Small Scale Industries ( SSI ) –Objectives & Characteristics.

Small Scale Industry (SSI).

In the planning era, the percentage of population dependent on agriculture has remained more or less unchanged.

In absolute terms, the number of agriculture dependent population has increased leading to wide spread unemployment and underemployment, causing mass poverty.

India may be regarded as a labor-surplus. At the same time, it is constrained by the shortage of capita, entrepreneurial talent and a developed infrastructure.

Also read | Foreign Investment Policy India 1948-1990.

Small scale industries which can be established even in remote rural area, can absorb the surplus manpower from agriculture.

Given the structural’ features of our economy e.g. surplus of labor, scarcity of capital and underdeveloped infrastructure; village and small scale industries (including handicrafts) can play a significant role in our industrialization endeavor.

Since the second Five Year Plan, India’s industrialization strategy involved rapid expansion of large scale industries especially in the capital goods sector.

Also read | The rationale for economic reform.

However, the Indian policy-makes were not unaware of the fact that large scale capital goods industries had a limited employment potential.

It was in recognition of the fact that even the Nehru Mahalanobis industrialization strategy, which postulated an overriding priority to the large scale capital goods sector, advocated the development of small industries.

Secondly, small scale industries can be located in rural areas facilitating rural development.

Also read | The determinants of Cost Function.

Thirdly, these industries largely cater to the consumer goods market. Fourthly, these require less capital and less skill than their large-scale counterpart and can play an important role. in alleviating poverty and unemployment.

Taking these factors into consideration, both the Central and State Governments established various types of marketing and financial institutions to promote and support different types of industries in rural areas.

Tags: Ba Economics

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