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    Direction : Read the following passage carefully and answer the questions given below it. Certain words have been printed in the bold to help you locate them while answering some of the questions.

    Industrial development is a very important aspect of any economy. It creates employment, promotes research and development, leads to modernization and ultimately makes the economy self-sufficient. In fact, industrial development even boosts other sectors of the economy like the agricultural sector (new farming technology) and the service sector. It is also closely related to the development of trade.
    But just after independence India’s industrial sector was in very poor condition. It only contributed about 11.8% to the national GDP. The output and productivity was very low. We were also technologically backward. There were only two established industries – cotton and jute. So it became clear that there needed to be an emphasis on industrial development and increasing the variety of industries in our industrial sector. And so the government formed our industrial policies accordingly.
    One of the biggest hurdles in industrial development was the lack of capital. Private industrialists did not have enough capital to build a new industry. And even if they did, the risk involved was too high. So in 1948, it was decided that state would play the primary role in promoting the industrial sector. So the state would have absolute and complete control over all industries that were vital to the economy and the needs of the public.
    In 1948, it was decided to reserve right of control with the state over coal, steel, aviation, petroleum industries, etc. All other industries were open to private enterprises. In 1956, a resolution was passed under which private capital was allowed to enter into the reserved sectors of industry. A number of top-ranking industrialists were members of the Central Advisory Council and Development Council.
    The state enterprises and public sector undertakings ran into heavy losses, and this put a question mark on the capabilities of the Indian State and its approaches in managing its own establishment. A debate started on private- public sector partnership and divide. The debated tilted in favour of the private sector.
    Many of the government enterprises were handed over to private entrepreneurs and industrialists. Privatisation has entered in a selected way in offices and transport sector, including roads, railways and airways. ‘Contractualism’ is the new slogan today.
    In 1955 a special committee known as the Karve Committee advised the promotion of small-scale industries for the purpose of rural development. It was believed that since small-scale industries are more labour intensive they would create more employment. Also, the manpower requirement of small- scale industries is semi-skilled or unskilled which was suitable for those times.
    However, these small-scale industries cannot match up to large scale industries. So, there were special goods and products reserved by the government. These could only be manufactured by small and medium scale industries. Such industries also got financial aid in form of loans, tax and duty breaks.
    Large-scale industries started in the first fifteen years of planning in India. Rate of industrial growth was fluctuating between 2 to 12 per cent. However, we have observed a steady industrial progress after 1967. The enduring factors which have contributed to the growth are vast natural resources, economic surplus, large labour force, high urban concentration, concentration of surplus within a small social group, availability of trained personnel, a stable political structure, powerful means of state economic control, etc. Currently, the growth rate is around 8 per cent. Today, India is one of the top developing countries compared to the countries of Africa and South America.
    However, production of luxury goods, control of monopolies, sluggish rate of agricultural development, etc., have come as obstacles in industrial development. Despite these factors, investments in private sector have been increasing.
    One of the first requirements for the development of the economy is to improve the infrastructure of the country. The various other sectors of the economy cannot develop without the support of infrastructure facilities like transport, rail, banking communication etc.
    So to develop these industries the government formed appropriate industrial policies. The development of most of these industries fell to the public sector. Like for example, the rail industry to this day remains firmly in the public sector. Capital goods are goods used in the production of other goods. Capital goods are not for direct sale to the consumer. But they are a hallmark of a good industrials sector. So the government decided to focus on the capital goods industry for the development of our industrial sector.
    So, the Mahalanobis model came into effect in the second five-year plan. The focus here was on heavy industries, especially those that produce capital goods. This was to create a robust capital base for the economy. So, industries of heavy metals, chemicals, machine building, tools, electrical etc all saw growth in this period.
    Such industries have massive capital requirements. But the government ensured they had enough capital to function smoothly. Soon there was a development of high-tech goods in the market as well.
    Collaborations with industrially advanced countries like the USA, UK, Russia, France, Germany, Italy, Japan, etc., are a clear testimony of India’s industrial progress. A boost has been given to the development of small-scale industries too during various plans. India has today a global market. India and China are considered as the fast developing countries.

    According to the author, why Industrial Policies were formed?

    Options :-

    1. To increase the output and productivity.
    2. Technology development
    3. Increasing the variety of Industries
    4. Employment generation
    5. All of the above
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