06 - Chapter 1
06 - Chapter 1
06 - Chapter 1
Chapter I
Nevertheless, nual industrializationwhich does not benefit the nual population is not
the best way of rural development, though it may lead to a wnsidarable growth in industrial
output4. Rural industrialization facilitates shifts in work force from primary to secondary
sectors. Industrialization promotes an economy fundamentally relying on agriculture into a
more advanced industrial economy6.The issues of industrialization are different at different
levels of growth with political goals. Economic growth, equity and welfare, national
independencc etc. dominate industrialization7.The strategy of industrialization immensely
depends on the theoretical framework and ideological betting. It is impossible to develop
everything simultaneously and therefm priorities are to be identified. The right choice has
dimensions like relative roles of public and private sectors, heavy industry and light industry,
import-substitutionand export-promotion labour-intensive and capital-intensiveetc.
Small scale sectors also prevent city-ward migration through balanced regional
development. Further, they also serve the local needs and make use of locally available
resources. All over the country, the promotion and organisation of smaller units would lead
to production by masses unlike the mass production by a few large scale industrial sectors.
These small scale industries also have a talent of dispersal and made accessible in the remote
or inaccessiblerural areas of the country, and do not lead to concentration of industries at one
place. Thus they help remove regional imbalances which are responsible for many economic
ills. At the same time, they help in tapping economic resources such as entrepreneurshipand
capital14. Besides, they are labour oriented and hence very much suitable for a country like
India to play a catalystic role in the overall economic development".
From the very beginning the government policy went in favour of supporting rural
industries. The National Planning Committee (1938) gave an important place to the
development of village and cottage industries. In 1944, Sriman Nmyan in his Gandhian Plan
had suggested the measures for the development of rural industries. The congress agrarian
refonns committee recommended several policy measures for the development of khadi and
village industries. Article 43 of the Indian Constitution telatiag to Dirwtive Principles of
State Policy says that in particular the state shall eadeavour to promote cottage industries on
an individual or co-operativebasis in rural areas. The Directive Principle of the Constitution
laid stress on certain economic and social values which can be chedshed only thrwgh the
development of nual industries. It should be the State Policy to provide for the gro* of
decentralized industries over the possible fields as they could avoid the evils of urbanization,
concentration and ~entralization'~.
The promotion of small scale and cottage industries has been a major plan of Indian
Industries Policy afler Independence. The development of cottage and village industries had
been receiving continuous attention of Government of India in the various industrial policies
as well as in Five Year Plans. Rural Industrialization programme is made an effective
instrument for ameliorating the rural poverty for which it is necessary that output,
employment and technological appropriateness for this sector are well harmonized.
Accordingly, the state has envisaged various measures in this direction.
The aim of the industrial policy resolution, 1948 was that the state must play an active
role in the development of industries. The results of this policy while recognizing the
importance of rural industries succinctly stated that these industries have a very important
role in the national economy because they offer ample scope for better utilization of local
resources and achievement of local self-sufficiency in respect of certain types of essential
consumer goods'9. Thus, industrial policy of 1948 considered nual small scale industries to
be vital for the economy. This was due to two reasons, such industries helped in the
utilization of local resources, secondly, they helped to increase the production of essential
consumer goods.
The industrial policy of 1977 was more or less based on the earlier industrial policies.
December 1977, the goveORmmt
In the statement of industrial policy announced on 23"
emphasized the intwaction between the agriculture and industrial sector, the need for
strengtheningthe small scale industries and tiny sectors, the need for reliance on appropriate
technology, dispersal of industries, the need for maximizing employment etc2'. This policy
laid up top-notch emphasis on the promotion of rural small scale, tiny, industries cenbras at
district level to provide assistance for the promotion of rural scale and cottage industries. The
1977 industries policy, thus, gave a definite shape to the comprehensive rural
Industrializationpolicy by establishing this coordination and multipurpo~agemy to provide
all assistance for the promotion of rud small scale indushies.
*:* Ensuring adequate flow of'credit on a nonnative basis and quality of its delivery for
viable operation of the rural small scale industry sector
9 Setting up of a special monitoring cell to oversee the genuine credit needs of the rural
small sector
4 Introduction of suitable legislation to msure prompt payment of rural small industfit9
biis
9 Implementation of the scheme of Integrated Mastructural (including technological
back-up) Services for industries
9 Market promotion of rural small scale industry products through cooperative and
public sector institutions, other specialized professionaYmarketing agencies and the
consortia approach and
9 To better focus attention on the problems of the rural small scale sector, a new
Ministry of Rural Small Scale Industries and Agro and Industries was created in
October 1999, which, later on, announced an 'Agenda for the Millennium' policy.
.3. A new Credit Insurance Scheme was announced in the Budget (1999- 2000) for Small
Scale Industries as security to banks and thus to improve the inductance of investment
credit to the SSI units, particularly export-oriented and tiny units.
+ The working capital limit for rural small scale indwtd units was to be determind
by the banks on thc basis of 20 per cent of their annual hunover. The turnover l i t
for this purpose was emhanced fbm Rs.4 to 5 cmm.
O To coordinate the latest development in the context of policy of the World Trade
Orga@zation, a cell was set up in the office of the Development Commissioner, Rural
Small Scale Industry to impart information to small scale industries associations
regarding recent developments, prepare policies for them in tune with the World
Trade Organization agreement and organize WTO sensitization seminars and
workshops.
9 To take necessary steps to accelerate the programmes of Rural Small Scale Industries
branches to ensure that every district and rural small scale industries clustcr within
the district are served by at least one specialized, Rural SSI bank branch.
Furthermore, to improve the quality of banking services, the rural SSl branches were
being asked to obtain IS0 certification.
9 To further fillip rural small scale industries entrepreneurs, the National Equity Fund
Scheme was introduced under which equity support was provided for projects up to
the limit of Rs.lSlakh, which was further raised to Rs.25 lakhs.
+:* The single window scheme of Rural Small Industries Development Bank of India is
also being extended to all districts. Thus, under the new policy, more emphmii has
been laid on the development of d l scale sector by providing different facilities
instead of providing different types of protection24,
O. The number of items exclusively reserved for small-scale sector has bcun
progressively increased and presently stands at 846.
4 Procedures and conditions of financial assistance 5Mn commercial bpnks and other
institutions have been libem&&
*3 The availability of raw materials to small scale has been inc~tasadSO that can
import their requirements so easily.
** The value of import licenses issued to small scale units has increased so that they can
import their requirements easily.
9 The protective policy of reservation for government pwhases has been further
strengthened and over 400 items have been exclusively reserved for the small-scale
units under the Government store purchase programmes.
*:* Not long ago, with a view to strengthening the provision of financial fillip to small
scale sector, especially to the smaller amongst the small scale industries, several
schemes have been introduced such as The Small Industries Development Fund
(SIDF) in 1986, National Equity Fund (NEF) in 1987 and the Single Window Scheme
(SWS) in 1988. The development of nual industries in their varied aspects as an
integral and continuing element in an expanding national economy has been from
very outset one of the key programmes under the five year plans and the objective of
the promotion of rural industries as emphaaizcd in the industrial polices was given
practical shape in the'five year plans.
It was stated in the First Five Year Plan that wherever a large industry compotes with
industry the appropriate course would be to try and formulate common production
programme. The Government would assce~the respective contributions which the luge and
small industries make towards the total requirements of the community and decide the
measures which should be taken to enable small industries to achieve the targets prescribed
for them. In case of competition, the policy would be to provide an area within which each
cottage industry would be able to k t i o n itself through placement of appropriate restrictive
measures on the operation of the organized industry. The development of rural industries
should, therefore be as much a matter of state action as the increase of the agricultural
production. Indeed one cannot be separated from other, for increase in agricultural
production pre-supposes fuller utilization of the available manpower and release of surplus
workers for other occupations25.
During the First Five Year Plan, various steps were taken for the development of
village and small industries. Rural industries were considered to be complimentary to
agriculture. During this plan period, several all India boards like All India Rural Small Scale
Industries Board, All India Handicrafts Board, All India Handloom Board, Coir B o d etc.
were set up for the promotion of rural industries. The small scale industries board was set up
in 1954 for the development of small scale industries. Four regional small industries service
institutes were established with the branches all over India to provide technical assistance to
the rural industries. The Government started imposing cess on large scale industrial goods to
protect nual small scale sector.
During the Second Five Year Plan, the government acted on the recommendation of
the Karve Committee, which was appointed in 1955. The committee recognized the
importance of the ml small scale industries as a major source of employment. Accordingly,
the second plan stressed the dire need for the development of rural small scale industries as
"these industries offer some distinct advantage in relation to some of the problems that need
immediate solutions they provide a method of ensuring a more equitable distribution of the
national income and they facilitate an effective mobilization of resources of capital and skill
which might otherwise remain utilized. The need to promote, modernize and recognize these
industries is paramount important26.The Karve Committee also suggested to develop these
industries on coordinated lines and also recommended technical improvements. The theme
for rural Industrialization was spelt out clearly for the first time during this plan. The
programme of industrial estates was extended and industrial extension service was
developed. The Khadi and Village Industries Commission was set up in 1957 as a separate
body for the development of khadi and village industries.
The Third Five Year Plan also emphasized the importance of rural small scale
industries. It pointed out that '"the objectives of the programmes for these industries" are to
create immediate and permanent employment on a large scale at relatively small capital cost,
meet a substantial part of the increased demand for consumer goods and simple producers
goods, facilitate mobilization of resources of capital and skill and bring about the integration
of the development of these industries with the rural economy, on the one hand and large
scale industry on the other. They also offer a method of ensuring more equitable distribution
of national income and avoiding some of the problems that unplanned urbanization tends to
createz7.The programme for the development of rural small scale industries during the Third
Plan was influenced by the recommendations of the second international prospective
planning team of 1963. Preferential treatment was given to the urban based small industries.
The rural industries project programme was formulated on a pilot basis in 49 selected
districts during this plan period.
In Fourth Five Year Plan certain positive forms of assistance such as evolution and
extension of appropriate technology for smaller unit were initiated. This plan prqmed to
encourage decentralized growth of industries. Besides, the skill and productivity of the
people engaged in the small scale sector was to be promoted to raise their income levels. For
building a decentralized sector in modern industry, both structurally as well as locationally, it
is imperative to adopt a firm and clear approach. In a number of industries and industrial
processes, a large size of production and a high degree of mechanization have no prescribed
advantage. It would be desirable in the context of present day Indian conditions for d e r
units and more labour-intensive technologies in such fields and processes and adopt policies
whereby smaller units of operation and less capital-intensive method could be promoted28.
The range of products produced in the mall sector was widened and the credit guntantee
scheme of the Reserve Bank of India was liberalized during this plan period.
The Fifth Five Year Plan emphasized that village and small scale industries have an
important role to play in the removal imbalances. During this plan period, the small scale and
village industries made an impressive progress. It was noticed that while the progress has
been rapid in some industries and in some states, the pace of growth of most industries
continued to be uneven and progress has not been up to the expectations. Several measures
were adopted for the promotion of these industries such as progressive improvement of
production technology, promotion of entreprendip, providing a package of constancy
services, fullest utilization of the skills of the persons already engaged in this sector e t ~ ~ ~ .
District Industries Centres were established during this plan to coordinate the promotional
activities of different agencies working in the development of rural small scale industries.
Apart from these, the plan has broadened the rural industries project programme spatially to
cover all the districts in the country.
During the Sixth Five Year Plan, promotion of rural small industries continued to be
an important element in the national development strategy particularly because of its very
favourable capital-output ratio and high employment intensity. In pursuance of this, the
Government took a policy decision to give maximum emphasis on development of rural
industries during this plan. The main objectives of the plan were creation of viable sttucturc
of rural small industry sectors, employment opport&ties on a decentralized and dispersal
basis establishment of a wider entrepreneurial base through appropriate training and package
of incentives improving the levels of production and earnings of the artisans in nual m a s
through measures like upgradation of skills, technologies and market oriented produ&ion30.
During this plan, this sector was to grow at the rate of 9.39 per cent per mu
m but the
growth rate of this sector during the period was very high.
1.4.7 Seventh Five Year Plan (1985-1990)
Within the overall focus on food, work and productivity laid down in the Seventh
Five Year Plan, this sector contributed towards improving the economic and occupational
profile of rural, semi-urban and weaker sections of urban communities through promotion of
small scale industrial activities3'. The policies pursued during the Seventh Plan aimed at
rationalization of fiscal regime to ensure the rapid growth of the small industries. Research
and development efforts were stepped up and the results thereof transfend to the field level
agencies providing for some of the welfare measures including housing-cum-workshed
facilities and thrift fund scheme for the benefit of the artisan type of units had been
considered. In this plan period, t h ~Government had started extending the basic support in
terms of functional assistance like marketing, ancellarisation, credit flow, supply of raw
material and critical inputs, technology, training etc. The seventh plan envisaged
discouraging the setting up of industries in or around urban agglomerations and a package of
incentives has been provided to attract the attention of industries in backward regions. The
implementing agencies have set up special cells to monitor, evaluate and build and effective
information service system so as to enable a periodic assessment of various promotional
programmes.
During the Eighth Five Year Plan, the public sector outlay for rural small scale
industries was envisaged at Rs.6334.20 crore. The value of production from nual small scale
industries ~ F I Sbeen targeted to increase from Rs.1,95,294 crore in 1991-92 to Rs.2,94775
crore by the end of the Eight Five Year Plan. The employment was expected to reach a target
of 553.74 lakh persons during 1996-97 against the 443.22 lakh persons in 1991-92. The value
of exports was expected to rise h m Rs.22,989.16 crore in 1991-92 to Rs.50,215 crore by the
end of 1996-97. The value of production of rural small scale industries alone was expected to
increase fiom Rs.1,60,000 crore in 1991- 92 to Rs.2,33,436 crore by the end of 1996-97. The
employment in this sector was expected to reach 150.50 lakh persons in 1991-92. The
exports from rural small scale industries were targeted to reach Rs.20,200 crore by 1996-97
as against Rs.12,658 crore during 1991-9232.
From the above targets, it is observed that the growth tat@ in respect of production,
employment and exports relating to rural small scale industries envisaged for the Eighth Plan
are lower than those achieved during the Seventh Plan. In view of the prevailing deficit of
resource position, Eighth Five Year Plan has observed that credit is the copiously crucial
factor for the development of rural small scale industries. This can be achieved mostly
through increased assistance from commercial banks and strengthening of SIDBI and
NABARD. The Reserve Bank of India has appointed a committeeunder the Chairmanship of
Sri P.R. Nay& in December 1991 to review various credit requirements of the rural small
scale industries sector and for the rehabilitation of sick small scale industries and to examine
other issues relating to small scale industries with a view to enduring that the interests of
Rural SSI sector are not adversely affected. Eighth Plan has proposed to initiate a massive
programme for the development of appropriate technology and technology upgradation.
Technological obsolescence is very high in rural scale industry. To improve marketability,
there is a dire need to induct sophisticated up-to-date and appropriate technology. The Eighth
Five Year Plan has observed severe sickness in rural small scale industrial sector. To prevent
sickness, the plan suggests proper monitoring of the projects. The quality of consultancy has
to be improved and proper diagnosis and co-ordination is required from the agencies
involved. The Eighth Plan proposed to increase flow of marketing assistance through
agencies like NRSIC, Rural Small Industries Corporations etc. The Eighth Plan proposed
establishment of 70 growth centres, of which a certain percentage of developed industrial
area should be earmarked for rural small scale industries.
The Ninth Plan (1997-2002) noted that the small sector was presently producing
about 8000 items, out of which, 821 after the recent dereservation of 15 items were reserved
for production in the small sector. However, out of the reserved items, it was observed that as
many as 200 were either not produced at all or their production also was insignificant.
Besides, the Ninth Plan has observed that during the few years "the growth of nual small
scale industrial sector in the non-reserved areas has been higher than in the reserved
categories which are proof of its inherent strength and resilience by showing its ability to
respond to the challenge of the market To improve the technology of nual small
scale industries, small hdumies development bank of India had already se4 up a Technology
Development and Modification Fund with a corpus of Rs.200 mra. The government also
set up technology trust funds with contriiutions 6om state governments and industrial
associationsfor the transfer and aquisition of the latest technologies.
The Tenth Plan (2002-2007) observed that by the end of March 2002, there were over
3.4million small scale industrial units in the country accounting for more than 40 per cent of
the gross value of output in the manufacturing sector and about 30 per cent of the total
exports of the country by providing employment to over 19.2 million persons, which is
second only to agriculture. It was also obvious that during Ninth Plan Period, SSis created
over 3.2 million jobs. The value of production of small scale industries has been estimated at
Rs.4,62,641 crore in 1997-98 which has increased to Rs.6,90,552 c m registering an
increase of 49.26 per cent. The employment has increased by 15.57 per cent during Ninth
Plan, i.e., from 16.7 million persons to 19.3 million persons. The export of the small scale
industries have been valued at Rs.44437crore in 1997-98 which have increased to Rs.65,000
crore in 2001-02 recording an increase of 46.27 per cent during the Ninth Plan Period.
Of late, there are 749 items reserved for exclusive production in the small scale
industries sector. It has been found that though the small industries sector is manufemuring
around 8,000 items, the reserved list items constitute around I5 per cent of the total SSI
production. Taking into account the W O regime and economic liberalistion, the Study
Group of the Development Small industries under the Chairmanship of Dr. S.P. Gupta
recommended SS1 units engaged in the ptoduction of reserved items are not affected. The
group also recommended that it would be p ~ d e n tto consult the stake holders, while
deserving items. To provide technological support and W n g to the tural smatl scale sector,
presently 10 tool moms are functioning at Kolhta, Ludhiana, Jallanadhar, Nagpur,
Hydarabad, Bhubaneswar, Jamshedput, Ahmadabad, Indore and Aurangabad. A new tool
room and training centn: has been set up at Guwahati. Many tool moms w e n set up in
various states to help in creating localized training and picduction facilities. Under
Technological Upgradation and Management Programme (UPTECH), six clusters were
identified to take-up diagnostic studies. A major cluster development programme was taken
up during the Tenth Plan period through the UPTECH scheme. There are about 350
important clusters in the country identified and a few new clusters would be taken up for
development each year.
The dispersed and decentralized (VSI) sector poses a special challenge and
opportunity to our policy makers. This sector has the second largest share of industries
including handloom, hand craft power looms, khadi village industries, and rural industries
segments including food processing industries. It beacons the lives of the weaker and un-
organized sections of the society with more than half of those employed being womon,
minorities and the marginalized 57 per cent of the VSI units are owner run enterprise with
one person.
The increasing possibilities in nnal Industrialization will not be able to entar the
industrial sector. There an many schemes with known tcdmologies within the government
that need to be taken to the youth through short courses that can k usefid5. Before
independence, Indian rural industries depended mainly upon input mwa of its own.
Agriculture provided raw materials to industry industry's contribution to agriculture were,
however, marginal. The rural industries were unidirectional.
In India, there have been two distinct development ideologies: Sarvodaya and
Socialistic. In the Sarvodaya appro& the immediate problom facing the country was
poverty which h d to be tacked directly through the provision of employment in traditional
sectors-agricultureal and cottage industries while the need for some large industries is
recognized, these are mainly for catering to the nceds and requirements of agriculture and
cottage industries. In the socialistic ideology, the accent is on large-scale industrialization
which lays emphases on capital and heavy industry. Cottage industry nprcsents only an
intermediate arrangement for providing gainful employment to rural population. The latter
approach has largely influenced Indian planning, especially in the earlier years.
In so far as the d industries sector is concerned, the developmental strategies
which have evolved over the years can be broadly classified into three stages:
1) Sectoral approach,
2) Growth centre approach and
3) Target oriented approach.
Indian attempts to organize and receive the cottage and village industries on the basis
of a sectoral approach began even before the attainment of independence. The All India
Spinners Association (AISA) was established in 1925 for the development of Khadi hand
spun and hand-woven cloth. All IndiaVillage industries Association (AIVIA) has established
a decade later, to look after the village industries. With the attainment of independence,
separate all India bodies were set up for each major sub-sector, viz. Central Silk Board
(1948) All India Handloom Board (1952) All India Handicrafts Board (1952) Coir Board
(1955) and Khadi and Village Industries commission (KVIC) 1957.
1.5.1.1 Effectlvenew of the Sectonl Appmach
Indian attempts in the area of sectoral approach have achieved a certain degree of
success though there is a scope for augmentation and improvement in the operations of the
promotional agencies. The Indian experience also seems to indicate:
Sectoral approach can achieve sucaw only in areas where a sizable cluster of artisans
engaged .in a particular industry exists. Thus, the handloom c o ~ t i o n am
s facing
difficulties in covering widely dispersed weavers.
The success of the efforts, especially in the field of traditional cottage and village
industries, seems to depend considerably on the commitment and dedication on the
part of the grass-root exteasion personnel.
During the last few years, government policy has been to ensure that both the artisans
and the promotional organizations obtain finance from institutional sources. This
would help balance the target-oriented approach of the promotional agencies and the
viability-oriented approach of banks and financial institutions.
Many of the people belonging to these categories pomm skills in their traditional
crafts, as also ttie capacity and will to work but lack of knowledge of the facilities available.
To overcome this, target-pup oriented corporations have been set up in most of the states.
At present, there are 28 such corporations operation in various parts of the oountry.
Provisions of margin money, interest subsidy, technical and ,panagerial assistance and
guaranteeing of loans are some of the major activities of these corporations. In the cese of
tribals in particular, besides supplying of essential raw materiab and purchasing of the
finished products, the corporations also undertake where necessary, the supply of daily
consumption requirements with the help of multi-purpose primary societies.
During the last 44 years India built up one of the worlds most extensive and elaborate
small enterprise promotion programmes. These programmes aim at assisting the small scale
sector in rural as well as urban areas. These measures are both positive and negative
measures promote the cause of nual industries only indirectly. The various measwes and
steps taken by the Government for the promotion of small scale and cottage industries an too
diverse and extensive. Some of these measures and programmes are discussed in the
following pages.
The idea of the Rural Industries Project was first mooted in a seminar held under the
auspices of the Gokhale Institute of Politics and Economics, at h e in the year 1 %1. It was
participated by Dr. D.R Gadgil, J.P. Narayana and V.L. Mehta et.al. The suggestions of
these stalwarts were accepted by the planning commission of Government of India.
The idea behind this programme was to work out an intensive programme of
development of small scale industries in these selected areas. Rural industries were to be
developed in centres with a population of less than 25,000. An entrepreneur was to make an
investment radging from Rs. 10,000 to Rs.1,00,000. Ultimately, this programme was
expected to ensure rural industrialization throughout the country, on the bases of the
experience in techniques and method of production gained in these areas.
Out of 49 projects, two were located in Orissa one at Barpali and the other at Jaipur.
During the Fifth Five Year Plan, the districts of Kalahandi and Bolangir also were brought
under the R.LP. Scheme.
Each project was under the in charge of a project officer, two technical experts, two
economic investigators and extension staff in the Block.
Objectives
i) To set up small industries in the rural areas by utilizing effectively rural resources,
iv) Raise the incomes and standard of living of the rural communities,
Initially, the programme was for a limited period. However, later on, following the
mmmendations of the Rural Industries Planning Committee, the government proposed to
bring the entire nual area of the country under this project, in about 25 years, in a phased
mmer.
Certain special facilities were provided to the prospective entrcpmeurs and artisans
of the R.I.P. They area:
The Government further announced certain special concessions for the selected
backward districts. These were:
The state government also decided to extend certain concessions like subsidy on
project reports, concessions on power tariff, land, exemption of sales tax, and the like. Thus,
the programme was mainly of promotional character. Initially the rural industries programme
seemed to have some impact and the cost benefit ratio of the programme was quite high. The
number of projects increased kom 49 in the year 1965 to 1 1 1 during 1975-76. By the year
1978 about 25 per cent of the country was covered by the 112 R.I.P. projects. The volume of
production and industrial employment also went up. But in the course of time it was realized
that the p r o p m e had only a marginal suc~es$~.
With the introduction of the District
Industries Centre Scheme in the year 1978, the R.I.P. programme was merged with it.
1.6.2 Run1 Artisans Programme (RAP.)
The Rural Artisans Programme was started by the Ministry of Agriculture in the year
1971-72. The programme was taken up as a part of tbe Scheme of Small Farmers
Development Agencies (S.F.D.A.) and Marginal Farmers and Agricultural Labourus
(M.F.A.L.). It is also a central prognnme. The programme is exclusively meant for the rural
artisans.
The main objectives of this programme are to provide all-round training to the village
artisans in different trades. This was to enable them to take up small enterprises and work
with the improved tools. The artisans were to produce goods which could be sold locally.
This was expected to increase their income and improve their standard of living.
The LRD.programme was started in the year 1978-79 in 2,350 blocks all over the
wuntry. Later on it was introduced in ail blocks. The programme has adopted the family as
the unit of planning. The present objective is under the programme, so as to bring them above
the poverty line. Durrng the Seventh Plan a sum of Rs. 12,500 cmrm hss been emnarked for
investment in the LR.D.P.The I.R.D.P.wvers all c l w of people, including non-
agricultural labour and rwal artisans, who are below the povraty line. This feature
distinguishes it h m earlia anti-poverty schemes. The I.R.D.P.lacks any new element. No
new approach is provided to tackle the burning problem of poverty. Another criticism is that
it lacks integration of different sectors such as agriculture, industry etc., relevant to the nual
areas.
1.6.4 District Industries Centre PIC)
The main purpose of the DIC is to provide all the facilities and assistance to the small
and rural entrepreneurs under a single roof. It would provide full co-ordination among the
various agencies connected with the promotion of small industries.
The Manager (Extension and Training) is to look after quality control, improvement
of production processes and arrange for training courses.
Manager (Khadi and Village Industries) would pay special attention for the
development of Khadi and Village Industries. He is to provide necessary link between the
entrepreneurs and the v d o u s Government agencies in charge of the promotion of Khadi and
Village industries. In spite of several achievements to its credit, the D.I.C. scheme is not
altogether free from certain limitations.
The targets of the D.I.C. were far too ambitious which made implementation difficult.
It suffered from certain draw backs. Some states have not yet delegated sufficient powers to
the D.I.C. According to a Report of the comptroller and Auditor General, the scheme has
failed to generate additional employment through the setting up of small and medium-class
industries. Till M m h , 1982,384 D.I.C.'s were set up covering 399 districts out of a total of
41 1 districts in the country.
The National Scheme of Training Rural Youth for Self-employment (TRYSEM) was
initiated by the Ministry of Rural Reconstruction in August 1979. 7'hc main thrust of rho
scheme is to equip rival youth with nscessary skills and technology to enable them to seek
self-employment Normally, persons between 18 and 35 ycm of age arc covered. The target
is to train at least 2,00,000 nual youth in each block of the country. TRYSEM activities
would cover all the three sectors viz. primary, secondary and tertiary. After the training, the
entrepreneur would be given appropriate support from the Government for setting up of
hidher own enterprises. Under this scheme, the landless labourers, small farmers, d
artisans and other nuai poor would be entitled for training and would be given stipend to
meet incidental expenses during the training period37.The principal objective of this scheme
is the removal of unemployment among youth and thence rural poverty.
Over the years, a large number of institutions have been promoted in the m t r y to
assist the small scale sector. These operate both at the state and Central level.
The Stapes have also set up their Small Scale Industries Corporations. They Perform
two types of functions Regulatory and promotional. Under the regulatory functions m w w
are included of registration of small scale industries, quality control, c o m c t i o n of
industrial estates, and the like. Under the promotional measures, several functions are
performed. They play an important role in the distribution of raw materials to small units.
They also provide seed capital and margin money to entrepreneurs, so that they could obtain
institutional finance. They prepare project reports for small industries. They organize training
programmes for prospective entrepreneurs.
At the State level, many States have set up Handloom Development Corporations to
look into the problems faced by the weavers, who operate outside the co-operative fold and
also try to assist them. The States have also set up Handicraft Development Agencies to
provide raw material and marketing assistance to the rural artisans. Similarly, at the State
level, there are Khadi and Village Industries Boards. They have their extension staff even in
the rural areas. They pay attention to the organization of Khadi and other products of the
specified village industries.
The SlDO was set up at the national level in the year 1954. This agency operatee
under the Central Ministry of Industry. The Small Scale industries Development
Organization provides comprihensive assistance to small scale entrepreneurs at every stage,
The assistance ranges from the selection of an item of production to its final marketing. For
the development of small industries, it acts as a policy formulating and co-coordinating
agency. It has a nmork of two Small Scale Industries Service Institutes (SISI), 20 Branch
institutes, 41 Extension Centres, four Regional Training Centres and a number of production
centres. The SIDO provides information on prospects of item that could bc produced in the
small sector. It draws up schames. It also provides eocmomic, technical and managerial
extension and consulttmcy services. It provides training in management and tedmical
matters. It provides guidance in the procurement of machinery, factory site, finance,
marketing, and many other related things. It also provides assistance in modomidon a d
technological developments.
1.75 ~ a t i o n n l ' s m Industries
l Corporation (NSIC)
The National Small Scale Industries Corporation (NSIC) was formed in 1955, The
NSIC is one of the few organs of the Oovenunent engaged in the development of small
industries throughout the country. During the last 30 years it took various measures which
contributed to the growth of small industries, It played an important role in discarding the
age-old banking practice of security in industrial financing. The NSIC constructed the first
industrial estate at Okhla. This was indeed a trendsetter. It also pioneered in organizing
export marketing on behalf of small scale foot wear manufacturers. It identifies thousands of
small industries which can supply their products to the Government, under the Government
purchasing programme. It imparts highly valuable practical training through the Prototype
Development and Training Centre. Thus, the main fimctions of the NSIC are:
(i) To supply machinery to small units,
(ii) To provide financial assistance by underwriting and guaranteeing loans taken by these
units,
(iii) To supply raw materials and components to small enterprises.
(iv) To provide marketing assistance to the small units and to secure a reaeonable share of
Government orders for small scale units, and
For the development of d industries, the Khadi and Village Industries Cornmimion
was set up in the year 1957 .Its main job was to promote basically manual trades and crafts in
the rural areas . Many of these industries have in opmation in the rural areas since agm.
However, they faced a decline in the face of stiff competition from modem factory
production. The KVIC follows a number of steps for the development of Khadi and Village
industries. It provides grants, subsidies and loans at a low of rate of interest. It provides raw
materials and assists in marketing the products of the industries. It pays special attention for
the training of artisans and supemisory personnel. Most important of all, in tht recent years,
the commission has taken several; steps for improving techniques for various traditional rival
industries.
CONCLUSION .
Rural industries play a pivotal role in the development of India. It is generally held
that economy in rural Industrializationnot only raises per capita income and living standards
of the people by providing gainful employment opportunities but also reduces income
disparities between rural and urban areas. Rural industries developed on proper lines can
serve as an effective means of reducing imbalances and also play a prominent role in
providing subsidiary occupations and supplementary incomes especially to pcmnnd
engaged in the agriculture besides facilitating a more intensive economic utilization of
material resources and man-power. Rural industrialization may be considered as an aepact of
spatial diversification of industries and is treated as a part of the problem of the location of
industries in general. On the other hand, rural industrialization may be looked upon as a
p m s contined to the development of village industries. Rural industrialization hlfills
several economic and social needs of rural areas such as increasing smploym~lt
opportunities, diversifying rural occupations, raising income and living standards of mal
communities, reducing exodus to urban centres, eliminating regional and ~ ~ ~ n o m i c
imbalance and ensuring socialjustice.
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