AGRICULTURE
APPLICATION OF SCIENCE &
TECHNOLOGY.
INTRODUCTION:-
Is depending
on agriculture. Agriculture is said to be the backbone of Indian economy. In
spite of being an agriculture economy, we come across the problem of food
supply In order to over come the shortage of food. The use of science and
technology will help to over come the problem.
1. The
use of modern methods of cultivation like tractor, harvestors, etc will help to
increase the productivity of land to economies the cost of production and
saving of time.
2. The
use of scientific inputs like high-yielding- variety of seeds, fertilizer,
pesticides, insecticides, etc. will help to produce qualitative and quantitative
food crops.
3. The
practice of modern methods of irrigation will help the farmers to take up the
productive activities throughout the year.
4. The
practice of double-cropping, multicropping and fixed farming will bring about a
good yield per acre of land.
5. The
use of advanced tools, implements and machines will also help the farmers to
produce large quantities of food grains.
6. The
use of scientific inputs and machineries will result in large production,
better quality and economies in the cost of production.
7. The
application of scientific inputs protects the crop from the attack of insects.
8. The
use of modern machineries will help the farmers to get return quickly and will
enable them to fetch good profit.
9. The
use of modern methods will also help to reduce the prices of agricultural
commodities.
10. The use of
modern methods will stabilize the prices of agricultural product and as well to
become self sufficient and self-reliant in the production of food crops.
CAUSES FOR LOW PRODUCTIVITY OF INDIAN
AGRICULTURE:
1. Outdated methods of production:
In India
farmers use the ancient methods of production. They cultivate the land with the
help of wooden plough.
2. Small size of land holdings: In India , farmers
do not own large size of land. 2-5 acres of land. On account of the small size
of their land they are not able to use the modern methods of production and
hence they cannot undertake large scale production.
3. Lack of irrigational facilities:
Indian farmers largely depend upon the rain fall to take up their production
activity. Since, rainfall in India
is uncertain, irregular and unevenly distributed, it leads to failure of crops.
4. Lack of financial support:
Farmers in India
are faced with the problem of finance; this is purely due to the failure of
government to support them with loans and credit facilities.
5. Poor quality of inputs: The
farmers in India
use the poor quality of seeds, fertilizers and other inputs which results in
low productivity.
6. Sub-division and fragmentation of land
holding: On account of divisions and sub-division, not only the size of
the land becomes smaller, but it also becomes problem in consolidating the
land-holdings to bring about higher productivity.
7. Lack of proper knowledge of cultivation:
The farmers in India
do not have a proper knowledge regarding the types of crops to be grown in a
particular season and as well lacks the knowledge of proper input mix.
8. Improper marketing and warehousing
facilities: In India
the agricultural markets have not been properly organized and maintained. They
are situated far away from producing centers and as well they do not have
proper warehousing facilities. On account of these problems the Indian farmers
are discouraged from undertaking large-scale production.
9. Poor transport facilities: The
transport facilities are so very bad that the farmers are not interested in
transporting their products to the organized agricultural markets and hence
they find it more convenient to sell their products in local market.
10. Low prices level: The prices of
agricultural products frequently fluctuates, which in turn affects the farmer’s
interest and discourages him to undertake large-scale production.
New
Agricultural Strategy:
Agricultural
production depends upon the inputs and the modern agricultural inputs and
technology has been increasing rapidly. Application of science and technology
includes the use of better irrigation, improved seeds, fertilizers,
mechanization, soil conservation, etc. initially the new technology was
introduced in 1960-61 as a pilot project in 7 selected districts and was called
intensive. Agricultural district programmers. Later the high yielding varieties
programmer was added and it was extended to cover all parts of the country. The
3rd plan was a failure in the agricultural sector. This experience
completed the government to introduce a new strategy. The new programme was
meant to increase agricultural production especially of food grains.
The new
agricultural strategy revolutionise Indian agricultural. These was a large
increase in agricultural production in short period of time in Punjab , haryana and parts of several states. This
spectacular increase in agricultural production as a result of application of
modern technology has described as the “Green Revolution”.
High Yielding Varieties of
Seeds: HYV
Recognising seeds as the primary
input for increasing agricultural production. The government of India set up
“National Seeds Corporation” in 1963.Since 1966, the programme of high yielding
varieties of seeds has been in operation and it is expanding rapidly. It was
only 1.88 million hectors of land were under HYV seeds. In 1995-96, 75 million
hectors were covered by this programme within a short span of time the use of
HYV seeds has multiplied by about 40 times.
Fertilizers: The
hyv seeds cannot give satisfactory results without the use of adequate
quantities of chemical fertilizers. It was only after mid 60’s that the
consumption of fertilizers increased from 1.10tons in 1966-67 to 13.90 million
tons in 1995-96. It is estimated to go up to 18.30 million to us by the end of
8th plan. Inspite of total consumption of fertilizers, the
fertilizers used per hector is still very low in India India Korea Japan
Plant Protection: In India
MECHANISATION
OF AGRICULTURAL:
It means all
agricultural operations ranging from cultivation to harvesting.
Argument for Mechanisation:-
- Machines work faster and with efficiency with the help of machines man can produce more.
- The difficult jobs can be performed easily with machines.
- It makes large-scale production.
- Output per hector as well as per man can be increased with reduction in the cost of production.
- It creates employment opportunities
Argument against
Mechanisation:
- Mechanisation is not
possible in
- Mechanisation of agricultural will deprive millions of farmers of employment. It will not be possible to provide alternative jobs for the displayed persons on such a large scale.
- The machines are costly. The average Indian cannot afford them.
- The machines will require petrol, diesel or kerosene there is already great shortage.
- Mechanisation increases only productivity per worker and not productivity per hector of land, which is required.
Green
Revolution
Meaning: The term green revolution refers to a spectacular
change in the methods of cultivation with the use of scientific inputs and
advanced technology.
GREEN
REVOLUTION IN INDIA
Due to the food
problem and continues drought in India India Punjab , Madhya pradesh,
Uttar pradesh, Tamilnadu & Andra pradesh. They selected few crops like
paddy, wheat, oil-seeds, etc.
Green Revolution
in India was not successful on account of monsoon media selection of a few
crops and a few states only in the production of wheat, we have witnessed 100%
success and hence it was called a “wheat Revolution” rather that a “Green
Revolution”.
Merits
of Green Revolution:
1. The use of scientific inputs and mechanized methods of
production will help to produce large quantities of food with low cost of
inputs.
2. The mechanization in the cultivation enables to have
large quantity of production in short period of time.
3. It enables the farmers to yield large profits.
4. It facilitates large-scale production, saving of time
and helps in consolidation of land for modern methods of Production.
5. Green revolution has helped the big farmers and
marginal farmers to harvest quantitative and qualitative Production of crops.
6. The green revolution enables the government to produce
large quantities of food crops and to build up buffer Stocks.
Demerits:
- Green revolution was not successful in
- It was beyond the reach of small and marginal farmers.
- Only the rich and big farmers enjoyed. The benefits of green revolution.
- The government has failed to provide the basic facilities such as irrigation, power supply and marketing Facilities.
- The green revolution has widened the gap between the rich & poor farmers.
- The green revolution has failed to reduce the prices of agriculture products.
AGRICULTURE
MAKETING IN INDIA
Importance of Agriculture Market: The agriculture market enables the farmers to
undertake large scale production help the farmers to get the better prices for
their products and as well to protect themselves from the exploitation of the
middlemen Agriculture market enables to have the process of grading and
standardization of products. It also helps to improve the stock in the market
and to bring down the price level of agriculture products.
The government regulated markets
help the farmers to get better prices and also to strengthen the understanding
power during emergencies. Agriculture markets directly helps in the proper
distribution of food crops.
Problems
of Agricultural Marketing:
1.
Agriculture
markets are situated far away from producing centers.
2. The size of agriculture market is very small.
3. The presence of middlemen who take the iron share
(huge profit) in the profit. This discourage the farmers from undertaking large
scale production.
4. Improper measures and weights also discouraged the
farmers to approach the market.
5. Poor transport facilities also discourages the farmers
from reaching the agricultural market.
6. Lack of banking facilities also distributes the
farmers from undertaking large amount of transactions.
7. The government should take care to appoint suitable
professionals to manage the agricultural marketing Operations. `
WAREHOUSING:
In India 10 to 20%
of agricultural crops gets wasted due to improper storage facilities.
Warehousing will help the
Farmers to store their products
over. A longer period of time especially when there is fall in the prices of
agricultural commodities. Warehouses help the government to build up large
quantities of food grains for public distribution and there by establish price
stability. Warehouses help farmers to gain with standing power during the
deflation. The farmers get benefit directly by storing their products in the
warehouses and they can get financial support or assistance by producing the
receipts of their storage.
Problem of
Warehousing
- In
- They are situated for off from producing centers.
- The warehouses have not being maintained scientifically.
- The warehouses are very less in number with small storage facilities.
- Warehouses are also prone to mal-practice, corruption.
- Its is beyond the reach of marginal and poor farmers, as they have to pay a minimum premium against their storage.
- Warehouses are not being acute with modern methods of preservations.
Measure to
set-rights the warehousing problems
- The warehouses should be established near to the producing centers.
- The number of warehouses should be increased.
- Warehouses should be building & maintained properly and as well should be large enough to provide for adequate Storage.
- The warehouse should be equipped with modern machineries & equipments to protect the crops from the attack of pests and insects.
- The warehouses should bring down the rates of premium such that poor farmers should also enjoy the benefits of warehousing.
- The officials should be appointed by the government. With minimum knowledge of agriculture management.
- The warehouses should be regularly inspected and maintained properly in order to keep the food grains intact.
CHAPTER – 4
INDUSTRIAL DEVELOPMENT
OR
INDUSTRY AND INDUSTRIAL
LABOUR
Importance of industry in Indian economy.
- Creation of
employment opportunities is an important contribution of industries.
- It helps to increase production by using more machineries, division of labours & various benefits of large scale Production. They produce various goods on large scale which will help to solve the problem of scarcity.
- Industrialisation leads to rapid economic development in the country. As a result, them will be increase in both national & per-capita income. Standard of living of the people also improves.
- Industries help the development of agricultural sector by supplying the modern machineries, tools & equipments & as well scientific inputs.
- Industrialisation contributes to the development of transport & communications.
- It increases the productivity in the country. Availability of modern machines, adoption of division of labours, development of modern technology, etc increases productive capacity.
- Industrialisation promotes the better utilization of natural resources with minimum wastage & there by to achieve rapid economic development.
- Rapid industrialization helps to earn more foreign exchange resources. The country can export more manufactured items & can help reduce foreign trade orientation.
- Industrialisation is necessary to provide for country’s security. Industries supply modern weapons, nuclear bombs. Dependence on foreign sources for defence material during international crisis is a risky thus; industrial development will achieve self-reliance in defence material.
- Contribution of industries to balanced regional development in the country is great. They remove regional imbalances in the country. Establishing more & more industries in backward region is an essential condition of balanced development.
- It contributes to the rapid economic development of the country. This increases both national & per-capital income. As a result, the taxable capacity of the people increases & therefore, the governments can mobilize more revenue through taxes.
- Industrialisation promotes the growth of cities & towns and brings about change in the outlook of the people as a result; people will be more intelligent & progressive. Progressive attitude is very essential for economic development.
- It expands the market for agricultural consumer & capital goods. Thus the scope for large scale production & division of labour widens. It contributes to expansion of trade & commerce.
- It will bring about economic stability in the country. It helps to achieve self sufficiency in the production of various industrial products & reduces country’s dependence on foreign countries.
- It helps to maintain proper balance between industry, agriculture & service sector.
Classification of industries
Meaning of SMALL SCALE & COTTAGE INDUSTRIES
Small scale & cottage
industries are defined on the basis of their size. Capital employed, labour
force of individual unit, management, etc.
According to the
definition of fiscal commission in 1950, “A cottage industry is one, which is
carried on
With the help of members of
family”.
A small scale
industry is one, which is operated mainly with hired labours, usually 10-50.
According to 1990-91 classification, on the
basis of the amount of fixed capital investment in a unit. If it is less
Than Rs. 5 lakhs are tiny units,
Rs.60 lakhs are small scale industries and Rs. 75 lakhs are ancillary units. At
Present the government fixed an
investment ceiling limits to small and ancillary units at Rs.1crore to
facilitate
Technology up gradation and
enhancing competitiveness, the investment limit as been raised from Rs. 1crore
to
Rs. 5 crore, (2004).
Agro
based-industries & Ancillary industries:
Industries which
produce goods by using agricultural raw-materials are called agro based
industries. Like jute,
Cotton textiles, oil, sugar, etc.
Industries which produce spare parts, components, etc. required by the large
industries are called ancillary industries.
Distinction
between Cottage & Small scale industries.
a.
A cottage industries is one, which is carried on mainly
in a house with the help of the members of the family and with the help of
simple and hand-operated tools. Small scale industries are those which are
organized on a small scale and they use simple machines and hired Labours.
b.
Cottage industries are common in rural areas &
semi-urban areas, where as, Small scale industries are found in towns &
cities.
c.
Cottage industries are usually carried, on with the
help of family members. But Small scale industries are carried on with the help
of hired labours.
d.
Cottage industries generally do not use power, but
Small scale industries use power.
e.
Cottage industries adopt traditional methods of
production. On the other hand Small scale industries adopt modern techniques of
production.
f.
Cottage industries use mostly local resources, small
scale industries do not depend on local resources, but they get the resources
from distant places.
g.
Cottage industries can be carried on with light skill,
where as Small scale industries require high skill.
h.
Cottage industries carry on operation on a very small
scale. On the other hand Small scale industries carry on production on a
slightly higher scale than that of cottage industries.
i.
Cottage industries produce goods mainly for local
market. But Small scale industries carry of production for local as well as
national & even international markets.
j.
The financial requirements of Cottage industries are
less than those of Small scale industries.
Classification of small scale and Cottage
industries.
1.
COTTAGE
INDUSTRIES: Are house-hold industries which are carried on by craftsmen’s
& artisans. It is carried on with the help of simple tools, local resources
with the help of family members. They produce traditional goods for local
market these industries are mainly concentrated in rural areas. Example: basket
making, pottery.
2.
SMALL SCALE
INDUSTRIES: SSI are organized on a small scale & produces goods on
small scale. They employ machines, hired labours and use power. They adopt
modern techniques of manufacturing. They get raw materials from distant places.
They produce goods for local national and international market. They are mainly
located in towns & cities. Example: - chemicals, engineering goods, etc.
3.
ANCILLARY
INDUSTRIES: Are the industries which manufacture spare parts,
components, etc. required by large scale industries. These industries have a
capital investment on plant & machineries not excluding Rs. 1 crore.
4.
TINY
INDUSTRIES: In 1977, the industries policy introduced the concept of
tiny sector within small scale sector as be the 1991 industrial policy. The
tiny sector comprises units with an investment of Rs. 5 lakhs. It was raised to
25 lakhs 1999
Classification of industries
Industries can
be classified into 3 categories they are:-
a)
Large scale industries.
b)
Medium scale industries.
c)
Small scale industries.
1)
Large scale industries:-
Problems
of large scale industries:
a.
Shortage of power: In India, the large scale industries
suffers due to shortage of power supply. The frequent power cuts reduce the
production level and also the margin of profit.
b.
Shortage of raw materials: Industries are faced with
the problem of shortage of raw materials as they have to be transported from
villages to the producing centers. The supply of raw materials and the quality
of the material supplied is very poor. Hence, the quality of production comes
down.
c.
Old machineries: The Indian large scale industries
carry on their production with old machineries which is not cost effective and
it requires more time and more of men and materials.
d.
Inefficient management: - The large scale industries do
not have proper management on account of inefficient, corrupt, dishonest
officials who do not have a proper knowledge of the production units.
5.
Poor
industrial relation and labour problem: - The relation between the
management and the labourers are not cordial. This is always a misunderstanding
between the employer and the employees.
6.
Problems of
taxation: The taxation structure in India is so high, that discourages
the production of goods and fixing of pricing for the goods. The high prices
and the taxation structure discourages both the producers and buyers.
STRATEGY FOR
INDUSTRIAL DEVELOPMENT
It was adopted in 1991. This new
strategy for industrial development is applicable to large and medium size
Industries and small scale industries.
Objectives of new industrial policy 1991:
1. To consolidate the strength build up during the last
40yrs of economic planning and to build on the gains already made.
2. To correct the weakness that may have crept in the
industrial structure as it has developed over the last 40yrs.
3. To maintain a sustained growth in the productivity and
gainful employment.
4. To attain international competitive and technological
dynamism.
Policy
Changes
The
major policy changes initiated in the industrial sector (policy of 1991) were
removal of entry restrictions, reduction of areas, and reserve exclusively for
public sector, rationalization of the approach towards monopoly restrictive
trade practices (MRTP), liberalization of import policy with respect to
intermediate and capital goods.
1.Delicensing
policy: Industrial licensing
governed by the industries at 1951. The industrial policy resolution of 1956
identified the three categories of the industries reserved exclusively for
public sector. Those industries that would be permitted for development through
private enterprises. Those in which, investment initiates would ordinarily
emerge from private entrepreneur. To liberalize the economy and to bring
changes in the policies. The system of industrial licensing Abolished for all
industries, except those specified irrespective of levels of investment. These
specified Industries will continue to be subject to compulsory licensing.
Licensing for reasons relating to security and strategic concern, social
reasons, problems related to safety concern and over riding environmental
issues, manufacture of products which are dangerous in nature. The list of six
industries requiring compulsory industrial licensing:-
a.
Distillation and brewing of alcoholic drinks,
b.
Cigars and cigarettes of tobacco and manufactured
tobacco substitute,
c.
Electronic aerospace and defence equipments of all
types,
d.
Industrial explosives including detonating fuses,
safety fuses, gun powder, nitrocellulose and matches,
e.
Hazardous chemicals, and
f.
Drugs and pharmaceuticals chemicals.
2.Promotion
of inflow of foreign investment: While freeing Indian industry from
official controls, opportunities for promoting foreign investment in India should
also be fully exploited. This is particularly necessary in the changing global
competitive market and economic co-operation marked by mobility of capital. Earlier,
foreign investment or foreign technology agreements. The approval of the
government was needed. Under Industrial sector reform since 1991, the
government has introduced several measures to promote inflow of foreign
Investment.
a)
The government has put in place a liberal, transparent
and investor friendly foreign direct investment (FDI) where in FDI up to 100%
is allowed for most of the sectors, where the investor does not require any
approval. Only notification to the RBI within 30days of inward remittance.
b)
Automatic approvals are also available for 50%, 51% and
74% in specified industry groups.
c)
To provide access to international markets, majority
foreign equity holding up to 51% equity will be allowed for trading companies
engaged in export activities.
d)
The Foreign Investment Promotion Board (FIPB) has been
constituted to negotiate with a number of large international firms and approve
direct foreign investment in select areas and industries requiring government
approval are considered by the FIPB in a time bound and transparent manner.
e)
With a view of injecting the desired level of
technological dynamism, the government will provide automatic approval for
technology agreements related to high priority industries. Automatic permission
will be given for foreign technology agreements in identified high industries
up to 2 billions.
f)
Similar facilities will be available for other
industries as well if such agreements do not require the expenditure of foreign
exchange.
3.Private
sector participation: The new economic policy and the accompanying
economic reforms have opened up unlimited opportunities for the growth in
private sector. Now only 3 industries were security & strategic concern
predominates are reserved exclusively for the public sector. They are:
a.
Atomic energy.
b.
Substances notified by the department of atomic energy.
c.
Railway transport.
In the
remaining industries, private sector is allowed to make investments the sale of
government owned Equity in nationalized industries other commercial enterprises
to private investors with or without the causes of Government control is called
privatization.
The
measures adopted for privatization includes:-
a.
Permitting the entry of private corporate sector in
such important sectors as steel, tele-communication, airline power & ports.
b.
No fresh budgetary support for public enterprises.
c.
Disinvestments either sale of a part of equity of
public enterprises to private sector.
d.
De-nationalization, either, transfer of ownership of
public enterprises to private enterprises or sectors.
e. Restriction
on future investments (expansion) and setting up of new units in public
sectors.
4.Disinvestment:
Unloading public sector unit equity in the market is known as disinvestments in
other words, dilution of government equity in public sector enterprises without
transfer of control is called disinvestments. This policy is being pursued to
provide fiscal support and to improve the efficiency of the enterprise. Objectives
of disinvestment
a.
To raise resources from with in the public sector for
meeting expenses relating to voluntary retirement scheme, restructuring and
retraining of workers.
b.
To create conditions conducive to raising productive
efficiency in all the dimensions.
c.
To improve the strategic performance of the public
sector units.
The
important changes that have been introduced under strategic sale policy are:-
a)
The sale of public sector unit shares will be under the
newly created Department of Disinvestment.
b)
Disinvestment of public sector units (PSU) shares will
be delinked from the union budget exercise.
c)
Disinvestment price to be market determined and not
prefixed.
d)
Government will ensure that disinvestment does not
result in private monopolies.
e)
Structural mechanism to speed up disinvestment process
to be put in place.
f)
The government off load above 51% in strategic sales.
5.Amendment
to Monopoly Restrictive Trade Practices act : As per the MRTP act, any
firm with assets over a certain size (Rs.100 crore since 1985) was classified
as MRTP firms and such firms was allowed to start only selected industries on a
case approval. But the government now felt that this MRTP limit has become
detrimental to industrial growth in the economy. Thus the following amendments
were introduced into the MRTP act.
a.
The MRTP act has been amended to remove the limits of
assets in respect of MRTP companies and dominant undertakings.
b.
Provisions relating to concentration of pre-entry
restriction with regard to the approval of central government for a new
undertaking, expanding an existing units, mergers, etc. have been deleted.
c.
MRTP act is strengthened in order to enable the MRTP
commission to take appropriate action in respect of monopolistic, restrictive
and unfair trade practices.
PROMOTION OF SMALL SCALE INDUSTRIES
Importance of Small Scale Industries:
1.Generation
of employment: Small scale and cottage industry provides employment to
large number of people. They are labour-intensive and the labour investment
ratio in these industries is quite high. In country like India , where
there is large-scale unemployment and underemployment. They play a discussive
role in providing Employment.
2.Contribution
to National Income: The small enterprises in India have a larger share in
national income. India
is still a country of small scale production and the contribution of small and
cottage industries to national income is very significant.
3.Foreign
Exchange Earnings: The products of small and cottage industries play a
very important role in earning valuable foreign exchange. Products like ready
made garments, leather goods, engineering goods, handicrafts, two-wheelers,
electronic goods, etc.
4.Large
production: With the growth of small scale enterprises the production
has increased substantially. The average annual growth rate of small industries
is around 7.44%.
5.Use
of local resources: Small scale and cottage industries provide greater
scope for optimum utilization of local resources. They effectively use local
labour, materials and other resources.
6.Capital-light:
Small and cottage industries are capital-light. They require only a smaller
amount of capital for their establishment. In a country like India , where
there is scarcity of capital, they are best suited.
7.Skill-light:
These industries do not require high degree of skill and managerial ability. In
India ,
there is lack of skilled labourers and efficient technicians.
8.Import-light:
Small scale and cottage industries are import light. That is, they can be
established with the help of local technology and machines they need not depend
too much on imported materials. In a country like India , where there is shortage of
foreign exchange and problems in balance of payments, small and cottage
industries can be developed without any burden.
9. Quick yielding: The small and
cottage industries give quick returns because the time lag between investment
and return is very short. Consequent upon that, there is no fear of inflation.
They are eminently suitable to Indian context.
10.
Decentralisation:
Small industries help solve the problem of regional imbalances. They can be
established and developed even in remote places. They can be dispersed all over
the country. But in case of large industries such chances are very much
limited.
11.
Equitable
distribution of income: Small and cottage industries are more
extensive. They secure even distribution of income and wealth and prevent
concentration of economic power.
12.
Support to
agriculture: Small and cottage industries give widespread support and
assistance to agriculture. They supply various inputs to agriculture and
provide market for agricultural products.
13.
Support to
large industries: The support of small enterprises to large industries
is great. They work as ancillary units. They supply spare parts, equipments,
implements, etc., to large industries.
14.
No evils of
factory system: In small scale and cottage industries there are no
evils of factory system like industrial disputes, strikes, lock-outs, and air
pollution, etc.
15.
More revenue
to government: Small scale and cottage industries bring more revenue to
the government by the way of taxes.
Problems of small scale industries
1.
Shortage of
capital: The most important problem faced by small and cottage
industries is that of finance. The institutions which provide finance to these
industries are not adequately developed. As a result, they are forced to depend
on money lenders and are forced to pay higher rate of interest.
2.
Problem of
raw materials: It is another major problem of small scale units. Raw
materials are not available in sufficient quantities and quality. Due to this
there is wastage of productive capacity. This incurs huge losses.
3.
Problem of
machinery and technique of production: Most of the small scale units
carry on production with outdated machines and implements. The technology of
production is old and inefficient. The result is low productivity and poor
quality of products and higher costs. Modernization of small scale units is not
possible due to scarcity of capital.
4.
Problem of
marketing: Marketing is the biggest problem of small scale industries.
They have no organized marketing system in the country. Due to lack of standardization,
market intelligence, advertisement and salesmanship, transport facilities,
insufficient holding capacity, etc., the small scale producers are forced to
make distress sales.
5.
Inefficient
management: The management of most of the small scale units is
efficient. Due to lack of proper education and training facilities their
managerial skill has not improved. Consequently, they are not properly managed.
6.
Problem of
power: Power shortage is another important problem faced by small scale
units. Supply of power is not proper and adequate. As a result, the utilization
of productive capacity is extremely low.
7.
Competition
from large industries: A serious problem of small scale enterprises is
the competition from large scale industries. The products of small scale units
are also produced by large industries. They use the latest production
techniques and are organized on modern lines. Hence small producers cannot
complete with large scale industries in the market.
8.
Lack of
transport facilities: Most of the small and cottage industrial units
are established in rural and semi-urban areas. They need an efficient means of
transportation to transport to market. But, the network in the country is very
poor and inefficient.
9.
Lack of
training and research facilities: There is no proper education and
training facilities. Research in the field of production is insufficient. As a
result, the productive efficiency of small units is very low.
10. Under-utilisation of productive
capacity: Utilisation of productive capacity in small scale enterprises
is far below the normal. It is even less than 48%. Shortage of power, lack of
marketing facilities, inadequate supply of credit, etc. has made their productive
capacity remain low.
11. Sickness and inefficiency: Quite
a large number of small industries have fallen sick. Their number runs into
lakhs. At present as many as 2.49 lakhs (2001) units are sick. Their
operational efficiency is very low.
12. Burden of local taxes: Most of
the small and cottage industries are over burdened with heavy local taxes. They
have to pay both central and the state government taxes in addition to the
local body taxes.
SICKNESS OF SMALL SCALE
INDUSTRIES
Meaning: The SBI (1975) defines a sick
unit as, “One which fails to generate an internal surplus on a continuing basic
and depends for its survival on frequent in fusion of external funds”.
Causes of sickness of small units:
1.
Lack of managerial expertise,
2.
Under utilization of productive capacity,
3.
Non-observance of the basic principles,
4.
Easy approval of small scale units by the government,
5.
Lack of credit facilities.
Measures to prevent sickness in small units:
The
following measures can be taken to prevent sickness in small scale units.
1.
They have to be properly protected during their infant
stage.
2.
Adequate credit facilities at cheaper rate of interest
should be made available.
3.
Supply of raw material, marketing assistance and
granting some concessions should be given top priority.
4.
Delayed payment by the buyers of small scale unit
products should be avoided at all cost.
5.
Proper professional management expertise should be made
available.
6.
Modernization, expansion, capacity utilization, etc.,
should be encouraged.
7.
Proper training, supply of power and development of
infrastructure are the other measure.
Government
helps to small industries:
1.
Organisational
help: The government of India
has set up a number agencies to render organizational help to cottage and small
scale industries:
a)
The central small industries organization to provide
technical and marketing help.
b)
The national small industries cooperation was
established to supply raw materials and spare parts of machineries.
c)
Several all India organization(board) such as khadi and
village industries board, small industries board, all India handloom board,
central silk board, etc. have been set up for the development of various small
scale industries.
2.
Technical
help: The government help is also available for skill-formation and
technological up gradation. Discovery of new production techniques, supply of
implements, machinery, etc., are the measures taken by the government to
provide technical help. The government has established various agencies for
this purpose. They are :
a.
Small industries development organization.
b.
Prototype production centers.
c.
Central institute for industrial design.
d.
The small inventions development board.
3.
Financial help:
a.
Long-term and medium-term loans are provided by the
government under state aid to industries act.
b.
State finance corporations in each state to provide
medium term credit at lower rates of interest.
c.
Commercial banks and the SBI have been directed to
provide credit to small scale industries.
d.
Credit is supplied through industrial co-operatives.
e.
Various specialized financial institutions and
facilities such as Small Industries Development Fund, National Equity Fund,
Small Industries Development Bank of India (SIDBI), etc.,
f.
A credit guarantee scheme to provide credit against
possible losses.
g.
To ensure credit delivery to the small scale
industries.
4.
Supply of
raw-materials: Arrangements have also been made to ensure the supply of
raw materials through Industries Corporation. Buffer stocks of essential and
scarce raw materials have been set up to tide over the crisis. The state
trading corporation is also entrusted with the task of supplying essential raw
materials to small scale Industries.
5. Marketing help:
a.
Exclusive purchase of specific products of small scale
unit for government.
b.
Price preference to small enterprises in public sector.
c.
Provision of quality control and testing facilities
with a view to increase their competitiveness.
d.
Selling of small scale industries products through
co-operative societies.
e.
Export promotion from small scale sector has been
accorded an important role in India ’s
export promotion.
6.
Training to
workers: The government help is also available for skill-formation and
technological up gradation. The government took various measures provide
education and training to workers and craftsmen. It has established various
production and training centers. They are small industries service institutes.
Cottage industry research organization tool room training centers to provide
training to improve technology production skill.
7. Fiscal incentives: Both
