Rationale of Small Scale Industries :: Methodical Approach To A More Equitable Mode of National Wealth Distribution
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Rationale of Small Scale Industries:
IPR (Industrial Policy Resolution ), 1956 established the rationale of SSIs in
terms of the following four arguments, viz.:
(i) Employment argument,
(ii) Decentralisation argument,
(iii) Equality argument, and
(iv) Latent resources argument.
In addition, there is also the
argument relating to allocation efficiency and the on-going debate about
relative merits of lean production and mass production. Let us examine each of
these arguments.
(i)
Employment Argument:
The most important argument in
favour of the SSIs is that they have a potential to create large employment
opportunities. These are labour-intensive in character, i.e., they use more of
labour per unit of output and investment there has also been an implicit
assumption in this argument that small enterprises use less capital per unit of
output. Therefore, in a country where labour is surplus and capital is scarce,
it is only to be expected that the production process should be decentralised
and should be divided into small units.
(ii)
Decentralisation Argument:
There are two aspects to this
argument— first, there is the need to prevent congestion in large cities
through prevention of growth of industries there; secondly, this negative
measure has to be reinforced by promoting industrial growth in semi-urban and
rural areas so that the local people can stay on their areas without emigrating
to the nearby cities.
A third variant of this argument
is that small industry helps in fostering enterprises from amongst the members
of castes, classes and professions which have hitherto not contributed or
contributed poorly to the entrepreneurial class in India. These include, apart
from others, SCs, backward/poor classes, STs, technicians and other
professionals.
(iii)
Equality Argument:
Large-scale industries, generally, lead to inequalities of
income and concentration of economic power. An SSI, on the other hand, it is
asserted, “will lead neither to swearing nor to inequitable distribution but
will result in a large and more widely distributed sharing of the productive
function and therefore to a more equitable distribution of the produce of
industry.” It is also held that as most of the small enterprises are
either proprietary or partnership concerns, the relations between workers and
employers are more harmonious in small enterprises than in large enterprises.
(iv)
Latent Resources Argument:
This argument justifies the cause
of SSIs on three grounds as follows: first, it presumes that there is to be
found a large number of small and potential entrepreneurs who are capable of
running industrial units efficiently if appropriate opportunity and help is
extended to them. Secondly, there are a large number of potential enterprises
whose full capacities have not been used so far. Thirdly, SSIs will be helpful
in putting idle savings in productive use.
Lean Production Vs. Mass
Production:
Another persuasive line of argument developed concerns the debate regarding the relative merits of mass production and lean production. The first industrial revolution had brought about mass production. It was much more efficient than the then prevailing craftsman type of production. In an effort to find a way to surpass the Americans, Japanese invented a new system of production: this came to be known as lean production.
There are two key organisational features of a lean production
facility:
(i) It transfers the maximum
number of tasks and responsibilities to those workers actually adding value on
the line,
(ii) It has in place a system for
detecting defects.
It quickly traces every problem,
once discovered, to its ultimate cause. Mass production does precisely the
opposite. It transfers responsibilities away from the value-adding worker. He
is left with a single repetitive task. It increases the efficiency of that
worker, but he then needs a battery of supporting specialists to be able to
concentrate on their task. When all the support services are taken into account,
the overall productivity drops.
Pic-:: Rationale Behind The Development Of Small Scale Industries
A lean producer is able to offer
greater variety and far better quality at a lower cost, such that the mass
producer is simply unable to compete. A small-scale industry, rather than a
range industry, is in a better position to be a lean producer.
As a result of its limited
resources, it can invent lean production methods that make it cast-efficient.
This largely explains why many industries like pharma, soaps and detergents,
automobiles, etc., find it cheaper to sub-contract than produce all their
requirements by themselves.
Well , that is it and That sums it all.
Regards and Thanks
Pics
Shyamal Bhattacharjee
Mr Shyamal Bhattacharjee, the author was born at West Chirimiri Colliery at District Surguja, Chattisgarh on July 6th 1959 He received his early education at Carmel Convent School Bishrampur and later at Christ Church Boys' Higher Secondary School at Jabalpur. He later joined Hislop College at Nagpur and completed his graduation in Science and he also added a degree in B A thereafter. He joined the HITAVADA, a leading dailies of Central India at Nagpur as a Sub-Editor ( Sports ) but gave up to complete his MBA in 1984 He thereafter added a Diploma In Export Management. He has authored THREE books namely Notable Quotes and Noble Thought published by Pustak Mahal in 2001 Indian Cricket : Faces That Changed It published by Manas Publications in 2009 and Essential Of Office Management published by NBCA, Kolkatta in 2012. He has a experience of about 35 years in Marketing .
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