Role of small scale and cottage industries in the pre liberalisation period. Notes
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The Small Scale Industry sector provides a panacea for less developed countries which aspires for higher growth in the face of shortage of capital, infrastructural bottlenecks, and a dearth of resources. The development of this sector hinges on the synchronized efforts of the governments, financial institutions and the entrepreneurs. There have been policy interventions undertaken by the state to promote this sector both in the pre-independence period and also after India secured its independence. Although some opportunities emerged for indigenous entrepreneurship in selected areas under the patronage of the colonial government however there was no systematic or deliberate approach on part of the British to revive, promote or develop Indian indigenous industries.
After independence, state intervention for the development of the small-scale industries in India was policy-specific aiming at varied objectives. The broad policy thrusts was to expand the capability of small and micro enterprises, to generate employment, promote exports, further the process of rural industrialization, and facilitate the development of appropriate technologies and new enterprise. Post-independence, SSI sector has been assigned a special status partly due to ideological reasons and partly due to social realities that created political compulsions.
Successive state policies were implemented to inject more vitality and growth impetus to the SSI sector so that it could contribute to the economy in terms of output, employment and exports. Deregulation, de-bureaucratization and simplification of rules, regulations and procedures in establishing and maintaining small units were made.
The MSMED Act, 2006 provided for the first ever legal framework for recognition of the concept of ‘enterprise’ and integrated the three tiers of micro, small and medium enterprises. The Act aimed at imparting greater vitality and growth impetus to the three categories of enterprises in terms of output, employment and exports and instilling a competitive culture based on heightened technology awareness. The enactment of this historic MSMED Act represents a paradigm shift where the policy of protection has now been replaced by the policy of promotion of SSI sector.
Keywords
Small scale industry; Capital; Entrepreneurship; Enterprise; Policy; Employment
Introduction
The Small Scale Industry (SSI) sector provides a panacea for less developed countries (LDC) which aspires for higher growth in the face of shortage of capital, infrastructural bottlenecks, and a dearth of resources. The development of this sector hinges on the synchronized efforts of the governments, financial institutions and the entrepreneurs. It is basically the entrepreneurs, who with the help of other two can promote entrepreneurship which is the basis of successful and sustainable establishment and operation of SSI units. The SSI sector covers a wide spectrum of industries categorized under small, ancillary, tiny, small scale service & business enterprises, women enterprises and cottage segments which are viewed to be complimentary to the medium and large-scale industries. Thus the rate of economic growth of a region is directly correlated to the rate of development of SSI sector as it, together with the medium and large scale sector provides a great synergy which is critical for generating the momentum necessary for sustainable growth. The importance of the SSI sector lies in the fact that unlike the other two sectors, it has the potential to generate gainful employment at low capital cost, create and sustain an entrepreneurial base, induce regional dispersal of industrialization in rural and backward areas which is so necessary in LDCs.
The paper seeks to provide a historical perspective on the SSI sector in India. It focuses on the policy interventions undertaken by the state to promote this sector both in the pre-independence period and also after India secured its independence. The post-independence period is broken down into the pre-liberalization era and the paradigm shift in state policies following the economic reforms in 1991.
After independence, state intervention for the development of the small-scale industries in India was policy-specific aiming at varied objectives. The broad policy thrusts was to expand the capability of small and micro enterprises, to generate employment, promote exports, further the process of rural industrialization, and facilitate the development of appropriate technologies and new enterprise. Post-independence, SSI sector has been assigned a special status partly due to ideological reasons and partly due to social realities that created political compulsions.
Successive state policies were implemented to inject more vitality and growth impetus to the SSI sector so that it could contribute to the economy in terms of output, employment and exports. Deregulation, de-bureaucratization and simplification of rules, regulations and procedures in establishing and maintaining small units were made.
The MSMED Act, 2006 provided for the first ever legal framework for recognition of the concept of ‘enterprise’ and integrated the three tiers of micro, small and medium enterprises. The Act aimed at imparting greater vitality and growth impetus to the three categories of enterprises in terms of output, employment and exports and instilling a competitive culture based on heightened technology awareness. The enactment of this historic MSMED Act represents a paradigm shift where the policy of protection has now been replaced by the policy of promotion of SSI sector.
Keywords
Small scale industry; Capital; Entrepreneurship; Enterprise; Policy; Employment
Introduction
The Small Scale Industry (SSI) sector provides a panacea for less developed countries (LDC) which aspires for higher growth in the face of shortage of capital, infrastructural bottlenecks, and a dearth of resources. The development of this sector hinges on the synchronized efforts of the governments, financial institutions and the entrepreneurs. It is basically the entrepreneurs, who with the help of other two can promote entrepreneurship which is the basis of successful and sustainable establishment and operation of SSI units. The SSI sector covers a wide spectrum of industries categorized under small, ancillary, tiny, small scale service & business enterprises, women enterprises and cottage segments which are viewed to be complimentary to the medium and large-scale industries. Thus the rate of economic growth of a region is directly correlated to the rate of development of SSI sector as it, together with the medium and large scale sector provides a great synergy which is critical for generating the momentum necessary for sustainable growth. The importance of the SSI sector lies in the fact that unlike the other two sectors, it has the potential to generate gainful employment at low capital cost, create and sustain an entrepreneurial base, induce regional dispersal of industrialization in rural and backward areas which is so necessary in LDCs.
The paper seeks to provide a historical perspective on the SSI sector in India. It focuses on the policy interventions undertaken by the state to promote this sector both in the pre-independence period and also after India secured its independence. The post-independence period is broken down into the pre-liberalization era and the paradigm shift in state policies following the economic reforms in 1991.
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