Jawaharlal Nehru was the first Prime Minister of India. He received his higher education at Europe where greatly got greatly influenced by Socialism and & closely observed the Soviet Economic Model.
As the first Prime Minister, he played a major role in reviving the Indian industries which were systematically destroyed by British colonialist.
His government introduced The New Industrial Policy in 1956 which heralded the age of industrialization in the independent India. However, this policy was flawed which resulted in uneven industrialization.
The flaws in the Nehru's policy of industrialization were;
- Emphasis on heavy industries: Nehru gave a major emphasis on developing the heavy industries. He prioritized steel, power and machinery sector which he viewed as the foundation of industrialization, job creation and a tool to reduce import dependence. On the other hand however, the consumer good industries remained neglected which resulted in shortages. The heavy industries are capital-intensive and a lack of government financial assistance resulted in low industrial output and generated fewer employment than expected.
- Excessive state control: Nehru was a hardcore socialist. He nationalized the entire economy & brought the industrial sector under excessive state control. The industrial sector was heavy regularized and any private industrialist who wished to set up an industrial unit had obtain to a license, this regulatory compliance gave birth to the infamous license raj. Bureaucratic delays and red tapism stifled entrepreneurship and discouraged competitive. Excessive state control led to a rise in corruption which resulted in industrial stagnation.
- Limited private sector participation: Nehru's industrial policy handed majority of industries to the public sector companies and left a very few to the private players. However, the private sector could never freely set up industries. The investments were kept under heavy scrutiny, which discouraged innovation and India couldn't develop competitive private industrial firms.
- Freight Equalization Policy: Nehru wanted balanced industrial growth in all parts of the country. His government introduced the Freight Equalization Policy that incentived the logistic costs involved in transportation of raw material across the country. This made it easy to transport raw materials from resource rich states to states and territories having a coast line. This policy led to inequal industrial development across India.
- Import Substitution: Nehru was heavily influenced by the Soviet model of economy. He pushed for Import Substitution to protect domestic industries from external competition and give them sufficient time to grow and develop. This policy went too far, it systematically destroyed the exporting industries and decreased the competitiveness of Indian industries against external competitors.
Source: Google
Nehru's industrial policy laid the foundation of India's industrial growth. His government set up Steel Plants in cities like Rourkela, Bhilai and Vishakapatnam and revived the industrial growth which was stagnant during colonial exploitation.