Industrialization
What is meant by industrial
development?
Industrialization is a transformation away
from an agricultural- or resource-based
economy, toward an economy based on mass
manufacturing. Industrialization is usually
associated with increases in total income and
living standards in a society.
The main objectives of industrial development in
India?
(i) to maintain a sustained growth in
productivity
(ii) to enhance gainful employment
(iii) to achieve optimal utilisation of human
resources
(iv) to attain international competitiveness
What is industrialisation?
Industrialization , will include a faster growth
of national income, alleviation of poverty, and
reduction of income inequalities.
Industrialization during the British Rule
Indian Industry had a global presence before
the advent of Britishers in India. Before the
advent of British in India, India accounted for
a quarter of World’s Industrial output.
The exports from India consisted of
manufacturers goods like cotton, silk, artistic
ware, silk and woollen cloth.
The First Phase (1950-1965): Industrial Sector at the Time of
Independence
The main features of the Indian Industrial sector
on the eve of the Independence were:
The Industrial sector was extremely
underdeveloped with very weak infrastructure.
The lack of government support to the industrial
sector was considered as an important cause of
underdevelopment.
The structure and concentration of ownership of
the industries were in few hands.
Technical and Managerial skills were in short
supply.
The First Five-year Plan:-
The First Five-year Plan did not envisage any
large-scale programs for industrialisation.
The plan rather made an attempt to give a
practical shape to the Indian economy by
providing for the development of both private
and public sector.
A number of industries were set up in the
public sector. Important among those were
Hindustan Shipyard, Hindustan Tools, Integral
Coach Factory etc.
The Second Five-Year plan
The Second Five-Year plan accorded highest
priority to Industrialisation. The plan was
based on famous Mahalanobis Model.
Mahalanobis model set out the task of
establishing basic and capital goods
industries on a large scale to create a strong
base for the industrial development.
The plan includes substantial investment in
the Iron and Steel, Coal, Heavy engineering,
Machine building, Heavy Chemicals and
Cement Industries of basic importance.
Third Plan:-
The Third Plan followed the strategy of the
Second plan by establishing basic capital and
producer good industries with the special
emphasis on machine building industries.
As a result, the second and the third plan
placed great emphasis on building up the
capital goods industries. Most of the capital
good industries are built under the Public
Sector.
The First Three-Five Year Plans are important
because their aim was to build a strong
Industrial base in India. This first phase of
Industrial development in India laid the
foundation for strong Industrial Phase.
The Period of Industrial Deceleration:-
The Second Phase (1965-1980):
The first three five-year plans mostly focused
on the development of the Capital Good
sector. As a result, the consumer goods
sector was left neglected.
The consumer goods sector also known as
wage good sector is considered to be the
backbone of the rural economy and its
complete neglect had resulted in fall in the
growth rate of industrial production as well
as of the overall economy.
Industrialisation & Economic
Development:-
1. Increase in National Income
Industrialization allows countries to make
optimal use of their scarce resources. It
increases the quantity and quality of goods
manufactured in that company, which makes
a larger contribution to gross national
product (GNP).
2. Higher Standard of Living
In an industrialized society, workers' labor is
worth more. In addition, because of higher
productivity, individual income increases.
This rise in income raises the standard of
living for ordinary people.
3. Economic Stability:-
A nation that depends on the production and
export of raw material alone cannot achieve a
rapid rate of economic growth. The restricted
and fluctuating demand for agricultural
products and raw materials—along with the
uncertainties of nature itself—hampers
economic progress and leads to an unstable
economy. Industrialization is the best way of
providing economic stability.
4. Improvement in Balance of Payments :-
Industrialization changes the pattern of foreign
trade in the country. It increases the export of
manufactured goods, which are more profitable in
foreign exchange. But at the same time, processing
the raw material at home curtails the import of
goods, thereby helping to conserve foreign
exchange. The export-orientation and import-
substitution effects of industrialization help to
improve the balance of payments. In Pakistan in
particular, the exports of semi-manufactured and
manufactured goods resulted in favorable trends.
5. Stimulated Progress in Other Sectors:-
Industrialization stimulates progress in other
sectors of the economy. A development in one
industry leads to the development and
expansion of related industries.
For instance, the construction of a transistor
radio plant will develop the small-battery
industry. (This is an example of backward
linkage.)
In another case, the construction of milk
processing plants adds to the production of ice
cream as well. (This is forward linkage.)
6. Increased Employment Opportunities :-
Industrialization provides increased
employment opportunities in small- and
large-scale industries. In an industrial
economy, industry absorbs underemployed
and unemployed workers from the
agricultural sector, thereby increasing the
income of the community.
7. Greater Specialization of Labor :-
Industrialization promotes specialized labor.
This division of work increases the marginal
value product of labor. In other words,
specialized labor is more profitable. The
income of a worker in the industrial sector
will be higher on average than that of a
worker in the agricultural sector.
8. Rise in Agricultural Production :-
Industrialization provides machinery to the
farm sectors, including technologies like
tractors, thrashers, harvesters, bulldozers,
transport, and aerial spray. The increased use
of modern technologies has increased the
yield of crops per hectare. The increase in
farmers' income boosts economic
development more generally.
9. Greater Control of Economic Activity :-
Industrial activity is easier to control and
regulate than agricultural activity. Industrial
production can be expanded—or cut down—
to respond to the price and cost of, and
demand for, a product.
10. Larger Scope for Technological Progress :-
Industrialization provides greater potential
for on-the-job training and technological
progress. The use of advanced technology
increases the scale of production, reduces
costs, improves the quality of the product,
and ultimately helps to widen the market.
11. Increased Savings and Investments :-
Because industrialization increases workers'
income, it also enhances their capacity to
save. These voluntary savings stimulate
economic growth. By cumulative effect, they
eventually lead to the further expansion of
industry.
