Impact of MRTP Act for Development of Nation- A Study

Abstract

In this paper author likes to to explore the important and fundamental aspects of MRTP act in making businesses equitable and contributing to the growth of nation.The British East India Company ruled India for almost 200 years. They exploited India’s resources for their own selfish purposes and ruined the indigenous industries prevailing in India at that point of time – handicrafts, etc. Prior to Independence, there was no competition regime existing in India. There were only policies and resolutions made by the government that aimed at just and equitable distribution of resources. However, the World Wars that took place led to the initial industrialization of the Indian economy. Although India did not actively participate in the wars it was the major source for the supply of arms and ammunition to the British army. This led to the formation of large Business Houses – Tata’s, Birla’s, etc. Initially this was seen as a positive sign for the blooming Indian economy. Post Independence, India adopted a centralized planning system – 5 year plans that laid down how the resources of the country were to be used in the coming 5 years. During the initial 5 year plans, the primary focus was on achieving the Industrial and Economic development. In 1956, Industrial Policy Resolution was passed wherein all the industries of the country were classified into 3 categories – Schedule A; Schedule B and Schedule C industries. The government was primarily responsible for the pattern of industrial development. Most of the laws and policies that were passed during that time were based on the Principle of Command-and-Control. There was high scale of government intervention in the affairs of the private industries and businesses. The thrust was to promote the public sector of the county which only could lead to the growth of the economy. This era is also termed by many as the period of License Raj wherein, the Private Industries were required to take approval licenses from the government in order to function; there were high tariffs and quotas imposed on the import of goods. The government used to support the Big Business Houses as they largely contributed to the growth of the economy. For them, obtaining licenses and permissions became a cakewalk. Soon it led to concentration of economic power in the hands of few. These monopolistic industrialists started indulging anti-competitive activities which were detrimental to the general public interest. It was also against the sacred principles that governed the formation of the Indian Constitution, the bible of the Independent India.

Keywords: Independent India, India, Constitution, License Raj, MRTP, Private Industries

JEL Classification: O1