POLICY ON MODEM SMALL SCALE INDUSTRIES: A CASE OF GOVERNMENT FAILURE

Suresh D. Tendulkar and T. A. Bhavani
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Suresh D. Tendulkar: Delhi School of Economics
T. A. Bhavani: Delhi School of Economics

No 44, Working papers from Centre for Development Economics, Delhi School of Economics

Abstract: In this paper. We address ourselves to an evaluation of government policy designed for the modern small scale industrial segment of the small scale sector. We argue that the policy has been and continues to be supply-driven in being paternalistic and atomistic in the sense of individual unit-centred and is dominated by continuous protective and discretionary prol1jlOtional measures with adverse side-effects for the healthy growth of this segment. We underline the need to move away from perpetual protection and bureaucratic discretion-based promotion and argue for a radical shift in this policy towards a demand-driven and group Oriented and collective effort-based (rather ,than atomistic) approach with a plea for the abolition of indiscriminate reservation of production lines for exclusive production in the small scale sector and introducing and strictly enforcing the time bound character of promotional concessions to get out of the syndrome of remaining small and inefficient. The suggested shift in policy is necessary in order to flexibly adjust to changing circumstances so as to better serve the long-standing and as yet unattained objective of developing a vibrant and self-reliant modem small scale industry.

Pages: 30 pages
Date: 1997-05
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Citations: View citations in EconPapers (13)

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