Industrial Policy Resolution 1956

Industrial Policy Resolution (IPR) 1956 was a declaration of the government that was initiated with the purpose of rapid industrialization to achieve high economic growth along with social justice. The resolution formed the basis of the second five-year plan and acted as a foundation stone to develop the socialist pattern of the society. The following are the principal elements of the IPR (1956).


Principal Elements of Industrial Policy Resolution 1956


Elements of Industrial Policy Resolution 1956 #1


Three-fold classification of industries

According to Industrial Policy Resolution (IPR) 1956, industries were classified into the following three categories.

Category 1: Those industries that are established and owned exclusively by the public sector.
Category 2: Those industries in which the public sector will perform the primary role while the private sector will play the secondary role. That is, the private sector supplements the public sector in these industries.
Category 3: Those industries that are not included in Category 1 and Category 2 are left to the private sector.


Elements of Industrial Policy Resolution 1956 #2


Licensing of industries

The private sector industries could be established only after obtaining a license (or permit) from the government. This proposal of obtaining a license was incorporated to keep a check on the indiscriminate growth of the private sector. Also, it was done to promote the establishment of industries in backward regions and to encourage regional equality. The license was required not only to establish a new industry but also for expanding the production capacity of the existing industries.


Elements of Industrial Policy Resolution 1956 #3


Industrial concessions

The Indian government aimed at promoting industries in the backward regions by offering tax holidays, concessions, and subsidies. This, in turn, promoted economic welfare and development of the backward regions; thereby, reducing regional disparities.


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