Growth and Sickness of Small-Scale Industries in India: World Research Journal of Economics
Growth and Sickness of Small-Scale Industries in India: World Research Journal of Economics
Growth and Sickness of Small-Scale Industries in India: World Research Journal of Economics
CHOPADE B.B.*
Department of Commerce, Art, Commerce and Science College, Sonai- 414 105, MS, India.
*Corresponding Author: Email- chopadebhanudas@yahoo.com
Abstract- In India S.S.I. sector is used as an efficient tool of progress. The recent data available indicate that the S.S.I. sector if India that
accounts for 95% of the country’s industrial units with 40% value addition in the manufacturing sector, shares 36% of the country’s total export,
contributes 9.50% GDP., employs nearly 9 lakhs per annum, registering a sectored growth rate of 9.20% as against 7.5% of the country’s over-
all industrial growth rate during 2011-12. During the 11th plan 5.7 million new jobs were created by the sector, while 7.6 million additional jobs
are expected to be creating by the 12th plan.
Keywords- manufacturing, creating, shares
Citation: Chopade B.B. (2013) Growth and Sickness of Small-Scale Industries in India. World Research Journal of Economics, ISSN: 2277-
6028, Volume 2, Issue 1, pp.-22-24.
Copyright: Copyright©2013 Chopade B.B. This is an open-access article distributed under the terms of the Creative Commons Attribution Li-
cense, which permits unrestricted use, distribution and reproduction in any medium, provided the original author and source are credited.
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Growth and Sickness of Small-Scale Industries in India
there was tremendous Increase ti the level of employment (70 lakh Industrial Sickness has Brought Disastrous Consequence
to 172 lakh). It is very clear that overall performance of SSI is quite The closure of industrial units leads to aggravation of the prob-
satisfactory after introduction of the new economic policy in India. lem of unemployment.
The growth of SSI is 272.79 lakhs in 2007-08 and it consistently
growth up to 332.12 lakhs in end of March 2011-12. Wastage of huge resources invested in the industrial units
The closure also leads to wide spread labor unrest, threatening,
Table 2- Overall Performance and Growth of the SSI Sector in India
disturbance in the industrial environment.
No. of units in Production Employment
Year Industrial sicknesses result in huge financial losses for banks
lakhs (` In crores) (lakhs)
272.79 7,09,398 626.34 and other terms lending financial institutions.
2007-2008
(4.47) (42.49) 5.15
The closure of industrial units will have adverse impact on the
285 880805 659.38
2008-2009
(4.53) (11.39) (5.27)
other related units through backward linkages.
298.08 9,82,919 695.38 In incurs heavy loss of revenue to center, state and local gov-
2009-2010
(4.53) (11.59) (5.46) ernment.
311.52 10,95,758 732.17
2010-2011
(4.51) (11.48) (5.29)
Foreign trade is also affected because of such industrial sick-
2011-2012 332.12 11,27,352 763 ness.
(March) (2.21) (8.25) (3.21) The implementation of certain agreements under the “World Trade
Average growth rate 8.76 27.21 5.35 Organisation” (WTO) has jeopardized the existence of many SSIs.
Source: Annual Reports, Commissioner, SSI Development Board (2007-2012)
Note: Figures in parenthesis percent growth rate for previous year.
The most important aspect is the complete reservation of SSIs list
by 2005. There is an anomaly in the price of raw materials. Steel is
In present-day world is confronted by small scale industries sold to the local industries in higher price is much lower. As a result,
amongst which industrial sickness is of paramount importance. The China buys Indian steel at a cheaper rate and dumps the finished
magnitude of industrial sickness is depicted in the [Table-3]. products in the India at higher price, which is quite less than the
price of Indian finished goods. The result is very simple, SSIs would
Table 3- Position of Sick SSI Units Financed by SCBs
be like dinosaurs.
Year No. of Sick SSI Outstanding (` In lakhs)
2007-08 3,06,221 4,313.48 The sickness of SSIs is mainly confined to the north-east and the
2008-09 3,04,235 4,608.43 state like West Bengal, Bihar, Orissa, Madhya Pradesh an Uttar
2009-10 2,49,630 4,505.54 Pradesh. One of the important reasons is lack of credit facility. The
2010-11 1,77,336 4,818.82 overall credit to SSIs has decline from 17.3% in 1998-1999 to
2011-12 1,67,980 5,706.35 11.1% in 2003-2004. The other reasons are the marketing and loca-
Source: Annual Reports, Commissioner, SSI Development Board (2007-2012) tion.
From [Table-3] following finds are drawn The survey conducted by all India Management Association (AIMA)
There were 3,06,221 small industries which were affected by indicates a fall of 5.2% in the sale growth of SSI units in 1998-2002.
industrial sickness, whereas 2,49,630 numbers of small units This was primarily concentrated in North India where sales decline
became sick in 2009-10, thus compared to both years sick SSI by 18.6% as a contrast, SSIs sale in South India grew 25.8%.
decreases, the problem of industrial sickness is more concen- What should be Measure?
trated in small-scale industries. Further, it is revealed that the
In order to compete with the MNCs and large scale Industries
magnitude of industrial sickness, particularly to small scale in-
dustries outstanding has risen from 4,313.48to 5,706.35 units in SSIs must concentrate hard on marketing.
2008 to 2012. The Finance Minister must ensure that the Loans are extended
There were 1, 67,980 no. of small industries which have ob- to SSIs at lower rates of interest as on other countries.
tained loans from Bank. Their no. has further increased to A certain ear-marked fund for credit must be maintained for
5,706.35 in the year 2012. SSIs.
Further, the [Table-3] shows that the problem of industrial sick- The modernizations and technological up gradation of the SSIs
ness of SSI. Is gradually decreased from 5,706.35 lakhs to 1, is a must. The government is trying to help SSIs with incentives
67,980 units due to outstanding bank credit. But, the industrial like subsidies for upgrading technology.
sickness has not been completed to desirable extent.
The must bring legislation to ensure that the government de-
Causes and Consequence of Industrial Sickness in SSIs partment buy SSIs products.
Government policy pertaining to production, distribution and price The of protection are over but before withdrawing the protection
change in the outlay blueprint, subsequent new priorities in the the measures to promote them have to be found out.
strategy, scarcity of power, transport, raw material and deterioration
The SSIs must diversify their range of products.
of industrial relations etc., can result industrial sickness. Indigenous
factor such as mismanagement, diversion of funds, wrong dividend The government must initiate to launch an awareness pro-
policies, excessive overheads, lack of fully responsible for aggravat- gramme so that the owners of SSIs can know the implication of
ing the situation of industrial sickness in a serve manner. Further, WTO and can prepare to prevent the sickness of these SSIs.
the government policies regarding price distribution, export, import, Therefore, WTO reality for SSIs has its own relevance in terms
licensing and taxation are the major factors for industrial sickness. if their role in export and employment.
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Chopade B.B.
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