THE CONTRIBUTIONS OF SMALL SCALE AND COTTAGE INDUSTRIES IN ECONOMIC DEVELOPMENT OF INDIA-A STUDY

ECONOMICS

Industrialization does not necessarily imply the existence of huge factories spread over hundreds of acres, churning out power and using lots of fuel. This specifically points to large-scale industries. Industrialization also has to do with factories and industries and organizations that operate on a much smaller scale, but generate profits all the same. In India, particularly, there has always been a push for small-scale industrialization, since the disparities in income and resources will not make it possible for all sections of the population to be engaged in large-scale industrial work. Moreover, India is home to a large number of artisanal crafts, and these cannot prosper under the principles of large-scale work. Even before independence, there was a push for cottage industries to develop and become self-sufficient. Industrial units are generally classified between small-scale, medium scale and large scale units; considering their size, capital resources and the number of labourers engaged upon. In India, the small scale industrial sector has been growing at a very rapid scale. Industrial Policy Resolutions, 1948, 1956 and more particularly the Industrial Policy Statement, 1977 have offered a special favour for the development of small scale industries in India. Initially the fixed capital investment limit of the small scale units was restricted to Rs. 5 lakh and later on the limit has been raised to Rs. 10 lakh for small scale unit and Rs. 15 lakh for ancillaries in 1975. Again this fixed capital investment limit was raised to Rs. 15 lakh for small units and Rs. 20 lakh for ancillary units in 1980. In 1985, this investment limit was further raised by the Government to Rs. 35 lakh for small scale units and Rs. 45 lakh for ancillary units.

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