Indian Industrial Policy and Economic Power Concentration
RAPID industrial development and reduction in concentration of economic power are the two professed objectives of industrial policy in India. Reduced inequalities of income and wealth, balanced regional development and adherence to plan priorities are closely linked with these objectives to be realized by extending the public sector as well as by regulating the private sector through such measures as price control or licensing policy. Here is an attempt to analyse those elements of industrial policy designed to reduce economic power concentration and to assess the practical achievements.
Words and Deeds
The directive principles of state policy of the Constitution enjoined that the concentration of economic power should be prevented. It was reaffirmed in the Industrial Policy Resolutions of 1948 and 1956, the Five Year Plans, reports of committees and other official pronouncements. Nevertheless, all available data indicate that concentration has been on the increase.
As far back as 1960, the Mahalanobis Committee found "concentration of economic power in the private sector more than what could be justified on functional grounds". The Monopolies Inquiry Commission in 1964 maintained that "planning itself has become a potent factor for further concentration of economic power.59 The findings of R K Hazari and such bodies as the Industrial Licensing Policy Inquiry Committee (ILPIC) and the Monopolies Inquiry Commission have established the fact of increasing concentration beyond any shadow of doubt.
An overwhelmingly large part of capital in the private corparate sector is centralized in the hands of a few highly diversified and integrated business groups. Assets of the top 75 industrial houses which stood at Rs 3418.5 crores in December 1966 rose to Rs 4032.4 crores in the next year. According to Nigam and Chowdhary, in 1957-58, 126 companies at the top of the list accounted for 34 per cent of the total paid-up capital; and, 1 per cent of the companies accounted for 47 per cent. A study conducted by the Reserve Bank of India revealed that 177 companies at the top accounted for 63 per cent of total paid-up capital of all companies.