Industrial finance and policy
To start a shop capital and permission are needed first. In the same way factories needed long-term loans and government policy.
Industrial finance means long-term loans given to industries. Industrial policy means government rules deciding which industries can be started by whom.
Key idea 1 : Loan-giving institutions — After independence in 1948 the Industrial Finance Corporation of India (IFCI) was established; its aim was to make long-term loans available to industrial projects. In 1954 the Industrial Development Corporation was established; its aim was greater development of the industrial sector.
Key idea 2 : Fourth plan and licensing policy — The fourth Five Year Plan stressed paper, pharmaceutical, motor-tractor, leather goods, textile, food processing, oil, colour and sugar industries. As per the Industrial Licensing Policy of 1970 factories needing an investment of more than Rs 5 crore were counted as heavy industries.
Key idea 3 : Result of the policy — In heavy industries not reserved for the public sector big industrial houses and foreign companies were allowed to invest. As a result of this policy by the end of 1972, 3 lakh 18 thousand small industries were registered with the government registration office.
- Easy : When was IFCI established? — In 1948.
- Medium : When was the Industrial Development Corporation? — In 1954.
- Exam-type : Which were heavy industries in the 1970 policy? — Those with investment of more than Rs 5 crore.
In the figure: Timeline of industrial bodies and policy.
What happened before the 1991 economic reforms? In mid-1991 India’s foreign-exchange reserves were almost exhausted, and the country had to send part of its gold abroad as security for emergency loans.
What happened after the 1991 economic reforms? On 24 July 1991 the Narasimha Rao government, with Finance Minister Manmohan Singh, presented a budget and industrial policy that ended most industrial licensing and opened the economy.
48 IFCI; 54 Development Corp.; 70 licensing; 72 small units.
The licensing policy was not only for government industries; private and foreign companies also got permission in some heavy industries.
Memory clue: 48-54-70-72 = loan-development-licence-small. Memory clue: “take the loan, develop, get the licence, start small units”.
Spot the difference
| Body/Policy | Year | Aim |
|---|---|---|
| IFCI | 1948 | Long-term loans |
| Industrial Development Corporation | 1954 | Industrial development |
| Industrial Licensing Policy | 1970 | Defines heavy industries |
Practice questions
- 1What was the aim of IFCI?
- 2When was the Industrial Development Corporation established?
- 3Which industries were stressed in the fourth plan? Name two.
- 4State the definition of heavy industry in the 1970 licensing policy.
- 5What was the effect of this policy on small industries?
- 6Why do industries need long-term loans?
- 7State one advantage and one disadvantage of allowing private and foreign companies.
- 8Write the chronology of industrial events from 1948 to 1972.
Show answers (try them yourself first)
- 1To make long-term loans available to industrial projects.
- 2In 1954.
- 3Paper and pharmaceuticals (or sugar, leather).
- 4Factories needing an investment of more than Rs 5 crore.
- 5By the end of 1972, 3 lakh 18 thousand small industries were registered.
- 6Because machines and factories need big investment and profit comes late.
- 7Advantage: investment and technology; disadvantage: competitive pressure on domestic industries (student’s view).
- 81948 IFCI; 1954 Development Corp.; 1970 licensing policy; 1972 small-unit registrations.
Textile, silk, jute and other industries
Our uniform, leather shoes and bag all come from different industries. In the same way many industries in India give jobs and exports.
Textile, silk, jute, leather, salt and bicycles are some important industries in India. Many of them are labour-intensive and give exports.
Key idea 1 : Textile, silk and jute — The textile industry is about 14% of total industrial production; it includes powerloom and handloom. As per the Textile Committee Act of 1963 this committee sets the quality standards for textiles for the home market and export. The silk industry is mainly in Karnataka, Andhra Pradesh, West Bengal and Jammu and Kashmir. India is a leader in jute production and jute gives cloth, sacks and ropes.
Key idea 2 : Leather, salt and bicycles — The leather industry is big and mainly export-oriented. India is among the leading salt producers of the world; annual production is about 200 lakh tons and about 60 lakh tons of it is iodised salt. Bicycles are made in Punjab and Tamil Nadu; Ludhiana is the main centre and exports go to countries like Nigeria, Kenya and Brazil.
Key idea 3 : Handicrafts and market — Handicrafts give work to many craftsmen as they need small investment and exports get preference. Markets like ‘Dilli Haat’ help rural and urban craftsmen to find buyers. In the ‘Mega cluster’ scheme weavers get help of raw material, design banks and technology through self-help groups and NGOs.
- Easy : What is the main centre of bicycles? — Ludhiana.
- Medium : What does the Textile Committee set standards for? — Textiles.
- Exam-type : What does jute give? — Cloth, sacks and ropes.
In the figure: Industries in four groups.
What happened before the 1947 partition (jute industry)? Before the partition of 1947 jute mills were near Kolkata along the Hooghly river, while most of the raw jute was grown in East Bengal. After the partition about 75 to 80 percent of the jute-growing area went to East Pakistan, but almost all the mills stayed in India.
What happened after the 1947 partition (jute industry)? After that the Government of India followed a policy of increasing jute cultivation; in some areas it encouraged jute instead of paddy and distributed free seeds to farmers in Madras, Travancore and Bombay. Later the country became a leader in jute production (as per the textbook).
Textile 14%; Textile Committee 1963; bicycle = Ludhiana; salt 200 lakh tons.
Jute and cotton are not the same; jute fibre comes from the plant’s stem and is used for sacks and ropes.
Memory clue: Textile-silk-jute-leather-salt-bicycle. Memory clue: “cloth on the body, leather on the feet, salt on the plate, a bicycle on the road”.
Spot the difference
| Industry | Main State/Place | Feature |
|---|---|---|
| Silk | Karnataka, Andhra, W. Bengal, J&K | Research at Bengaluru |
| Bicycle | Punjab, Tamil Nadu (Ludhiana) | Exports |
| Salt | Across the country | 200 lakh tons |
Practice questions
- 1What is the work of the Textile Committee?
- 2In which States is the silk industry? Name two.
- 3Which things are obtained from jute?
- 4Write the main centre of the bicycle industry and two countries of export.
- 5What changed in the jute industry before and after the partition?
- 6Why is handicraft called a labour-intensive industry?
- 7How does the ‘Mega cluster’ scheme benefit weavers?
- 8Write four industries with place and features in a table.
Show answers (try them yourself first)
- 1Setting the quality standards for textiles.
- 2Karnataka and West Bengal.
- 3Cloth, sacks and ropes.
- 4Ludhiana; Nigeria and Kenya.
- 5Before: mills in India and farms in Bengal; after: farms went to East Pakistan and India expanded its own cultivation.
- 6Because it needs more human labour than machines.
- 7They get raw material, design banks, technology and welfare help.
- 8Silk - Karnataka - Bengaluru research; bicycle - Ludhiana - exports; salt - across - 200 lakh tons; jute - Bengal - leader.
Khadi and village industries, agriculture, automobile and cement
In the village potters, carpenters and weavers give work, and our food comes from farms. In the same way khadi, agriculture, automobile and cement industries meet the country’s needs.
Village industries are small industries in villages that run on local resources. Agriculture is India’s main occupation and about seventy percent of society depends on it (as per the textbook).
Key idea 1 : Khadi and Village Industries Commission — This commission was established to give impetus to industrialisation in rural areas. Its aims were to develop traditional industries, handicrafts and cottage industries, to encourage industries using local resources, and to make villages self-reliant by creating employment.
Key idea 2 : Agriculture — In India farming is done by both traditional and modern methods. Jowar, wheat, rice, pulses and oilseeds are the main crops; cotton and sugarcane are processed into cloth and sugar. Farmers get loans, tools, seeds and fertilisers through rural banks and cooperative institutions; modern techniques like drip irrigation and organic farming are used.
Key idea 3 : Automobile and cement industries — India is a big producer of vehicles and vehicles are exported to 40 countries. The automobile industry is called the ‘sunrise sector’; as per the textbook one-third of the world’s tractors are made in India. The cement industry is important in the development of housing and infrastructure and is technologically advanced.
- Easy : What is the automobile industry called? — Sunrise sector.
- Medium : Which are the main crops in India? — Jowar, wheat, rice, pulses, oilseeds.
- Exam-type : What is the aim of village industries? — Making villages self-reliant by creating employment.
In the figure: From khadi movement to the commission.
What happened before the Khadi Commission? In 1925 Mahatma Gandhi set up the All India Spinners Association and later the village industries association followed. After independence in January 1953 the government set up the All India Khadi and Village Industries Board; it was an advisory board.
What happened after the Khadi Commission? In 1956 Parliament passed the Khadi and Village Industries Commission Act and in April 1957 the Commission took over the work of the Board. The Commission got executive and administrative powers; its head office is in Mumbai.
1953 Board; 1956 Act; 1957 Commission.
The Khadi Commission was not set up in 1953; only a Board existed then and the Commission came in 1957. (The textbook does not give the year.)
Memory clue: Charkha-Board-Act-Commission. Memory clue: “first the spinning wheel turned, then the Board sat, then the Act came, then the Commission”.
Spot the difference
| Industry | Feature | Example |
|---|---|---|
| Khadi and village | Employment, self-reliance | Handicrafts, cottage industries |
| Automobile | Exports to 40 countries | Tractors |
| Cement | Housing and infrastructure | Technologically advanced |
Practice questions
- 1State the objectives of the Khadi and Village Industries Commission.
- 2Briefly write the crops and methods of farming in India.
- 3What kind of help do farmers get?
- 4Why is the automobile industry called the ‘sunrise sector’?
- 5What happened before and after the Khadi Commission?
- 6State the importance of the cement industry.
- 7Can village industries reduce migration? Give reasons.
- 8Explain the mutual relation between agriculture and industry with examples.
Show answers (try them yourself first)
- 1Developing traditional industries, using local resources, and making villages self-reliant by giving employment.
- 2Jowar, wheat, rice, pulses, oilseeds; traditional and modern methods.
- 3Loans, tools, seeds, fertilisers and training.
- 4Because it is growing fast and exports are rising.
- 5Before: the Spinners Association and the 1953 Board; after: the Commission of 1957.
- 6Cement is necessary to build houses and infrastructure.
- 7Yes, because employment is found in the village itself (student’s view).
- 8Cotton → cloth; sugarcane → sugar; agriculture gives raw material and industries make finished goods.
Resources and trade
On a trip we meet the needs of transport, stay and guides. In the same way many occupations run on minerals, forests, fish and tourism in the country, and goods are exchanged through trade.
Import means bringing goods from abroad and export means sending goods abroad. Internal trade means trade within the country.
Key idea 1 : Minerals, forests and fisheries — We have adequate stores of iron, coal, manganese and mineral oil. The government has reserved some forests for industries; forests give raw material for construction, paper, silk, matchboxes, medicinal herbs, honey and lacquer. Fisheries include sea and fresh-water fish; harbours, fish-seed centres and training centres were built.
Key idea 2 : Tourism — India’s cultural heritage is rich — places of worship, pilgrimage centres, river confluences, forts and caves. Facilities of stay and travel for tourists are provided through the Tourism Development Corporation. Souvenir sellers, hotels, guides and local people who help in remote places get employment.
Key idea 3 : Import-export and internal trade — When planning started in 1951 imports of machines, iron, mineral oil, fertilisers and medicines increased. To earn foreign exchange exports of tea, coffee, spices, cotton textiles, leather, footwear, pearls and precious stones were increased. Internal trade takes place by railways, waterways, roads and airways; Mumbai, Kolkata, Cochi and Chennai are important ports.
- Easy : What does India export? — Tea, coffee, spices, cotton textiles etc.
- Medium : What does India import? — Machines, iron, mineral oil, fertilisers, medicines.
- Exam-type : Name an important port. — Mumbai (or Kolkata, Cochi, Chennai).
In the figure: Imports and exports after planning.
Imports = machines, oil, fertilisers; exports = tea, textiles, spices.
Export does not mean only cloth; tea, coffee, spices, leather, footwear and pearls are also exported.
Memory clue: Im-Ex = import-export. Memory clue: “machines come in, tea goes out”.
Spot the difference
| Type | Examples | Purpose |
|---|---|---|
| Import | Machines, iron, mineral oil, fertilisers | For industry and farming |
| Export | Tea, coffee, spices, textiles | Foreign exchange |
| Internal trade | Coal, cotton, rice, sugar | Home needs |
Practice questions
- 1What are import and export?
- 2Name four minerals of India.
- 3What raw material do industries get from forests? Name two.
- 4How does tourism create employment?
- 5Why did imports increase after 1951?
- 6Why was it important to increase exports?
- 7State the commodities and means of internal trade.
- 8Write how the development of industries improves the standard of life.
Show answers (try them yourself first)
- 1Import = bringing goods from abroad; export = sending goods abroad.
- 2Iron, coal, manganese, mineral oil.
- 3Wood for paper and honey (or lacquer, medicinal herbs).
- 4Hotels, guides, souvenir sellers and local helpers get work.
- 5Planning increased industries’ need for machines, raw material and medicines.
- 6To earn foreign exchange.
- 7Coal, cotton, rice, sugar; railways, roads, waterways and airways.
- 8Employment opportunities rise and income growth improves living standards.