2.

1 STATEMENT OF THE PROBLEM

Almost all the countries world over an marching forward towards the great race of
industrialization The question is no longer whether industry is good or bad. Some people
may moot that industrial technology will destroy valued social and political institutions, but
opposition to ~dustrialmtionis generally futile. Developing economies have been
confronted with a conflict between growth and employment in their attempts at
industrialization as the countries have to achieve simultaneously higher levels of
employment. Thus, the strategy and technology appropriate to develop countries are entirely
different from those considered to be appropriateto the advanced countries

In India, the earlier development planning keeping its stress on the development of
large scale industry, failed to solve the problems like balanced regional development, gainfid
employment to millions of unemployed and, equitable distribution of benefits of
industrialization with industrial development mostly confined to a few metropolitan cities
and big towns and the benefits of industrialization have hardly percolated. Thus, it has bean
realised later that the pattern of industrialization could not be the same as the pattern of
industrializationin western countries owing to the fact that India is a over-populated country
with wide regional imbalances and scarcity of capital. Moreover, the welfare objectives
enshrined in the constitution imply that in the process of development, the common man's
welfare is to be given top priority. The guiding principle of the socialistic pattern of society
also dictates that the small scale should be recognised as the means to achieve equitable
growth.

Industrialization is a process in which change of a series strategical production

functions are taking place and economic gains of industrial progress are continuously
created. Its resultant effect is to raise the per capita income and standard of living of the
people in any country. A higher standard of living implies that more of industrial goods flow
into the consumption basket of the people. The net economic impact of industrialization must
travel down ultimately to maximum number of people. For any country, industrial
advancement is the main factor for achieving honourbale place in the world map. Absence of
industries made a nation dependent on other countries and infringes its dignity. Without
industrialization, no country can have political or economic freedom and raise the standard of
living of its people.

Rural industries play a pivotal role in the development of India. It is gcnarally held
that economy in rural industrialization not only raises per capita income and living stan*
of the people by providing gainful employment opportunities but also reduces income
disparities bekeen rural and urban areas. Moreover, promotion of rural industries provides
an ample opportunity for optimum utilization of local reSOun:es to serve the local needs,
Rural industrialization has become one of the major economic and social goals of cumomic
development and fonned part and parcel of planning and development of India. The objective
of rural industrialization implies widely dispersed on a small scale with as high an
employment potential as is compatible with an efficient technique and the requirement of
process of development.

Rural industrialization facilitates shifts in work force from primary to secondary

sector. Industrialization promotes an economy fundamentally relying on agriculture into a
more advanced industrial economy. The issues of industrialization are different at diffmnt
levels of growth with political goals. Economic growth, equity and welfare, national
independence etc. dominate industrialization. The strategy of industrialization immensely
depends on the theoretical framework and ideological setting. It is impossible to develop
everything simultaneously and therefore priorities are to be identified. The right choice has
dimensions l i e relative roles of public and private sectors, heavy industry and light industry,
import-substitution and export-promotion labour-intensive and capital-intensiveetc.

Rural industrialization may be considered as an aspect 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 industrialiition may be looked upon as a process confined to the
development of village industries. Rural industrialization fulfills several ewnomic and social
needs of rural areas such as increasing employment opportunities, diversifying rural
occupations, raising income and living standards of rural communities, reducing exodus to
urban centres, eliminating regional and economic imbalance and ensuring social justice. But
rural industries need not merely location condition. A large industrial establishment located
in nual areas and employing some thousand labourers all coming from their village homes to
work in the establishment,cannot be called a rural industry. Ihe word has, thmfb~,
to be
treated as conveying the additional idea of the industry, an enterprise of rural people carried
out mainly in rural environs as distinct from urban or industrial environs. A household
industry located in a big town or large factory located in rural areas after cmating an
industrial colony would not be technically a rural industry.It implies a widely decentralized
growth of industries with as high an employment potential as it is compatible with an
efficient technique and the requirement of the process of development.

Industrialization is recognized as one of the developmental stnrtegics all over the

world. In the process of industrializationpeople and their abilities plays a significant role and
if human factor is neglected it will weaken the economic procears of any country. The d
industries are more labour-intensive and capital- saving compared to the large firms. They
are better suited to the factors of productiot~in the labour abandoned economy like India.
Rural industries play a strategic role in the progress of the country. These industries by and
large, represent a stage in economic transition from traditional to modem technology. The
transitional nature of this process is reflected in the diversity of these industries. Rural
industries use simple skills and machinery while many others use modem and sophisticated
technology. The challenge of economic growth is to accelerate the productivity of ~gricultwe
and industry by improving their techniques of production. As far as industries arc concerned,
this will involve adoption of a progressively super technology, particularly in semi-urban and
rural areas. The rural industries have a significant role in production and distribution.
Creating employment opportunities to people in their local environment by harnessing both
the natural and human resources for development and thereby improving the standard of
living on one hand and enriching the cultural heritage on the other, are the key roles w r d e d
to the enterprises. The rural industries have the advantages of generating gainful employment
with low investment, diversifying the industrial base, reducing regional disparities through
dispersal of industries into rural, semi-urban and backward areas.

Industrialization is a process in which change of a series of strategical production

functions are taking place and economic gains of industrial progress are continuously
created. The objectives of industrializationare high growth rates, employment generation and
equitable distribution of income and wealth. The effect of it is to raise the per capita income
and standard of living of the people of any country. The third world countries are trying to
37
solve their endemic problems of poverty. inequality and unemployment thrwgb a systmatic
process of industrialization. Tbe development experience of the past indicates that
industrialization has played a crucial role on the o v d l economic development of any
country. Countries with rapidly growing industrial sectors manage the development
problems, particularly unemp1oyment, poverty and income leva1 mom effectively than those
countries in which industrialization is marked by low. Thus,there is a worldwide acceptance
to have industrial development as legitimate objective to solve their economic and social
problems.

The most common characteristic of low per capita income countries is b w degree of
industrialization A close relationship between industrialization and the growth of national
income has been observed by Kuznets in a comparative study of 50 countries, which has
shown a marked increase of manufacturing output with rising per capita income. Chenery
and Taylor also prove that a statistically significant relationship exists between per capita
income and the degrees of industrialization. A consensus has arisen among the development
theorists and planners that, for most countries, economic development must be viewed
primarily in terms of industrialization. Industrialization acts as an instrument both of creating
capacity to absorb excess labour power and of catering to the diversification of the market
required at higher stages of economic development.

In the development of an underdeveloped economy, there is really no conflict

between agriculture and industrial development. The fact that the productivity of labour in
industry is much higher than the agriculture, points to the need for rapid industrial
development. Moreover, in an underdeveloped economy, the surpluses created in the
industrial sector are likely to be available for investmeat relatively more easily than the
surpluses in agricultural sector.

2 2 NEED FOR THE S T m Y

Ever since the plan era, the Government of India and State Gwernmcnts have
enunciated various policies, initiated programmes and promoted agencies to help all the
sections involved in the process of industrialization. The changos that are to be brought into
the system for improving the performance of the agencies for achieving the avowed
objectives of industrialization, feedback is essential. Such feedback can be made available
fhrough a systematic micro level empirical investigation alone. Since the district lies in thc
heart of famine zone and tbe development of industries not being fast in the area, a detailed
study is necessary to fmd out and analyze the real problem existing and b c i i experienced
by the artisans of the rural industria in SPSR Ndlore district. Hence the dintended
to purse the research on the impact of nrral industries under the title "Employment potential
of Rural Industries: A Study of SPSR Nellore District".
23 REVIEW OF LITERATURE

A comprehensive review of literature has become part and parcel of any investigation
as it not only gives an idea about the work done in the past and assists in delination of
problem area but also provides a basis for interpretation of findings. The available relevant
literature on Rud. Industries is reviewed with reference to their financial as well as
other related aspects. An attempt is made along the following lines to review some of such
studies.

A committee (1966)' under the chairmanship of Ashok Mehta was constituted in June
1966 to assess the progress of Khadi and Village Industries and to make recommendations to
strengthen and expand them and to suggest structural or constitutional changes. Two
significant recommendations of the committee were the suggestions to constitute a rural
industries commission and setting up of a rural technology research institute. The committee
was firmly of the view that the village industries based on utilization of local rtsourccs and
skills had considerable potential and if proper guidance was given, the village industries
programme could help in raising the living standards of the rural community. The committoe
further stated that methods, techniques and processes of production would netd continuous
improvement if a viable programme of rural industries was to be carried out. It was,
therefore, necessary, the committee felt, that a small and compact research groups would be
constituted for not only conducting research into selected problems but also collecting and
disseminating the results of research being camed out in different institutions concmed with
rural industries. It would be useful if a technological research institute for small industries is
set up to conduct research into problems of appropriate technology for rural industries and to
assist and advise the rural industries commission and state rural industries boards with regard
to the technical problems of development of rural industries.
 The National Committoe (1975f on Sciemx and Technology Panel's Report on
Khadi and Village Jdustries while giving statistical data on growth of production and
employment in several d industries pointed a gloomy p i a m of these industries as a
source of employment in Industrialization. The r e p o ~showad that the compound growth
rates of employment in industries, as compared to the growth of output wan very
meager.

In a study of "Rural Industrialization in India", Bepin Bihari (1976)' examined

problems, possibilities and perceptive 8 of rural industrialization and discussed the crisis in
India villages, the need for the new strategy of rural industrialization and the provision of
fuller employment in rural and small scale industries and technologies. He traced out
agricultural development, encouragement to village and small scale industries and general
awareness for incorporating appropriate technologies as principal sources of impetus to the
programme of technalogical transformation in rural India. Further he reviewed various
measures taken by the government towards rural industrialization, local industry growth, and
ago-based industries, rural cement plants, utilization of animal waste and harnessing natural
power. Citing Chinese example of integrating individual activities with socially desirable
goals of communities He suggested selection of technology, rural utilization of newer
technologies as suitable strategies of rural industrialization.

The Village and Small Scale Industries Committee Report of 1955,popularly known
Report, deals with an employment oriented strategy of
as the Karve Committee (1956)~
industrialization. The committee notes that since a substantial numbor of the unemployed
belongs to village and small industries group, setting up of small scale and village industries
will provide employment to them in occupations in which they have btm traditionally
trained and for which they possess equipments. The committee realizes the necessity of
introducing better techniques in the village industries, so that they can keep pace with the
progressively expanding economy and do not become unsuitable tomorrow, but the
improvement in techniques can be permitted only so long as it has no "deleterious effects"on
employment.

The Scheduled Castes and Scheduled Tribes Commission (1960)~ (Dhebar

Commission) report stated "If the problem of distribution or subnormal standards of living in
the tribal areas is to be tackled, it can only be possible through the development of village
and cottage industries. The theory of percolation of p+ty would be sound if t h m w e n
no handicaps of illiteracy or disparity and the bottienecb inbeaunt in an acquisitive type of
economic frame work". The committee also s t m s d that wherever there arc mw-merials
and a market available locally or outside, the principle should be that the raw material should
nQt go out as raw material but should go as a processed article unless the cost is uneconomic
or it involves technical or transport problems beyond the teach of administretion of tribal
areas.

The Government of India appointed a review committee (1987)~

popularly known as
KVIC Review Committee" under the chairmanship of M.Ramakrishanaiah to examine the
role played by the Khadi and Village Industries Commission as an apex level organization in
fulfilling the functions and tasks assigned to it. The committee was appointed to suggest new
ways and means of harnessing science and technology to meet the requirements of Khadi and
Village Industries sector and any other measures which arc considered appropriate by the
committee recommended that the need for Khadi and Village Mwtriu, Commission to adopt
a market approach to the problems of raw material supply, technology, training, packing,
processing and pricing etc. The committee also rrcommended that the Khadi and Village
Industries must be approached not merely from the sentimental or historical angle but in
consonance with socio-economic considerations. The boards must meet twice a year and
assist the commission through special committees that may be formed to examine select
issues in-depth and suggest practical solutions to problems of coordination tahnology,
marketing, institutional f m c e etc. The committee alao suggested that Khadi and Village
industries Commission's general policy should be to encourage the different village
industries. The policy may be either positive or protective. Apart from the many
recommendations, the committee suggested 'KVIC People's Educating Pro$rammw which
can be made more meanin@ if the schemes are carefully selected and empirical studies are
promoted in support of the policy aspects that are sought to be protected.

J.D.Sundaram (1970)' made a study about the schemes and programmes of the Khadi
and Village Industries Commission in the task of rural development. The study reviewed the
writer's ideas of the subject, based on the critical appraisal of the efforts made for the
promotion and development of various village industries for the welfare and progress of rural
India. The writer rightly stated that India's efforts at dcoentralizad development have not
been allowed to proceed beyond the experimental state with potitid consciousness
in-ing rapidly. It is time now to do some serious rethinking about our planniw and
giving priority to various nual industrial development programmes. In this context the author
presented Gandhiji's concept of decentralized economic development and gave an analytical
nxiew of the range of problems besening this task. He also s w e y d theiu prospscts the
various hurdles faced by them and evaluated their success and failuras. The author also held
the view that the Khadi and Village Industries Commission, instead of being confined to the
formulation merely residual programmes, should be allowed an ample scope to plan the
development of Indian nual economy on such lines as would ensure the realization of
Gandhian ideal in a greater measure than possible at present.

L.N.Bhattacharya's (1976)' study is a socio-economic study of the Khsdi and Village

Industries before and after independence. The author analyscd the fhctions of the Khadi and
Village Industries Commission and put forth a good argument for the development of these
industries, specially for developing countries like India w h m labour is abundance on the
own hand and where centralization has been creating diverse types of problems on the other.
He outlined the historical significance of the nual sector and showed how then was a close
relationship and steady pace of development between the villages and the towns. He
maintained that the economic structure of the towns and the villages was built up by the
combined efforts of the agriculturists, craftsmen, artisans and traders. The author rightly
observed that the industrial revolution in England flourished at the cost of India while the
artisans of this country were wiped out from the industrial scene. The Swadmhi Movment
revived rural industries and Khadi came to be regarded as the new revolutionary vsrlant of
the age old textile industry. The practical and theoretical utility of the feasibility study has
been dealt with and has asked if a sound feasibility study can help in setting up a viable unit
for evaluation. He also discussed the problems of entreprenmhip and how far these could
be simplified. In answering the question due importance has been given to the significance of
industrial estates in nual industrialisation. The author has a180 stated the need for the
development of 1- industries in India. The study also reviewed the responsible agencies
for the development of rural industries, the nature of the problems of d artisans and the
important crucial factors that need to the considered in feasible study for rural industries in
the development of backward amas by colle&g information and date from twmdary
SMUICW.

A joint study team (197619 on the "Special Scheme of State Bank of India fbr
Financing Small units Located on Rural Industries h j e c t Areas" conducted by the Rwwve
Bank of India on a sample basis covering 130 b m h c a of the bank had revaafed that
awareness of the scheme among the bank managers is poor and the period of loan varied
between 2 and 5 years without any provision for initial moratorium, as against the repayment
period of 7 to 10 years with an initial moratorium of 12 to 18 months. Further it was revealed
that the credit requirements of the borrowers has not been liberally asseasad caking into
account the fixed and worlang capital requirements along with provisions for contingency
and consumption loans as provided in the scheme. The problem not only related to
percolation of the liberal policy to gress root level but also of attitude leading to casual
approach, underftnancing, shorter repayment period and absence of periodical nview and
follow up. There is considerable hesitation in allowing the initial moratorium and libad
repayment period, perhaps on account of the fear that the b o w e r would misconstruethis as
no obligation to repay as regular contact with a large number of loans is difficult to maintain.

S.N.Bhattacharya (1980)" studied the economic growth and its problems in five
backward districts of north Bengal and called for "a new orientation to our industrial policy,
drawing upon the tenets of the Gandhian philosophy of production by masses and economics
of relative resource (including labour) endowments in the wuntry in order to encourage,
units of appropriate processes and sizes". His argument is that the potential for developing
smaller and more dispersed agro-related industrim should be systematically identified for
each local area and exploited to the full.

Bhagavathi Prasad and Erasi (1988)" made an empirical study on "Fixed Assets
Management-An unknown dimension leading to sickness in small scale industries". Tht
study examine-d about the extent of investment in fixed assets in SSIs. The main findings of
the study are the investment in the fuced assets and SSIs with higher investment utilized the
fixed assets more efficiently compared to others. The study concentrated only on fixed assets
management which is an important aspect of small industry management.
 Myrdal (1%8)12 advocated a case for development of Rurai Small Soale
Industries, when he favoured adoption of a pndominaatl y labour i n W v e techniques for
industrialisation of developing countries which poses a large volume of mutilized labour
capable of creating capital and incmse in production.

Bhagavati Committee (1973)13opposes fast introduction of mechanization dmignod

to replace human labour but at the same time, recommends introduction of sophisticated
technology in certain areas. The Committee recommmds reduction to the maximum extent
possible in the installed capacity in various industries in order to generate employment in the
industrial field. The Committee virtually favours creation of employment at any cost without
going into the economics of the scheme.

L.C.Jain's (1980)'' paper discusses some policy and programme maasuras necessary
for the fuller development of decenh-alized industries. The paper is in thm parts. Part-1
presents the social and wnomic rationale for encouraging decentralization of industry and
assisting the development of village and small industries in the Indian context. Part-11 is
devoted to comments mainly critical on past performance of official measures to encourage
and strengthen the small and village sector and presents a series of suggestions for more
positive action in the future. The last saction briefly discusses the special problems of
development of decentralized industries in backward areas.

On the basis of figures collected from census of Indian Manufactures, 1956 and
studies prepared by the perspective planning Division of the Planning Commission in respect
of capital, labour and output relations in various industries, Dhar and Lydall (1961)'~arrive
at the finding that although small enterprises appear to employ less capital per unit of output,
in general the most capital intensive type of manufacturing establishments I the sniall factory
using modem machinety and employing up to 50 workers. They, therefore, conclude that the
issue of choice between lar* and small industries for the purpose of an employment oriented
industrialization strategy is largely irrelevant and it should aim at making the best use of
scarce resourcp instead of aiming at creating employment for the sake of employment

N.C. Chakravarthi (1965)'' in his study "Surveys and Plans for Rural industrias",
Stated that no internationally accepted standards have been developed in the field of rural
industries.He opined that in respect of many of the surveys carried out in the field of nual,
rural industries, details of organizational procedurr: and technical methwiology am also not
readily available. Accordmg to bim, in many underdeveloped countries them is a pressing
need for attention Wig given to the development of nual industrim for the putpose of
improving the socio-economic conditions of the rural population. But the local official md
other social workers find it difficult to take action for want of a suitable simple manual. This
shrdy is intended to meet this need. Attempts have been made to make if as simple and non-
teclmical as possible so that it may be used, in the absence of workers with propcr training
and wider experience, as a guide to those who may be called upon to collect facts and
materials in respect of rural industries for purposes of preparation of suitable plans for the
development of such industries and Wer,to set up suitable organizations for the purpose of
such surveys and development.

Sudharshan LaI(1966)" in his study 'Rural industrialization in Retrospect' reviewad

in brief the experiences of the U.S.A., the U.K.,Italy and Japan, all of which have similar
problems of geographical distribution of industries. While reviewing the experiences of other
countries the author reviewed specially Japan's experience which is more identical to Indian
conditions. He stated that in Japan, small producers are located in country areas, and
temporary and seasonal work is provided to the rural labour in srnail establishments. In apitc
of this, it is estimated that 4 to 4.5 lakh people will have to migrate to urban areas to seek
employment in non-agricultural vocations. In the light of experience in other countries, the
author expressed that the programme of balanced development and industrialization of rural
and backward areas is full of stresses and strains. Even in Mia, the experience about
dispersal of industries has not been very encouraging.

Sigurdson (1977)'' who made a case study of nual industrialization in China, has
found that rural industries, as a component of overall strategy of employment-oriented
industrialization have misembly failed to satisfy the employment aspirations of the people. In
support, he cited the figures fron Zunhua country, where more than 85 per cent of the total
work-force still depends on agricultural operations, which even for a developing agricultural
economy is too high. On the other hand, Jan Deleyne, on the basis of detailed and objective
studies of China's ecunomy, amves at the conclusion that the creation of small industries
constitutes the only means of creating a large number of jobs for the young people coming on
to the labour market.
45
 In the study of "Rural Mustrialization in India", R.V. Rao (1978)19 r a f d to the
various measures taken up for benefitting rural poor and investments made to develop overall
economy of an area This study reviewed the village industries movement and suggested
appropriate technology for the development of rural industries. It is recommended that in
order to eradicate the problems of nual India then should be an integrated development
which includes not only agriculture but also decentralized rural industries to provide work to
agriculture labourers, small and marginal fanners and others. It also referrad to a d a n
Economic thought and d industrialization in Qandhian way. The study also c o v d
various rural industries projects in state and central government incentivaf and subsidies to
industrially backward districts of Andhra Pradesh.

The findings of the Joint Study Team (1985)'~on "The Special Scheme of Slate Bank
of India for Financing Small Units Located in Rural lndustries Project Areas-198.5" w m
examined in detail by Khusro Committee in order to look into the wider policy issues and
problems of lending to Village and Small Industries (VSI). The committee had suggested
intensive training and recognized that branch manager is the central to the success of
developmental efforts including flow of credit to VSI sector. The committee recommended
that besides other parameters, the performance of the officer should be judged in tmns of
initiative taken in extending coverage to VSI sector. It also suggested that 'employoe
appraisal system', wherever necessary, should be modified suitably keeping in view the risk
of failure inherent in lending under this sector, particularly security for activities whore
viability may depend to a large extent on factors beyond the control of the borrower.

The Reserve Bank of India's (1980)" survey dealt with the sources of finance with
special reference to institutional financing of small scale industries. An attempt is made to
examine fiom the demand side the extent to which fmancial institutions meet the requirement
of small scale industries and from the supply side to analyze the development of institutional
credit to the small scale =tor according to the size of the units, their location in rural and
urban areas, type of organization ctc.
The results of the survey reveal that the internal resources fonned a smaller
proportion of total net assets (28 per cent) for small scale units than for medium and large
public limited companies (41 per cent). A number of policy implications useful for the
promotion of small scale units were presented in the analysis.

Kanvinde (1980)~provides some thoughts on rural industrialization and appropriate

technology. He says that the planning for rural industrialization has not yet been well
developed in the country particularly in view of expansion of employment opportunities.
Among problems and suggestions the author felt that marketing of products is crucial to the
viability of any programme of industrialization. Selection of labour-intensivetechnology will
have to be based on a carell study of the market demand for products. In the c d i t planning
exercises he felt, that the bankers should also be associated with the grass root level planning.

Rastogi (1980)~conducted a case study of Madhya Pradesh, which he calls a unique

case of growing unemployment and poverty amidst plenty. He is in favour of only small
scale and village industries which make optimum use of indigenous resources and
techniques. According to him,there are many items which can be produced in rural and small
scale industries more economically than in large scale sector.

Shrinivas Y.Thakur (198~)~'has discussed the strategy and approaches to rural

industrialization emphasizing the need to finance the rural industries (particularly the small
scale industrial units) for increasing the labour absorption and generating the income in the
rival areas to attain the development of the rural areas.

Sundera Raj (1980ys explained from the demand aide, the extent to which financial
institutions could meet the requirements of small scale industries, and from the supply side, it
analysed the deployment of credit to these units according to their size, location and type of
organization. The main findings are: (i) internal resources formed a smaller proportion of
total net assets for SSls (ii) borrowings and trade credits were higher in SSls and (iii) *or
proportion of institutional credit was deployed in other than backward areas. The study
concentrated more on resources of financing rather than on financial problems of SSls.

Sen (1962)'~in his study focuses on the problems of choice of techniques employed
in production. His book concentrate on those problems concerning selection of techniques
employed in production in the under developed countries. He arrives at a point that
handlooms or power looms suffer a lot in this connection as the choice of technique seem to
be a genuine socio-economic.
 Moulik and Pumhotham (1980)~'Khadi and Village Industrim sector which has the
potentiality to generate omploymcnt opportunities at a low capital outlay by harnessing the
existing skills of village artham offcrs a profitable alternative. The relevance of this sector in
our economic development can also be traced to its capacity to

(i) provide work opporwlities to people at their own doorsteps and to provent thc
job
motivated rural-urban migrations;

(ii) retain self-employed character of labour force in the enterprise;

(iii) offer flexible work norms and

(iv) ensure the universal participation of family members in the enterprise., This
paper examines the trends in the operation particularly employmant
generation in the sector and seeks to identify the factors underlying these
trends. The data are limited to the published information by the Khadi and
Village Industries Commission.

Papola's ( 1 9 8 1 ) ~paper
~ examines critically the concepts of rural industrialization and
m l industries and poses the problem of rural industrialization in a contracting frame-work
either s a problem of the spatial diversification of industries and therefore, a part of the
problem of location of industries in general or as a part of the process of nual developmmt
providing employment to the nual people and meeting their basic needs as the primary
objectives. The paper examines the implications, attributes of each of these perspectives and
goes on to argue that rural industrialization should be seen not simply as a way of providing
some kind of employment of the rural people in order to prevent them from migrating to the
towns but as a dynamic element in the process of raising productivity and income of the
workers in the rural areas. The author also examines the policy of dindusbialization in
India to argue that the approach to the problem has been one of preservation rather than that
of modernization i.e., establishment of linkages with the indushial sector in order to promote
the development of m l areas and to provide better-paying employment lo the rural people.

Tendon ( 1 9 7 7 ) ~analyzing
~ data published by United Nations Agencies and
Government of India, anived at the conclusion that an employment oriented strategy of
industrialization should not only aim a providing jobs maximized output but also oonsarving
foreign exchange and improving the distribution of income to achieve all thaw objective
tendon was of the opinion that in the first phase of development, tbe traditional and
intermediate techniques may work together, but the later should gradually rep la^ the farmer.
In the final stage, modem and sophisticated technology alone would serve the purpose.

Biswainth Golder (1988)~'analysed the technical efficiency of 37 small scde and

large scale industries. He found that the SSIs have low productivity and high capital
productivity. He inferred that the small scale sector is inefficient relative to large scale =tor.
He found that the relative efficiency of SSI varies directly with capital development, so that
the SSI cannot rely upon as a source of eficient generation. The analysis suggmts that large
scale units are better than the small scale units.

Ommen (1972)~'examined the emerging pattern of entrepreneurship in the Small

Scale Sector of Kerala by studying the origin and growth of f h in the light engineering
industry and the impact of government programmes like industrial estates and rural industries
project on entrepreneurship.The study was based on the data collected from 45 entnpmaus
and found that engineers and technicians formed the single largest group of tho
entrepreneurs.

The Rural Small Industries Extension Training Institute SIET (1974)32,~yderabed,

conducted a survey of small units situated in the twin cities of Hyderabad and Secunddad.
The study analysed the reasons for starting industrial units by interviewing 61 mtrepmm.
The study revealed that Economic gain was the most important reason for the the
small industrial units followed by "ambition ", 'Social prestige'' and "social rasponsibilily'
in that order. The study revealed "capital shorhge" and "Government redtapism" as the
most discouraging factors. The study further showed that younger age, Formal education,
Urban Background, Experience in industry, high scores in levels of aspiration, risk taking
and adoption propensity were some of the characteristics that were positively associated with
the quality of entrepreneurship.

Government of India (1977)" also constituted a working group on Rural Small / Scale
Industrial Secton with special reference to the District Industries Centres (DIC),undw the
c h a i i h i p of Tambe. The group rccommendatiom relate to the provision of institutional
b c e to village and cottage industries, artisans, tiny sector units and mail wale indwtrios,
these recommendations have been accepted and communicated to tha commmial banks for
implementation.

Gangadhara Rao (1978)" had made a detailed and an in-depth study of the Rural
Small Scale Units located in the industrial estates of coastal Andhrrr Ptadesh and attempted to
evaluate the impact of the programme of industrial estate on the emergence of
entrepreneurship in the small scale sector. The study found that educational and income
iwels are important factors motivating entrepreneurship of all the ambitions. Money making
is the major ambition of the entrepreneurs.

The Small Industries Extension Training Institute (1980)" conducted a study on

"Impact of Concessional Finance on Industrial Development of Backward Areas." on which
the Rural Small Scale entrepreneurs were selected as sample. It was observed that the
entrepreneurs presented the procedural delays in sanctioning of loans and insistence on
collateral security, and solvency certificate. As ngards the underdeveloped areas, it was
observed that the growth in number of units and incmse in fixed capital alone may not
create the necessary impetus for growth unless considerable productivity changes are also
effected through hller capacity utilization. The causes for under utilization of capacity were
mostly insufficient demand and inadequate financial resources for working capital. The study
confined itself to backward areas, and it also failed to look into unit level financial problems
of small scale industries.

Manohm V. Deshpande (19841'~made a survey on 1900 small industrial units in the

Marathawada region of Maharashtra in 1982. The study among other thing evaluated the
socio-economic origins of the entrepreneurs and the problem faced by them at various
stages. It revealed that caste, family occupation and father's occupational status are important
for entry into the business of manufacturing. It was also found that the government support
system can play an important mle in expanding the entrepmsurial base. There is also a need
to bmad base the Government support system because it was observed that the upper strata of
the society has availed most of the benefits created by the government agencies.

Pathak and Mohapatro (1987f7 study of wral industrialition in Koraput district of

Orissa was based on the view that a study of potentialities of rural industrialization would
serve as a guide for a development plan. They employed eleven indicators to gauge the socio-
economic backwardness of the district as compared to that of the state. The findingsinclude
the household industries show a greater tendency to procure raw materials from local arcas,
exhibit local bias in marketing, profit margin is high: certain industries are capital-intensive,
running on small scale for lack of demand, shortage of raw materials, working capital, power
etc. Finally,. they concluded by pointing out that the development of any area whether in
terms of agriculture or industry cannot be an isolated phenomenon. The economic
performance is linked with several factors.

Sandeiara (198~)~'
while reviewing the Indian experience with regard to rural small
scale industries concluded that the programmes of assistance to Small Scale Industries have
been more attractive than they were before. At the same time he felt that there is a tendency
to give more assistance to the units once selected rather than to those for which it is
absolutely necessary and it has resulted in waste of financial assistance,

Sathyanarayana (1989)j9has studied the pattern of industrial development of large,

medium, small scale and village and cottage industries for a decade from 1974-75 to 198685
and examined the catalytic role played by the DIC in industrializing the rural arwus of
backward and drought prone district of Anantapur. It has been observad that the impact of the
DIC was very small in respect of promotion and development of either small scale industrial
units or village and cottage industries in Anantapur district. With regard to the assistance a
few entrepreneurs seemed to have received the requisite help h m DIC. Further the study
concludes that the role of DIC depends also on the personality of its General Manager. The
DIC could not explore the talent entrepreneurialand nurtured for the good of the district.

Ojha (1989)~while analyzing the aspects of financing of the rural small industries
has stressed that the extension of fmces for the small scale industrial units has to be
increased and the support'services have to be provided for augmenting the development of
the small scale industrial sector.

John Page (1979)~'in his survey relating to small scale enterprises in several African
countries examined the role of small scale industries in entrepreneurial development and the
policy environments affecting these enterprises and suggested revicw of the policies in the
light of experiences gained from the survey.
 Ram K. Veps ( 1 9 8 8 ) ~reviewed
~ the progress of rival small d e sector over the last
three decades and identified some key areas like technology support, credit flow and market
assistance which need rather greater anekon on the part of policy makers in Mder that small
scale sector may meet challenges posed by the modem technologies successfhlly.

Papola (1982)'' study is based on a detailed survey of and

Vanuu~~i G o ~ w
Districts in Uttar Pradesh including the growth, performance, employment, output and
productivity of rural industries. it outlined alternative approaches to nual industrialization
and provided a framework for the asstssment of potentials of different industries in the
development of rural areas and in the industrial development of the country. He suggested
that the scope of several studies on the financing and other aspects of rural industrialization
particularly considering the small scale industrial units at various levels have been made by
the researchers at different points of time.

Patel's ( 1 9 8 3 ) ~paper stresses the need to promote rural artisans, village crafts and
cottage industries as they can contribute substantially towards cconomic and m i a l uplift of
the large chunk of our population that is rural. He observed that for the exploitation of full
potential of the village industries an integrated approach is necessary since these traditional
skills have been retained by the craftsmen of different regions face various problems that
need to be solved in a co-ordinated manner. It was, therefore, suggcsted that a detailed
analysis be carried out relating to their performance over the past ten years so as to identify
their specific problems and to take suitable measures to remove them. Attention should be
drawn towards the need to bring about the suitable technological changes, which lead to
production of better quality goods thereby increasing the income level of workers. He has felt
that the various organizations have to play a positive role towards this end and the financial
institutions should come forward with easy credit facilities.

Grover, Dak and Sharrna (1983)~' attempted to examine the socio-economic

determinates influencing the survival or expansion of rural industries by studying the
registered industrial units covered under the rural industries project in three districts of
Haryana during 1982-83. The analysis of the data revealed that 73.5 per cent of the total
industries were traditional each included handloom, carpentry and black-smithy, bag-making,
shoe-making and basket making. Theae traditional industries were mostly inherited (81.6%);
among the non-lnditional industries only a small pottion (28.3%) was iahaitai.The latter
include agricultural implements, resdymade garments, oil and cotton, bnss utansils, titd
W t u r e , candle making. flour mill mep making rrnd bandage making. The evident
domination of traditional form of rival industries has compelled rural atisms to continue
their trade and to work mainly as agricultural l a b o h to supplement their income. This fad
gets ample support in the study which shows that about two fifths of the entrepreneurs arc
engaged in some occupation other than the craft and in overwhelming proportion (80.8%) it
is agricultural labour. On account of .the traditional characteristics most of the Nlal
industries, could not make much headway in respect of their expansion. The state policy
efforb since independence to promote nual industries have benefited much the non-
traditional industries. Only 17.5 per cent of the rural industries have availed all promotional
facilities of the government. Hence, t h m is an urgent need to modernize the nual industries
and to provide new entrepreneurs a package of services ranging from the selection of
industries to marketing on the scale extension service in agriculture.

Sen (1987)" in his work on Rural industrialization in India studies about various
aspects of rural industries with particular reference to Orissa and Tamil Nadu states.
According to him poverty can be attacked only by providing gainhl employment
opportunities to the masses. Large scale industries have failed to solve the type of
unemployment that we have as large proportion of idle manpower is concentrated in the rural
areas. In the past it was believed that rural unemployment could be tackled through
agricultural development. But the green revolution in many states showed the benefits of
agricultural development an not enjoyed by the entire rural folk. In its context he suggested
that rural industrializat~onhas to be considered a remedy loo many of the rural ills.

Patnaik (1988)" in his study "Industrial Development in a Backward Region :

Dynamics of Policy" emphasized on industrial growth, policy needs and institutional refoms
in the state of Orissa in particular and India in general. He discussed the present frame work
of integrated rural development schemes of Orissa and stated that industrial development
programmes are weak, both in articulating, formulating projects and also in their
implementation.
 Ramakrishna Sharma (1982)'~aade a comprrhensive study on growth and problems
of small scale sector in Andhra Pradesh..He o b s m d that the backward districts of the state
improved their relative position in tams'of units, employment and capital during 1966-75.
The study further observed that a majority of the small units arc confronted with the
problems of raw material and finance.

Sundari and Manimekalai (1990)'~ have assessed the "Role of DIC in Promoting
Enireprenmhip in Trichy District, Tamil Nadu." In their mearch paper only an attempt is
made to study the performance of DIC in promoting entnpmcurship in nun1 small scale
industries. The study relates to the nunrber of industrial units, capital invested, value of
production and employment for the period to the establishment of DIC and after. If also
highlights the structural change in the small scale industrial development with the
introduction of DIC.

Venkata Subba Reddy (1990)'~has reviewed the progress of village industries in

Kadapa district of Andhra Pradesh. He has examined the efficiency, pcrfomance and
problems of village industries. He observed that the artisan complexes and industrial co-
operatives have been 'given due encouragement while setting up but failed to gear them up to
dynamic functioning, support of finance, raw materials, marketing, technology product mix,
power supply and non-effectiveness of artisan complexes and industrial co-operatives are
some of the problems of village industries 1 in Kadapa district. He suggested that the donnant
industrial co-operatives have to be revitalized so that the artisans could get various support
services through better cooperation and coordination between and among the DIC, State
Khadi and Village Industrial Board Cooperatives, and other concerned Government
departments and organizations.

Prasad (1991)~'analyzing the problem faced by the small scale industrial units has
suggested that the increase of the provision of raw material and other inputs facilitates the
growth of the small scale industrial units. Though these studies have covered the various
aspects of the development of the small scale industries, there are no specific studies on the
small industry development in Andhra Pradesh and particularly with reference to Kadapa
district. Hence, an attempt is made in this study to examine the small industry development
in Andhra Pradesh particularly with reference to Kadapa district. Krishna Kumar (1997f2
has analyzed that the economic d&lopment can be sustaind through the procdss of
industrialization, especially by developing the small industry by includmg the telenta of
entrepreneurship which results in augmenting the growth possibilities, 80 as to rcalise more
value added for investment while reducing the unemployment.

Nagaiah (1998)" canied out a field survey in 1994 covering mponsw from n w l y
500 small scale entrepreneurs from different parts of the country marching towards crucial
problems in the near fuhur. Though t h m has been a slowdown in the growth of industrial
development and exports during (1946-98), small scale entrepreneurs have been able to
demonstrate high degree of resilience and perform exceedingly well in the recent years by
taking advantages of the opportunities presented by liberalization policy. The study
recommended an eight- point action plan for implementation to mea the challenges of the
emerging situation in the years to come. It is well brought out that the ection plan would be
more necessarily useful in taking appropriate decisions to accelerate the growth of modem
SSIs in the country.

Vasanth Desai (19981~inferred that SSls have gained importance and preference
irrespective of their form-formal or informal, visible or invisible, urban or rural. In the
developing countries, SSls arc given priority. His book has also clearly pasteurized the small
scale being caught in the winds of change ushering in the industrial culture. According to
Desai, the development of scale enterprise, generally, creates substantial employment
industries and has become a source of generation of income for low groups. Gopal Swaroop
(1999)'' explained illustratively a systematic lending to small scale industries. He explained
the tools used for lending. Appraisal of loan application and the financial requirements of
SSls in a scientific manner have been explained. Khannan (1998)" expnssed the view that
credit continues to be a decisive factor (calling for attention and augmentation crodit scrvee
to be an impetus for rejuvenating small scale sector. SSIs have proved their effective
performance by recording the highest ever growth in terms of production, cxporls and
employment generation in the process of economic development of India.

Mitra (1998)" observed that the factors affecting the flow of credit to the SSI =tor
can be broadly categorized in to two segments. The first set of facton indicatce short-
comings inherent to SSI sector such as a weak financial base, which eventually prompts the
entmpmeus to bring in fimds by way of loan ratha than capital improper maintenance of
books of accounts' inability to provide cellateral security delay in payments by the largar unit
and lack of financial date required by ba;lks/financial institutions. Kulkani (1999)" opined
that SSI sector occupies an important position in the industrial economy of the country
because of advantages of low investment, high poiential for employment and wider disparsrl
of industries in nual and semi-urban.

Valsamma Antony (2002)'' in his article titled "Prospects and Growth of Rwal
Industries in India: An Overview", obsirvcs that adequate and timcly availability of working
capital and marketing avenues for the Rural SSI products should be ensured for improving
their competitive strength in the domestic and global markets. Thac is a dirt naed for
providing better information and efficiency networking for the d SSls besides
development of quality infrastmctural facilities. Jaya Krishna (2004)" in his study on
"World Trade Organization and its Implications on Rural Industries in Karnataka", assesses
the entrepreneurs' awareness of both qualitative and quantitative information, from 30
randomly selected entrepreneurs during May-June 2002, in and around the rural and urban
areas of Bangalore. His conclusions are

a. The nature of activities is dominant by rural industries.

b. Perennial activity dominates over seasonal activity

c. Young generation entrepreneurs employ more managerial staff than the old
generation entrepreneurs.

d. Entrepreneurs are facing sanitary and phytosanitary problems

e. Small scale industries are facing competition from large and medium scale industries
outside the State rather than within the State and

f. Entrepreneurs are experiencing the impact of WTO and its agreements across the year
of establishment and generations. However, their awareness of the WTO agreements
and their implications is poor.

According to Balasubramanyam (2005)~'due to globalization and liberalization,

Rural SSI in India finds itself in an intensely competitive environment. This resulted in
decrease in growth rates in terms of units, employment, output and exports. The declining
tread is intqmted to reduced economic infrastructure and c d r , tachnology obsolascence,
infaior quality and low productivity of rival SSI units compare to large scale industrial units.

Ramachandra Rao (2006)~' in his study observed the declining share of commercial
bank credit to the Rural SSI vis-a-vis the non-SSI sector in the post reform period. These
results indicate the high incidence of bad loans. The pronounced decline in SSI advances is
intapreted to the declining sham of nval SSI loans of commercial banks. The study of
on "The Impact of Liberalization on SSls" opined that the
Ramappa and Basavaraj (2006)~~
govcmment of India had put the whole SSI sector into hot wata due to the new economic
policy. The study made a compressive picture of the data before liberalization (from 1980-81
to 1990-91) and post-liberalization period (from 199 1-92 to 2002-2003). The study
concluded to evolve a policy of easy credit, marketing, i n c m e in tax Fne period,
reservation of products for manufacturing, delicensing, upgradation of technology policy to
liberate the SS1 units in the country.

Small Industries Development Bank of lndia ( 1 9 9 9 ) ~made an anempt to analyze the

relative efficiency of small scale sector using aggregate time series data for the period 1981-
87 to 1994-95. The results unearthed that while small scale industries have higher capital
productivity than the large scale industries relative total factor productivity in mral small
scale industries is lower than in large scale indusbies. Relative total factor productivity in
small scale industries is generally greater than one over the study period thus indicating
higher productivity in Small Scale Industries compared to large scale industries. In addition,
the mall scale sector has higher profitability 'as compared to large scale sector. Joseph
Xavier (2000)~' conducted a study on "The Contribution of Commercial Banks in the
Development of Rural Small Scale industries in Timchirappalli District, Tamil Nadu". The
performance efficiency of SSI units was studied with the help of financial ratioa with a view
to d y z e whether financial assistance from commercial banks had helped them to improve
their network and profit.

Cheena and Bale (2001)66studied the relative technical eficiency of rural small scale
sector in lndia by applying mathematical programming techniques on the time series data for
the period 1973-74 to 1996-97. The empirical results suggested that Indian small scale sector
has been, for the most p m , technically eficient. The study also brought into light that both
small and large scale sector have adjusted to the new technologies since 1990, which is
evident from an asset in technical efficiency during the intensive-liberalization phase. Vepa
Kamewn (2002f7 Deputy Governor. &I in his inaugural address at I symposium on
"Winnings Strategies in SME Finance (2002)", pointed out that the major problems faced by
SSI sector relate to availability of loan with collaterals, delay in getting the loan, high cost of
funds delayed payments, marketing problems and W.T.O. related issues.
Nmdranath (2003)~' noted that the banks, dapite the intervention of RBI and the
Planning Commission, who have blcn showing some concern o w the shrinking of
availability of credit to SSI Sector, have been w l a t i n g in rsccnt meetings and insisted thet
they would enjoy the discretionary f r d o m in lending to SSls. Bodla ( 2 0 ~ opind
) ~ ~ that
considerable delay in settlement of dueslpayment of bills by the large scale buyers to the SSI
units adversely affected the recycling of h d s and business operation of SSI units. Though
the government has enacted, the delayed payments acts many of SSl units arc to pursue cases
against major borrowers. He observed that the Small Scale Sector is in no way inferior to
large scale sector in the utilization of resources. Surprisingly, the problems concerning
finances marketing and technology have emerged as more serious ones despite the
continuous efforts made by the Government.

Rana Bijoy Deb (2004)~' in his case study on "Employment Generation in Small
Units", opined that nual-based industrial units have proved to be more efficient in gencration
of employment with low involvement of capital as compared to their urban counterprut.
Moreover, the stronger units with higher invesimmt in fixad and working capital generate
more employment. Jaya Krishna (2004)" in study on "World Trade Organization and its
Implications on Small Scale (Industries in Karnath", assesses the entrepreneurs' awarencsa
of both qualitative and quantitative information, from 30 randomly selected entrepreneurs
during May-June 2002 in end around the rural and urban areas of Bangalore. His conclusions
are: a) Perennial activity dominates over seasonal activity, b) Young generation
entrepreneurs employ more managerial staff than the old gencration entrepreneurs, C)
Entrepreneurs are facing sanitary and phytosaniw problem, d) Small Scale industries are
facing cornpetition from large and medium scale industries outside the state rather than
within the State and e) Enmprencvrs are experiencing the impact of WTO and its agreements
across the year of ~stablisbmentand generations. However, their awemess on the W O
agreaments and their implications is poor.

Balasubramanya ( 2 0 0 5 ) ~mentioned that due to globalization and liberalization, SSI

in India fmds itself in an intensely competitive environment. This resulted in decrease in
growth rates in terms of units, employment, output and exports. The declining b d is
attributed to reduced economic infrastruchuc and credit and technology obsolosccnce,
inferior quality and low productivity of SS1 units compared to large scale industrial units.
According to Luken and Stare ( ~ o o s ~in' many developing countries small and d u r n
sized enterprises (SMEs) that arc in the field of exports arc facing a dilemma. They do nor
know how to respond to the rising social and environmental requirements of global supply
claims.

CUCTS International (2006)'' study on globalization and small scale industry

examined implications of liberalization policy on sick industry. In ordc~to become
competitive, the Indian Small and Medium Enterprises (SME) sector needs to move up to
higher value added outputs and attracts more investment in terms of Foreign Direct
Investments (FDI). As 'faster will eat slower' rather than 'big will eat the small SME sector
requires facilities in terms of infrastructure, raw material, linkages with machinery supplies
and credit facilities, regional markets, entrepreneur-friendly policy with respect to excise
duty, Value Added Tax (VAT)and abolition of octroi tax. Ramachandra Rao et at. (2006)"
in study found that there is declining share of commercial bank credit to the SSI via-A-via the
non-S SI sector in the post reform period. The& results indicate the high incidence of sick
loans. The pronouncad decline in SSI advances is interpreted to the declining share of SSI
loans of commercial banks.

The study of Ramappa and Basavaraja (2006)" on 'The Impact of Liberalization on

SSIs" observed that the Government of India had put the whole SSI sector into hot water due
to the new economic policy. The study made comprehensive picture of the data before
liberalizetion (fiom 1980-1981 to 1990- 1991) and post-liberalintion period (from 1991-
1992 to 2002-2003). The study suggested evolving a policy of easy credit, nUrlcding,
increase in tax free period, rcscwation of products for manufachlring, de-licming and
upgradation of technology to liberate the SSI units in the country. Fuxin Jiange and
Chunping Zhou (2006)'~studied that the small enterprises have pusbed China's economic
transition forward, but felt China's small enterprises are also still in a transition themselves.
The study concluded that the prospects o f SSI in China are positive with the process of
China's economic transitional reforms in terms of factor endowment structure, industries
muctwe, specialized cooperation and support froni China's Government.

Nirankar Srivastav and Ricky, A.J. Syngkon (2007)~'stated that the number of SSIs
are growing in the state in a significant manner. Meghalaya's economy has begun to join the
process, which is known as preliminar). stage of "Industrialization". At this stage, it is not
possible to take 1 1 1 advantage of technology and economics of scale by the existing SSI' and
the economy at large. As a result, in the present fonn this sector is not in a position to
contribute to the growth of state economy in a big way. It appears that unexploitcd sources,
scale of economiesJpositive-externalities, technology applications and research and
development could become the key factors for the, furfher growth of thc economy of
Meghalaya. It is recommended to develop additional industries in the state that lcad to the
full exploitation of economies of scale and technical advances to lcad the state to a solid,
stable and sure progress.

Tirthankar Roy (2008)'~in his articles on "Labour Institutions, Japanese Competition

and the Crisis of Cotton Mills in Interwar Mumbai", expressed that India and Japan are
leaving centres of the cotton textile mill industry, Mills in India. According to him, found
hard to deal with competing form Japan. Several contemporaries attribute the outcomes to the
industriousness of the workers. He concluded that neglect of training is the major reason for
legging behind with Japan in competition. Kanchan Chopra and Runimn Daagupta (2009)~
in their study "Nature of Household Dependence on Commo~iPool Resources: An Empirical
Study" opined that households are spending more time on collection from forest resources.
They tested the hypothesis and proved that households collecting forest resource for 88le
purpose improvtd their income. They wncluded that collection for sale is an option and can
increase income of households in Bihar, Kamataka, Madhya Pradesh Maharasthra.

Banikanta Mishra (2010)" in his study on "Agriculture, Industry and Mining in

Orissa in the Post-Liberalization Era: An Inter-District and Inter-State Panel Analysis" stated
that liberalization process made Orissa potentially the most attractive destination for large
capital intensive projects by private sector firms. He critically analytically and empirically
examined that agriculture, industry and pining sector. Basing on inter district and inta-state
panel analysis, he highlighted the saioui decline in the Orissa's agriculture sector which is
the only significant determinant of per capita income in the state while the mining sector has
flourished.

2.4 OBJECTIVES OF THE STUDY

The following are the important objectives of the study:

1. To study the origin, growth and development of Rural industrialization in India;

2. To present the profile and development of Rural Industries in SPSR Nellorc District;

3. To examine the socio-economic profile and pattern of select Rural industries in SPSR
Nellore District;

4. To evaluate the performance of finance, production and profitability of select Rural

Industries in SPSR Nellore District;

5. To examine the employment potentiality of select Rural Industries in SPSR Nellore

District; and

6. To study the problems and prospects of select Rural Industries in SPSR Nellorc.

2.5 METHODOLOGY

SPSR Nellore District is purposively selected for the study because of the proximity
and familiarity of the researcher. The study wiil make use of both secondary and primary
source of data. The secondary sources include the data and information published in the
Reports of Currency and Finance of RBI, RBI Bulletins, Economic survey, Statistical
Abstracts. hnual Reports of planning Commission and Ministry of Industry, Annual
Reports of SIDBl and Annual S w e y of Industries. Reports of Directorate of Industries and
SIDC, Hand book of District statistical and Annual Reporb and Action plans of District and
Financial Institutions in the District are also used.

The primary data covering all the aspects of rural industries units in accordance with
the objectives of the study are collected through personal interviews with the cnveprmeun
and managers of the sample units with the help of a schedule, which is specially designed for
the study.

2.6 SAMPLING

Primary data has been collected from therural industries in SPSR Nellore district,
Andhra Pradesh. SPSR Nellore district is divided into three administrativerevenue divisions,
viz. Nellore. Gudur and Kavali.

All the rural industries in the di.strict from 2001-2002 to 2010-201 1 are listed out. A
sample of 10 per cent was drawn at random covering all categories of rural indusPial attisans
belonging to different social groups (SC, ST, BC and OC) and different product lines. There
are 3045 rural industrial units in SPSR Nellore District. From these 300 nual industrial units
(equal to 10%) are selected for this study covering all categories, social groups and produc~
lines.

From Nellore division 103 units, 99 units from Gudur division and 98 units from
Kavali division have been selected totaling 300 units for the study. In selecting the sample
enterprises, the researcher has used a sample technique known as "Stratified Random
Sampling with proportional allocation".

2.6.1 Distribution of sample rural industries by category-wire and dlvision-wlse

The Category-wise and Division-wise distribution of sample rural industrial units in

SPSR Nellore district is presented in the table 2.6.1.

The table presents that in Nellore division majority of the sample industries are agro
and food based (29.1%), followcd by Khadi based (15.5%) and engineering and non
conventional emrgy based industries. The percentage of the other industries is rather low. In
Gudur division too division majority of the sample industries a n agro and food based
(25.3%), followed by 14.1 per cent each of khadi based and mineral based industries. In
Kavali Division, unlike the other divisions, majority of the sample industries are khadi based
industries (22.5%) followed by are agro and food based (20.4%) and engineering and non
conventional energy based industries (1 1.2%). I[ IS concluded that Nellore and Oudur
divisions have agro and food based, khadi b a d (1 5.5%), mineral and engineering and non
conventional energy based industries whereas Kavali division has more khadi industtias
compared to Nellore and Gudur divisions.

Table 2.6.1

Note : Figures in Parentheses are percentages lo total

Source: Field Survey
Rural industries for the present study have been classified into eight broad categories.
1. Mineral Based units: RCC spun pipes, mosaic tiles, cement hollow blocks, crushed stone
glass mirrors, laminated safety glass, synthetic gem cutting and polishing.
2. Forest Based units:: Paper boards, saw mills, wooden funriture, tobacco manufacturing
etc., are considered under' forest industry.
3. Agro & Food based Industry: This group includes the units engaged in rice m~lling,flour
milling, groundnut decorticating, groundnut oil extractin& oil crushing, rice hulling, and
tamarind decorticating and making starch and Mango puli making and fruit canning.

4. Polymer & Chemical Industry: Manufacturing Polythene bags, labomtory chemicals,

rigid PVC pips industrial alcohol mounded plastic products, chicory s o w , writing ink, ctc.,
are considered under this industry. .
63
5. Engineering % Nm-Conventional Energy: Carpentry, Black Smithy, Production of
Voltage Stabilizer, Manufacture of Elwtronic Clocks and Alarm Timepiects, Umbrella
Assembling etc., are considered under this industry.

6. Textile Industry (Excluding Khadi): Embroidery, Carpet weaving, Traditional d m ,

Hosiery, Tailoring and pfeparation of Readymade Garments, Batick works, Toys and Doll
making etc., are considered under this industry.
7. Servlce Industry: Laundry, Barber, Plumbing, Repair of Diesel engines, Pump sets etc.,
Battery Charging, Art board painting, Cycle repair shops, Masonry etc., are consideld under
this industry.
8. Khadi Industry: Handloom weaving is considered under this industry.
2.7 TOOLS FOR DATA COLLECTION
A pre-tested schedule is consmcted to collect the primary data from the sample
beneficiaries relating to their socio-economic and educational background, factors
responsible for selecting trade, bank finance, financial, production, distribution, profitability.
employment potential and problems encountered by them.

A pilot study is conducted to elicit data from selected rural industries. In the light of
the information obtained from pilot study, the schedule is modified accordingly end primary
data is collected from the selected rural industrial units in the district.

2.8 TOOLS FOR ANASLYSIS

The collected primary data is analyzed using appropriate statistical tools like
percentages, ratios, Chi-square and analysis of variance. Since the magnitude of data is
voluminous, use of computer is inevitable.

2.9 SCOPE AND LIMITATIONS OF THE STDY

The p r e m t study is confined to analyze the impact of nual industries on employment
generation. This may be applicable to SPSR Nellore Distnct and also for creation of self-
employment in India in general, that is where similar socio-economic condilions arc
prevailing.
2.10 PLAN OF THE WORK

The thesis has been well organized into 8 meaningful chapters and they have been
presented below.

Chapter I Rural Industrialization in India presents rural industrialization in the

pre and post independence era, policy frame work, regional planning, industrial progress and
five year plans, promotional agencies and industrial progress in India.

Chapter 11 is Desim of the Studv and Methodolo~yelicits a brief outline of

the problem, statement of the problem, Review of literature, Objectives of the study, Need
for the study, Methodology, Sample design, Tools used for analysis of the data, Swp and
limitations of the present study and Plan of the study.
. .
Chapter I11 is Profile of SPSR Ndlore DlstnFf appraises profile, panan and
progress of rural industrialization in SPSR Nellore district.
Chapter 1V Socio-economic orofile and wnern of select
. .
Hellore District denotes the analyses of socio-economic profile of select enterprises on the
basis of primary data collected in terms of age profile of the select entrepreneurs, occupation;
nature of production, educational status and social status, sources of raw materials, marketing
and source of finance.
Chapter V Performance of Finance. Production and ?!&&&v
.. of -s
. .
usmes m SPSR Nellore District evaluates the performance, production and profitability of
selected rural industries in different angles. .
. . . .
Chapter VI &r&&zyment b o r n

assesses employment potentiality in d i f l m t dimensions, productivity and profitability using

structural ratios of sample units.
. .
Chapter V11 problem and P i B p C G ~ l @ X &
elicit operational problems and constraints of sample units.
. .
Chapter Vlll Summaw of Findinas and P o w sums up the findings
and conclusions and offers suggestions.
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