to all these factors, Industrial Policy was adopted by various countries and India was first noncommunist democratic country to have an official industrial policy. Industrial Policy is a typical character of a mixed economy. It is policy of government intervention which is sector specific and is aimed at giving preferential treatment to a particular sector over others.
Sector are recognized by policy makers, which are worthy of government support and targets are set. We have already seen government support toward renewable energy sector, organic farming, food processing and export promotion of various products.Entrepreneurship Development Institute of India is one of the leading management institute in India offering 2 year full time PGDM program in Business Entrepreneurship, MBA Courses in BE.
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The Delhi–Mumbai Industrial Corridor Project (DMICDC) is a planned industrial development project between India's capital, Delhi and its financial hub, benjaminpohle.com is one of the world's largest infrastructure projects with an estimated investment of US$90 billion and is planned as a high-tech industrial zone spread across six states, Delhi being a Union Territory, across the 1, km long.
Industrial policy is seen as harmful as governments lack the required information, capabilities and incentives to successfully determine whether the benefits of promoting certain sectors above others exceeds the costs and in turn implement the policies. Dr. Sheelan Misra, Professor & Head, Department of Management Studies (MBA) The Master of Business Administration program at New Horizon College of Engineering is a two year full time autonomous program affiliated to Visvesvaraya Technological University.