Policy on Modern Small Scale Industries: A Case of Government Failure

Suresh D. Tendulkar and T. A. Bhavani
Additional contact information
Suresh D. Tendulkar: Delhi School of Economics
T. A. Bhavani: Institute of Economic Growth

Indian Economic Review, 1997, vol. 32, issue 1, 39-64

Abstract: In this paper, we address ourselves to an evaluation of government policy designed for the modern segment of the small scale manufacturing sector. We argue that the policy has been and continues to be supply-driven and paternalistic leading to dependency. In addition, the individual unit-centered atomistic approach of policy is dominated by continuous protective and discretionary promotional measures with perverse incentive effects for the healthy growth of this segment. We underline the need to move away from continued protection and bureaucratic discretion-based promotion and argue for a radical shift in this policy towards a demand-driven, group-oriented and collective effort-based (rather than atomistic) approach. We argue 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. It would induce this segment to get out of the syndrome of remaining small and inefficient. The suggested shift in policy is necessary in order to flexibly adjust to fast changing circumstances so as to better serve the longstanding and as yet unattained objective of developing a vibrant and self-reliant modern small scale industry.

JEL-codes: H19 L52 P41 (search for similar items in EconPapers)
Date: 1997
References: Add references at CitEc
Citations: View citations in EconPapers (14)

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:dse:indecr:v:32:y:1997:i:1:p:39-64

Ordering information: This journal article can be ordered from
http://www.ierdse.org/

Access Statistics for this article

Indian Economic Review is currently edited by Pami Dua (Editor) & Ram Singh (Associate Editor) and Sunil Kanwar

More articles in Indian Economic Review from Department of Economics, Delhi School of Economics University of Delhi, Delhi 110 007. Contact information at EDIRC.
Bibliographic data for series maintained by Pami Dua ().