Secondary Sector--INDUSTRY

1.
2.
3.
a)

Sector contribution for Industry accounts for 27% of GDP

Employment to
22% of the total workforce
Trends in industrial production before 1990s
Phase I (1951-65):
The First Plan (1951-56):
No large scale programme of industrialization.
Only Rs.55 crore out of the total expenditure of Rs. 19,602
Crore (2.8 %) was spent
The Second Plan (1956-1961):
Established basic and capital goods industries on a large scale
so that a strong base for industrial development in the future
could be built
Three steel Plants were set up in the public sector at Bhillai,
Rourkela & Durgapur
There was expansions and modernization programmes
undertaken in the private sector

The Third Plan (1961-1966):

Same as the second plan so that the growth of the economy in
the subsequent plans could become self-sustaining
Expenditure on industry in the Third Plan was Rs.1, 726 crore
which was 20.1% of the total expenditure of Rs.8577 crore
under the plan

On an average growth rate of Industrial output during this phase was about 7% per
annum.
b) Phase II (1965-1980) :
This phase was marked by industrial deceleration and
structural retrogression.
The slow growth was attributed to inadequate investment in
infrastructure sectors such as power transportation, etc.
Causes of Deceleration and Retrogression:
The war of 1965 and 71--Indo-Pakistani War of 1965, IndoPakistani War of 1971(Bangladesh liberalization)
Oil Crises of 1973 (oil price rise)
Drought in 1965-66
The industrial growth rate declined to less than an annual average of 5%.

c) Phase III (1980-1991): Increase in investment, especially in the public sector,

that too in infrastructure, helped the industrial sector to get into a recovery
phase.
The rate of industrial growth was 6.4% per annum during 1981-85,
8.5% per annum during the Seventh plan (1985-90) and
8.3% per annum in 1990-91.
4. Trends in industrial production after 1991:
Allowing foreign direct investment (FDI) and the New Industrial Policy, 1991
played a major role.
Objectives of New Industrial Policy, 1991:
Full utilization of capabilities of entrepreneurs and thereby
employment generation
Improvement in efficiency & productivity
Greater investment in R&D and bring new technology to attain
international standards
Encouraging competition
Development of backward areas and the small-scale sector
Improving efficiency of the public sector
Open the economy to the global market
All these resulted into more investment and increased demand.
5. Current status:
Industry grew at 0.4 per cent in 2013-14
The key reasons for poor performance have been:
a. Manufacturing sector declined by 0.7 per cent and Mining sector
declined by 1.4 per cent.
i. Poor performance of these two sectors has been considerable
deceleration in investment, particularly by the private corporate
sector during 2011-12 and 2012-13
ii. Major items in the consumer durables that declined during 201314 are gems and jewellery, passenger cars, colour TV sets, and
telephone instruments.
iii. The gems and jewellry segment suffered partly due to restrictive
gold imports
b) Further, slowdown in construction activities has resulted in capacity
underutilization in the steel and cement sectors.
Steel consumption rose by just 0.6% and cement consumption
by 3.0%

c) Also, for the first time since 2001-02, Diesel consumption contracted by
0.3% during the year.
d) The positive highlights of 2013-14 were robust growth in textiles
contributing nearly 11% of the total exports basket