THE SECOND INDUSTRIAL POLICY RESOLUTION, 1956
The second industrial policy was announced in 1956 to avoid the threat of nationalisation and to incorporate changes which occurred after 1948. The Constitution of India was adopted in 1950 and the resolution of the ruling Congress Party "socialistic pattern of society" was approved by the Parliament in 1955. The Constitution stipulated directions to the state in the management and ownership of resources. Further, in 1951 the Industries Act was passed and the First Five Year Plan was launched setting broad goals These changes necessitated announcement of Industrial Policy in more concrete terms.
One important feature of 1956 policy is division of industries into 3 groups or Schedules and defining the respective roles of private and public sectors. In Schedule 'A' 17 industries were included and in Schedule B' 12. Other than these 17 and 12, the remaining industries were left to the private sector including cooperative sector. In the new classification of industries. approximately schedule 'A' industries included the former first and second categories, schedule B" the former 3rd category and schedule C the former 4th category of industries. Schedule A industries shall be exclusive monopoly of public sector Schedule 'B' industries will be progressively state owned. It means that while the units already established in this category would continue to be owned by the private sector, all the new units would be established by the state. This is why schedule B is called mixed sector or public cum private sector Schedule "C" industries come under private sector and the government will regulate and develop them as per the 1951 Industries Act
The policy recognised the importance of private sector and foreign cap in industrialisation. However, participation of foreign capital would be limited and the share holding would be limited to maximim 40%. Further, the state took the responsibility to rapidly industrialising India. In case private sector does not come forward or not capable necessary industries, the same will be made good by the public sector. In brief, the 1956 policy accorded supreme role to public sector viz, control over commanding heights of the Indian economy.
