After independence, the government took over the commanding heights of the economy’.
This involved defence, transport, and communication, power, mining, and other projects which only government had the power to do, and which was also necessary for private industry to flourish.
- In India’* mixed economy policy, some sectors were reserved for government, while others were open to private sector. But within that, the government tried to ensure, through its licensing policy, that industries were spread over different regions. This was because before independence, industries were located mainly in the port cities like Madras, Bombay, and Calcutta. But since then, due to government efforts, we see that places like Baroda, Coimbatore, Bangalore, Pune, Faridabad and Rajkot have become industrial centres.
- Government also tried to encourage small scale sectors through special incentives and assistance. Many items like paper and wood products, stationery, glass and ceramics were reserved for the small scale sector.
- The Government did not open up the Indian economy to the world because immediately after independence, the economy was in a very vulnerable position and needed to get back on its feet before it could compete in the world market.
