State and Industrial Development

In this post, you will learn about the state and industrial development. The industrial sector has shown impressive growth in 1980 to 1997, covering the Sixth, Seventh and Eighth Five Year Plans, but declined in 1997 to 2000, the first three years of Ninth Plan. In 1980-2000, employment grew three times, the number of industrial units five times, investment and production 18 times, both in the large and medium and small scale sector. Small-scale industry (SSI) accounts for 80% of the total employment, contributes 40% to production and 60% to exports, with 20% investment of the industrial sector.

It is important for you to note that the regional disparities in industrialisation persist. Patiala, Ludhiana and Ropar districts account for half the industrial production in the state. On the contrary, Faridkot, Mansa and Muktsar districts have a share of less than 1% each.

The SSI sector, the backbone of the industrial economy in the state, is passing through a crucial phase, prima on account of such factors as low level of technology resulting in low industrial productivity and poor quality of products leading to competitive disadvantage both in domestic and international markets. The small-scale sector has to attain the capability to produce quality products, to compete in the international market. It has to renovate itself from a protective to a competitive environment.

Notes: Ludhiana, a district in the state of Punjab, has been adjudged as the best place for doing business in India as per the World Bank Study, 2009. With the up-gradation of Amritsar International Airport and another International Airport coming up in Mohali, Punjab is geared to be one of the finest and easily accessible tourists as well as business destinations in South Asia.

For the existence of industry and to support the tempo of growth, the broad measures recommended are modernisation and technological up gradation through innovative R&D; product adaptation; planned development of quality infrastructure; human resource development through skills up gradation and training; market-oriented policy and institutional framework.

The state must follow a pro-active policy to encourage partnership with industry for both utilising existing infrastructure and setting up badly required new facilities.

The government’s role should be restricted to that of an effective facilitator and co-ordinator of the process of growth, offering transparent, conducive policy framework and effective delivery mechanism via good governance.

It is important to note that up gradation of existing research and development centres in the state has been recommended so as to offer the latest design and testing techniques to the industry. Keeping in view the developing requirements of industry and lack of monetary support from central and state governments, the management of these may be delegated to the applicable associations of industry, on the basis of binding partnership protocols evolved through a consultative process. This approach will ensure operative functioning of R&D centres to fulfil their objectives.

Industrial clusters and parks should be established sector/product-wise, with an emphasis on agro-food processing, automobile and automobile parts, bicycle and bicycle parts, machines and machine tools, sports goods, leather and leather goods, hosiery and textile industries. This will facilitate building a centralised and modern infrastructure. The private sector and financial institutions should be encouraged to take part in these activities. Additionally, infrastructure in all existing industrial areas and focal points should be upgraded.

Agri-export zones (AEZs) for various products should be set up expeditiously. These will accelerate provision of all export incentives to enhance exports, value addition centralised modern facilities, better productivity and higher incomes to the farming sector. The Government of India should also establish special economic zone (SEZ), for connection with the global market with emphasis on the export of industrial products.

You must understand that it is vital to establish industries in the large and medium (L & M) sector in the state for their balanced growth. Suitable facilities and incentives should be offered to multinational companies (MNCs) to establish manufacturing facilities in the state, particularly in agro-food processing, light engineering and electronic hardware industries. NRIs should be motivated to invest in the state.

An appropriate institutional mechanism, including representatives of the Reserve Bank of India, banks, financial institutions, industry and state government, with sufficient powers and the resources, should be developed, to offer requisite financial support to small-scale units enduring from sickness or showing indications of sickness. A system should be evolved for timely detection of sickness at the initial phases for speedier required action.

The tax structure should be simplified and rationalised, compatible with that of the adjoining states. Easy and timely credit at interest rate equal to Prime Lending Rate (PLR) should be available to the SSI sector.

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