discrimination against foreign capital laid the foundation for the policy to be implemented even in the public sector . This aspect of government policy should be constantly kept in mind when one studies the future of the state sector in our country .
The Second Five Year Plan categorically stated that , in “ a growing economy which gets increasingly diversified , there is scope for both the public and private sectors to expand simultaneously but it is inevitable , if development is to proceed at the pace envisaged and to contribute effectively that the public sector must grow not only absolutely but also relative to the private sector ”.
The area in which the public sector will grow , and grow faster than the private sector , were clearly enunciated in the Industrial Policy Resolution of April 13 , 1956 , where it was promised that :
“ In the first category there will be industries the future development of which will be the exclusive responsibility of the State . The second category will consist of industries , which will be progressively State-owned and in which the State will therefore generally take the initiatives in establishing new undertakings , but in which private enterprise will also be expected to supplement the effort of the State . The third category will include all the remaining industries , and their future development will , in general , be left to the initiative and enterprise of the private sector .
Industries in the first category have been listed in Schedule A of this resolution . All new units in these industries where their establishment in the private sector has already been approved will be set up only by the State . This does not preclude the expansion of the existing privately owned units , or the possibility of the State securing the co-operation of the private enterprise in the establishment of new units when the national interests so require . Railways and air transport , arms and ammunition , and atomic energy will , however , be 10 developed as Central Government monopolies . Whenever co-operation with private enterprise is necessary , the State will ensure , either through majority participation in the capital or otherwise , that it has the requisite powers to guide the policy and control the operations of the undertaking .
Industries in the second category will be those listed in Schedule B . With a view to accelerating their future development , the State will increasingly establish new under-takings in these industries . At the same time , private enterprises will also have the opportunity to develop in this field , either on its own or with State participation ”.
It is now 15 years since the resolution was passed by the highest body of people ’ s representatives - the Parliament . Now we should study the results and see whether the contention that public sector has become , and is becoming , more and more a base for private capital and much more so for foreign capital is true . It can as well be said that resolution does not exist since it was stealthily thrown into the dustbin even before the ink with which it was written was dry . Let us now examine a few cases to concretize the above criticism . COAL : Coal and Lignite was one of the industries in Schedule A - i . e ., those industries whose “ further development will be the exclusive responsibility of the State ”. Let us now see how this particular resolve has been implemented . Instead of enumerating the facts , it would be better to hear from the horse ’ s mouth : the Estimates Committee of Parliament in its report in 1962-63 gives the following facts .
“ The industrial policy resolution of 1956 listed coal in Schedule ‘ A ’, thus envisaging that its future development was to be the exclusive responsibility of the State ”. ( Page - 1 )
“ The industrial policy resolution of 1956 envisaged that ‘ all new units ’ in the coal industry are to be set up only by the State . This does not , however , preclude the expansion of the privately-owned units ”.
“ The Second Five Year Plan clearly contemplated that the private sector should raise its share of additional 10 million tonnes from their existing workings and immediately contiguous areas ”. ( Page - 2 )
“ The committee was informed that since the middle of 1956 , the Central Government had given its approval to the private sector of the coal industry to develop new areas in 49 cases in various states ”. ( Page - 2 )
“ It is however seen that , out of 49 areas referred to above , 25 are contiguous and 24 non-contiguous . The representative of the ministry explained during evidence that Government took a pragmatic view of the Industrial Policy Resolution and interpreted it rather liberally ”. ( Page-3 )
“ The committee noted that in the Second Five Year Plan , it had been specifically stated that , “ in future , the policy of retaining all new undertakings in coal in the public sector should be more strictly followed ... The expansion of production by the establishment of new collieries will be undertaken wholly in the public sector ”. The committee feel that the present policy of the Government in allowing noncontiguous areas to the private sector is strictly not in consonance with the Industrial Policy Resolution and the decision contained in the Second Five Year Plan . The rather Liberal interpretation of the Industrial Policy Resolution is not conducive to the proper development of industry ”. ( Page - 3 )
Now it is clear that , in 1956 itself , the Government had started condoning the growing encroachment by the private sector into spheres reserved for the public sector by the Industrial Policy Resolution of 1956 . OIL : This is the field in which the Soviet Union has played an important role as a catalyst for foreign oil companies to enter the public sector . This is a field in which the Soviet Union and the foreign oil companies seem to be playing a role more and more complementary to each other . With the increase in aid to this sector
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