Licensing for regional equality
Topic: Industrial Policy, Public Sector, MSMEs and Disinvestment · NCERT: Class 11, Ch 2 "Indian Economy 1950-1990"
Meaning
Under the licence system, a firm needed government permission to set up or expand a unit. Licensing for regional equality meant these licences were easier to get for units in backward areas. Such units also got tax benefits and cheaper electricity. The aim was to spread industry more evenly across India.
Example
A firm wanting to open a new factory would get its licence faster in an industrially backward district than in an already developed city. It would also pay less tax and pay less for power there.
Don't confuse with
- Freight equalisation policy (1952-1993): this subsidised the transport of minerals so that the price was the same everywhere. It did not favour backward areas. In fact it weakened the advantage of the mineral-rich eastern states.
Related concepts
- Industrial licensing
- Licence Raj
- Freight equalisation policy
- Crony capitalism
- Pro-market versus pro-business policy