India adopted economic planning in 1951 and since then ten Five-Year plans are over. India’s Five-Year plans have the basic objectives of growth, employment, self-reliance and social justice. Any country that wishes to progress must place due emphasis on industrial development as economic development and modernization processes are closely interlinked. In India, the importance of agriculture is self-evident as about two-third of the population depends on it, but industrialization has a major role to play in the economic development of the underdeveloped countries. This paper deals with the critical analysis of the policies of the government for allocation of funds to the industry and related activities in various plans.

The Government of India set up the Planning Commission in 1950 after the attainment of Independence to assess the country’s needs for material, capital and human resource so as to formulate plans for their more balanced and effective utilization. The Government of India adopted economic planning in 1951 and since then more than five decades of economic planning is over. Indian planning regards higher investment as the stimulant of economic growth. In such a framework, resource allocation or investment pattern becomes the main source of expressing the plan objectives and implementing the actual planning strategy. Unfortunately, in India, regional variables did not form part of the overall planning strategy and all models that formed the basis of planning were sectoral in character. Therefore, when we talk of resource allocation or investment pattern in India, we are concerned mainly with the allocation of resources (i.e., investment) as among different sectors of economy.

The three main sectors in the economy are agriculture, industry and infrastructure. Importance of agriculture is self-evident as about two-thirds of the population depends on it and unless the infrastructure of the economy is developed, no long-term economic development can take place. Since economic development and modernization processes are closely inter-linked, any country that wishes to progress must place due emphasis on industrial development. Hence in this paper efforts are made to critically analyze the policies of the government for allocation of funds to the industry and related activities in various plans.

Before the arrival of Britishers, India was industrially more advanced as compared to the economies of the West European countries. The Britishers systematically destroyed the industrial base of India. As a result, India inherited a weak industrial base, underdeveloped infrastructural facilities and a stagnant economy at the time of Independence. The government called an Industries Conference in December 1947 to consider ways and means to utilize the existing capacity more fully and to harness industry to the growing requirements of the people. With the purpose of assisting industrial development, the government granted certain tax concessions to industry in 1948-49 and passed the Bill to establish the Industrial Finance Corporation of India. The industrial policy resolution was also passed in 1948. These factors had a favorable impact on industrial development.

Managerial Economics Journal, Government Policies, Economic Policies, Economic Development, Modernization Processes, Industrial Development, Consumer Goods Sector, Industrial Sectors, Industrial Development Program, Engineering Industries, Electronics Industry, Domestic Economy, Manufacturing Sectors.