Industries are classified into ___________ categories in the Industrial Policy Resolution, 1956.

The correct answer is three.

Key Points

• ​Industrial Policy Resolution (IPR) 1956:-

  • It laid the foundation for India’s second five-year plan and Industrial policy Resolution 1956, which paved the way for the development of the Public Sector and License Raj.  
  • In accordance with the goal of the state controlling the commanding heights of the economy, the Industrial Policy  Resolution of 1956 was adopted. 
  • The 1956 Policy empha­sised the need to expand the public sector and build up a large and growing coop­erative sector. 
  • It encourages the separation of ownership and management in private in­dustries and, above all, prevents the rise of pri­vate monopolies. 
  • This resolution formed the basis of the Second Five Year Plan, the plan which tried to build the basis for a socialist pattern of society. 
  • This resolution classified Industries into three categories.
  • The first category comprised industries that would be exclusively owned by the government; the second category consisted of industries in which the private sector could supplement the efforts of the public sector. 
  • It was based upon the Mahalanobis Model of growth which advocated that emphasis should be laid on the heavy industries, which can increase the economic output of the country. Mahalanobis model suggested the dominance of the heavy industries. 
  • It laid emphasis on integrated infrastructure development as a prerequisite to private investment and therefore gave priority to power, transport, and financial institutions.
  • It gave recognition to small-scale industries such as cottage industries with respect to balanced regional growth and also gave tax concessions and subsidies.
  • It gave impetus to industrial development in far-off of the country to increase economic growth.
  • It considered FDI as complementary to domestic growth provided a major share in control and management was to be given to Indian hands.