New Industrial Policy 1991
The New Industrial Policy declared was on July, 1991 with the major aim of loosening the barriers to entry for private firms to encourage competition in the industrial sector. The industrial policy acted to consolidate the earlier gains and to build further by correcting the distortions that might have crept in the Industrial structure developed in the earlier decades. It also aims to sustain growth in the productivity and gainful employment and to attain international competitiveness.
The specific reforms related to the restructuring of public sector enterprises are as follows.
To encourage private participation in the economy. The areas of industry reserved for the public sector has been considerably reduced from 17 to 8. In particular, telecommunication, power, air transport, petroleum, sectors were opened for private sector.
The disinvestment of shares of some public sector enterprises in order to raise the resources and to encourage private participation in the public sector enterprises.
Public enterprises which are sick, will be referred to the Board of Industrial and Financial Reconstruction for rehabilitation or reformulation.
An improvement of performance and accountability has to be ensured through new rules and only potentially viable public sector undertakings (PSUs) can be revived.
Budgetary support to sick public sector industries will be reduced drastically.
Only potentially viable PSUs can be revived and others will be closed down.
In 1998-99, another two sectors were removed from the exclusive public sector domain and subsequently only 3 sectors have been left under the public sector domain leaving the rest open for private and foreign investments. Thus the Industrial Policy of 1991 has dismantled the industrial controls, regulations in a significant way to restructure the public sector and to promote private sector.
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