Industrial Policy RESOLUTION, 1977

BBA-205 Unit-3 Business Environment

This Policy Statement was made by Janta Government which came to power in 1977 and was strongly biased against large scale industries. This Statement promoted small scale and cottage industries to provide local employment and root away regional imbalances in industrial development.

The major provisions of this policy are as follows:-

1) Emphasis on Cottage and Small Scale Industries

The main thrust of this policy was on the promotion of cottage and small scale industries. The keynote of this policy was “whatever can be produced by the small scale and cottage industries must only be produced.”

2) Development of Indigenous Labour Intensive Technology

• This policy emphasized the need for developing industrial technology that was appropriate in the Indian context.
• This would further ensure larger employment and better use if country’s resources.
• To make use of abundant labour resources existing in a place in local area.
• Labor Intensive Technology means a process where a larger portion of cost is due to labor as compared to other expenses.
• For Example- Agriculture, construction, coal-mining industries etc.

3) Use of MRTP Act, 1969

• This policy used MRTP (Monopolies and Restrictive Trade Practices) Act to curb monopoly power of big industrial houses.
• This policy proposed number of measures to curb disproportionate growth of large business houses.
• Also focused upon dispersal of industries away from the metropolitan areas.

4) Restrictive Approach towards Large Business Houses

• The large scale sector was allowed in basic, capital goods and high-tech industries. The policy emphasized that the funds from financial institutions should be made available largely for the development of small sector.
• The large sector should generate internal finance for financing new projects or expansion of existing business.

5) Expanding Role of Public sector

• The industrial policy stated that the public sector would be used not only in the strategic areas but also as a stabilizing force for maintaining essential supplier for the consumer.