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Module: Industrial

Psychology

Session 1-2:

The Indian Industrial SceneBackdrop of Industrial Psychology in India

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Two groups: Rural Industry and Urban Industry.

Rural industries manufactured utility goods such as

earthenware, coarse cloth, baskets, etc, catering to the local

needs. Urban industries manufactured luxury goods such as gold and

silverware, and also silk and woolen fabrics and calico, to

serve wider foreign markets

Business and Industry: Pre-British

Period

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Business and Industry Under

the British Changes in the Industrial Scene with the advent of the British:

Industrial Revolution in England led to the decline of Indian

handicrafts.

Use of machines in the manufacturing sector helped England toproduce goods cheaply and displace Indian products in foreign

markets as well as in the home market.

Prospects of industrial development in India was deliberately

discouraged to suit the British economy. Indias internal economy

was upset by British imperialism and Indian industries decayed. Indians could not set up new industries to match the British

because of lack of knowledge and capital.

As Indian manufactured goods declined, the British made India

their main market of manufactured goods.

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Business and Industry Under

the British (Contd.) Only such raw materials as were necessary for the progress of

Industrial Revolution in England were allowed to be exported from

India.

As a result India gradually withdrew herself from industrializationand increased her dependence on agriculture.

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Industries in India During the

War Years The Second World War pushed India into further industrial

activity to suit the war needs.

Factories worked extra shifts, technical methods were improved

and organizational changes were brought about to increaseproductive capacity.

New sources of supply were created by the expansion of small

scale industries all over the country.

Such industries were set up on an ad hoc basis.

Enough attention was not paid to scientific planning. Long-term factors like right location, operation, marketability and

availability of raw materials were not given enough attention.

High cost of production resulted in inflation.

Malpractices became rampant.

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Industries in India During the

War Years (Contd.) Such industries were set up on an ad hoc basis. (Contd.)

Smaller groups got exploited by powerful industrialists at the cost of

the public.

Basic capital goods industries lagged behind in development. Poorer sections of the community were badly affected by the scarcity

of consumer goods and steep rise in prices.

Corruption and black marketing appeared in large-scale.

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Business and Industry: Post

Independence Independent Indias industrial policy announced in 1948.

Indian economy was declared Mixed Economy with an overall

responsibility by the government for planned development of

industries and their regulation in national interest. Policy revised in 1956 in the form of Industrial Policy

Resolution Act,1956

Parliament accepted a socialistic pattern of economy for India.

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Business and Industry: Post

Independence Several reforms were introduced in the areas of:

Industrial Licensing

Manpower utilization

Five Year Plans and Industrial Growth

Industry Unions and Confederations of Indian Industry

Industrial Unrests and Labour Problems

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Industrial licensing to be given under the Industries

Development and Regulation Act 1951

State made directly responsible for the future development of

industries Industrial licensing given to the following sectors:

Public Sector

Small-scale industries

Small and Medium Entrepreneurs

Larger Industrial Houses

Foreign Concerns

Joint Sector

Industrial Licensing

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Manpower Utilization

Large population of India: A boon not a curse

Vast manpower resources not been utilized.

unprecedented industrial growth and increase in employment

since independence failed to keep pace with the countrysmanpower requirements.

Lack of training and skills development leave people

unemployed and underemployed.

Government and Planning commission optimistic aboutgradual growth.

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Manpower Utilization (Contd.)

High degree of non-utilization and under utilization of our

manpower resources has resulted in a negative psychological

environment of pessimism.

Economic, Social, and Psychological repercussions ofunemployment and underemployment affect the industrial

climate adversely.

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Five Year Plans and Industrial

Growth Planning Commission reviewed and declared 7% growth in

the industrial and minerals sector during the first 15 years of

the planning period.

Industrial production increased at an average rate of 7percent with the first decade of planning (1950-51 to 1960-61)

recorded an increase of around 9 percent annum during the

next four years, i.e., 1961-62 to 1964-65).

On the whole, during the decade 1965-75, the average annual

growth was no more than 4 percent and about 6 percentduring the period 1974-75 to 1977-78.

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Five Year Plans and Industrial

Growth (Contd.) The Planning commission in their Draft Plan for 1978-83

expected the average rate of industrial growth to be 7 percent

per annum during the plan period.

As of now, in 2008-09, towards the end of the Plan Period ,we have maintained a consistent 8% Industrial growth in the

country for the last three decades.

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Industry Unions and Confederations

of Indian Industry Various Chambers ofCommerce, trade and industrial

associations developed for concerted actions. Associations

were formed trade-wise (such as Indian Jute Mills

Association), region-wise (such as Employers Federation ofthe Indian Chambers ofCommerce and Industry, (FICCI), and

nationally and globally Confederation of Indian Industries (CII)

etc.

Causes of such unions and associations:

lack of motivation and insecurity

Interference in industry matters by politicians and social activists

and Leftists

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Industry Unions and Confederations

of Indian Industry (Contd.) Instability and disturbances due to political leadership using trade

unions as a means.

Employees associations paid more attention to labour

matters, Coordinated with labour departments to assist their members.

standardize wage rates and conditions of employments.

Federation of Indian Chambers ofCommerce and Industry

(FICCI) and the Employers Federation of India (EFI) helped

formulation and implementation of the labour policy of the

government.

private employers to improve their business.

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Industrial Unrests and Labour

Problems Industrial policies aim at bringing a harmonious relationship

between employers and employees on democratic norms.

Governments arguments and efforts:

industrial conflicts are natural and inevitable in the process ofindustrial development.

They are to be accepted as a part of industrial reality.

it is important to remain aware of the causes behind such

conflicts and develop policies and practices accordingly in order

to keep them within reasonable control for increased industrialgrowth and productivity.

An atmosphere of mutual understanding and trust should develop

between all stakeholders.

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