Employment and growth potentials of rural industries, small-scale industries and medium and large-scale industries in India

R. Banerji

No 64, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: While small-scale industries have not gone unnoticed in India's Industrial Policy Resolutions, in practice it is largely the large and medium-scale industries which have set the pace of industrialization in the country. Recently, the wisdom of the prevailing pattern of industrial growth has come increasingly under criticism. The reasons for dissatisfaction with large and medium-sized industries are many, the principal ones being the very limited impact these industries have had on the serious problems of unemployment, income distribution and regional disparities. It is being felt, in other words, that the prevailing approach towards industrialization is not truly development oriented when seen in the perspective of both economic growth and the general unemployment situation of the country. It seems, however, the pendulum is now swinging in the opposite direction; according to the current thinking of the Indian government - if the sporadic proclamations are any guide to it - the emphasis in industrial policy ought now to shift away from the large towards small-scale and rural industries. It must be stressed that this paper is purely exploratory in nature, its main purpose being to illustrate, apart from the orders of magnitude involved, a) whether, in some sense, a conflict exists between the goal of maximising employment and that of maximising the growth of output in Indian manufacturing when seen in a three sectoral framework; and, b) in which sector the potentials for economic growth and employment are likely to be the greatest.

Date: 1977
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