Act stipulated that no new industrial units could be set up, nor the capacity of existing units expanded without a licence or permit from the government. The Policy Statement of encouraged large industrial houses to start operations in rural and backward areas to reduce regional imbalances in development. The Policy Statement of was framed by the short- lived Janata government which was aimed at promoting rural, village and small scale industries. The Policy Statement of was announced by the Congress government which also aimed at promoting balanced growth.
Otherwise all these statements continued the ideology of a strong public sector owned by the state and control over the private sector and especially the large business houses. There were also other interventions which intruded into the market economy. For instance, inputs produced in the private sector like cement were rationed, and permits had to be obtained even for private construction of houses. The manufacture of consumer goods was severely restricted under the licensing policy.
This was partly an expression of the ideology of reducing inequalities in consumption between the affluent and weaker sections of society. But it was also a way to ensure that scarce resources like steel, cement etc. would be used in strategic industries for the long-term development of the economy. Many important industries and services were nationalised.
These included coal mines,