CHAPTER I Indian Small Scale Industries in Pre and Post...
Transcript of CHAPTER I Indian Small Scale Industries in Pre and Post...
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CHAPTER – I
Indian Small Scale Industries in Pre and Post Liberlisation Era: An
Overview
1.1. Small Scale Industries: Global Scenario
Small business has played a role in history since the beginning of recorded
time. The first known writing on small business, describing how bankers loaned
money at interest for doing small business, appeared more than 4,000 years ago1.
Since then, small business on new products and services for benefiting consumers
were started.
1.1.1. The SBA's Definitions
The Small Business Administration (SBA) has defined small business for
every industry, which depends on the industry average. For example, the small
business for computer manufacture has been defined to contain below 1000
employees since the average for this industry is very high due to reputed computer
manufactures such as IBM. Similarly, SBA‟s definition of small business for selected
industries (Made in 1987 and still in effect) is presented in Table 1.1. It is interesting
to note that the definition for small business differs from industry to industry. Also,
the definition is based on the number of employees for certain industries and earning
sales for other industries.
1 Edward C.Bursk, The World of Business (New York: Macmillan, 1963), P.1
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Table 1.1
Industry - Wise Definition of Small Business
Manufactures Number of employees
Petroleum refining Less than 1,500
Electronic computers Less than 1,000
Macaroni and spaghetti Less than 500
Sporting goods Less than 500
Furniture Less than 500
Paints and varnishes Less than 500
Retailers Earning Sales per year
Groceries Less than $ 13.5 million
Automobile dealerships Less than $ 11.5 million
Restaurants Less than $ 10.0 million
Services Earning Sales per year
Computer Less than $ 12.5 million
Accounting Less than $ 4.0 million
Television repair Less than $ 3.5million
Source: "U.S. Small Business Administration: Small Business Size
Standards". Federal Register, Vol.49. No. 28 (Washington, D.C: U.S.
Government Printing Office, January 6, 1987).
According to U.S. Small Business Administration, small business is a vital
force in the American economy. This is due to the fact that employees of small
business contributes roughly half of the Nation‟s workforce and generates 54% of the
sales revenue and 40 % of Gross National Product2.
2 U.S.Small Business Administration: The state of Small Business: A report of the President
(Washington, D.C: U.S.Government Printing Office, 1995) P.3.
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1.1.2 Global Change and Small Business
As the world moves towards a global economy, the barriers among nations
will gradually dissolve. Indeed, freedom of opportunity, or what economists often
refer to as free enterprise, is a basic freedom, one of the pillars of liberty. So it follows
that with the winds of change sweeping across lands like the former Soviet Union,
small business is likely to emerge as an agent of creativity. For example, it is the
genius of small business that offers the greatest hope for the greatest number of
people. Now accepted virtually by every nation that something basic has happened to
change forever the way our global economy works. In the words of Merrill Lynch,
the nation‟s largest investment banking firm, “today's global marketplace offers new
opportunities for investors to expand their borders beyond national borders.
Technology is erasing traditional barriers. Thanks to the Computer, we can send
billions of dollars overseas and back again in a second”3.
1.2. Small Business in Other Countries
In India, there is no specific definition for small business and only the
concept of small scale ancillary and tiny industry exists, which are related to the
investment in plant and machinery. In other countries, small business is termed as
Small and Medium Enterprises (SME). Here, SMEs are defined on the basis of both
quantitative and qualitative elements, such as, the number of employees, annual
turnover or the level of fixed investment. However, number of workers employed
seems to be an omnipresent criterion for determining the size of the unit. The
prevailing definitions and the criteria determining it for some countries are listed in
Table 1.2.
3 Cecily Patterson, "Going Global", Forbs (October 19, 1992) p.1.
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Table 1.2
Definition of SMEs in other Countries
Country Category of
industry Criteria / Country‟s Official Definition
Measure
North America
USA
Very Small
Enterprises
Small Enterprises
Medium
Enterprises
<20 employees
20-99 employees
100-499 employees
Number of
employees
Canada Small Enterprise Independent firms having <200 employees
Number of employees
Latin
America
Manufacturing
Micro
<15 employees and gross income
/ sales
< US $ 175,000 Million
Number of
employees
and gross
Mexico
Small 15-99 employees and gross income / sales <US $ 175,000
Income/sales
Medium 100-249 employees and gross income /sales
<US $3,500,000
Europe
Belgium
SME Annual staff average of 50
employees, Annual turnover (VAT excluded)
ECU-4.2 Million, balance sheet total of
ECU 2.1
Million
Number of
employees
and annual
Turnover
Denmark Manufacturing <500 employees, production units
with More than 5 employees
Employment
France
Germany
Greece
SME
SME
Small Enterprises Medium
Enterprises
10-499 employees
<500 employees
<50 employees
50-500 employees
Employment
Employment
Employment
Employment
Ireland SME < 500 employees Employment
Italy
Nether
lands
Small Enterprises
Small Enterprises
Medium
Enterprises
<200 employees
<10 employees
10-100 employees
Employment
Employment
Portugal SME <500 employees
<ECU 2400 million in sales
(value for 1993) is not controlled,
more than 50 percent of any
Employment
And sales
value
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Country Category of
industry Criteria / Country‟s
Official Definition
Measure
company (nor
does it hold more than 50 percent of any other company)
Spain Small Enterprises
Medium
Enterprises
<200 employees
<500 employees
Employment
Employment
Sweden SME Autonomous firms with <200
employees
Employment
Switzerland SME No fixed definition
United
Kingdom
SME No fixed definition
Asia
China
SME Depends on product group usually <100
Employees: investment ceiling 30 million Yuan (US $ 8 million
Employment &investment
Indonesia SME <100 employees Employment
Japan Manufacturing,
Wholesale Trade,
Retail Trade and
Services
<300 employees or asset capitalization <100 million yen
<50 employees or asset capitalization <30
Million yen
< 50 employees or asset
capitalization < 10 million yen
Employment
And assets
Korea Manufacturing
Services
< 300 employees
< 20 employees
Employment
Malaysia SME‟S
SSI
MSE
< 75 full time workers or with a shareholder
Fund of Rs. 2.5 million (US $1 million
Manufacturing establishments
employing Between 5 and 500 employees or
with a Shareholder fund up to Rs
50000 Manufacturing establishments
employing. Between 50 and 75
full time employees or With shareholders fund between
Rs50000 to Rs. 2.5 million
Employees
and
Shareholder
fund
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Country Category of
industry Criteria / Country‟s
Official Definition
Measure
Taiwan
SME
SSI
In manufacturing, mining and
Construction- invested capital is< $ 40
Million or regular employees to be < 200
In manufacturing and
construction sales Turnover <NT $ 120 million or
regular 20
Employment
or Invested
capital
Employees
or Sales
turnover
Thailand Labour intensive
Sectors
Capital intensive Sector
< 200 employees
< 100 employees
Employment
Vietnam SME No fixed definition generally <
200
Employees
Employment
Brunei SME 0-100 employees Employment
Hong Kong SME Manufacturing enterprises with
fewer than 100 employees and
non-manufacturing enterprises with fewer than 50
employees
Employment
Australia Manufacturing
Services Small enterprises <100 employees
Medium enterprises <20
employees
Employment
Employment
Sources:
1. Handbook on Foreign Direct Investment by small and medium sized enterprises Lessons from Asia, United Nation Conference on Trade and Development (UNCTAD), Geneva, 1998.
2. Globalisation and Small and Medium Enterprises (SME s) - Vol-I.
Synthesis Report Organisation for Economic Cooperation and
Development (OECD). 3. Industry Division, Government of Hong Kong Special Administrative
Region.
4. Small and Medium Business Administration Government of Korea.
1.3. Small Business in India
Economic development of a country is directly related to the level of industrial
growth. The expansion of industrial sector leads to a greater utilisation of natural
resources, production of goods and services, creation of employment opportunities
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and improvement in the general standard of living. India has also been striving to
develop the country‟s industrial base since independence. It has framed various
policies aimed at development of industries in the public and private sectors. Special
emphasis has been laid on small-scale industries. Small Scale Industries play a key
role in our planned development with its advantages of low investment, high potential
for employment generation, diversification of the industrial base and dispersal of
industries to rural areas. The small scale industries sector has been appropriately
given a strategic position in our planned economy towards the fulfillment of the socio
economic objectives particularly in achieving equitable growth. P.N.Dhar and
H.F.Lydall in the introduction to their book, “The Role of Small Enterprise in Indian
Economic Development” have observed that „The promotion of small scale industries
has been widely recommended as one of the most appropriate means of developing
industry over populated backward countries‟.
The definition of small business in India is broadened from small-scale
industries to small scale enterprises that include all business enterprises in the services
sector which provide service to industrial sector. In addition to these factors, Reserve
Bank of India(RBI) uses an expanded definition of Small Scale Industries(SSI) which
includes industrial undertaking that are engaged in the manufacturing, processing and
preservation of goods in which the investment in plant and machinery doest not
exceed Rs. 5crore. These would include units engaged in mining or quarrying,
servicing and repairing of machinery.
The SSI sector covers a wide spectrum of industries categorized under (a)
small scale industrial undertakings, (b) ancillary industrial undertakings , (c) export
oriented units, (d) tiny enterprises (e) small-scale service enterprises, (f) small-scale
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1977 Small Scale Industrial units Investment of less than Rs. 10 lakhs
Year Defining Authority were defined aDs semfinalitl-ioscnale industrial
1950 Fiscal commission
Atheuinnivt eosptemraetnint glimiatiwnlayswRist.h15hilraekdhs. lUabnoitusrwuistuhailnlyve1s0tmtoen5t0ohfalnesdss than Rs.
1955 Small Scale Industries Board, (SCIB) Govt. of India
1SSla: kRhss. w5 elarekhdsefainndedemasptlionyying less ethnatner5p0rispeesr.sons when using power and
1980 Ministry of Industry, Govt. of
India
less than 100 persons when not using SS: Rs. 20 lakhs A: Rs. 25 lakhs power
1966 1985
Ministry of Industry, Govt. of Ministry of Industry, Govt. of India India
SS: Investment in plant and machinery SS: Rs.35 lakhs A: Rs. 45 lakhs not exceeding Rs. 7.5 lakhs. A: Rs. 10 lakhs
1990 1975
Ministry of Industry, Govt. of Small Scale Industries Board India SCIB, Government of India.
SS: Rs. 60 lakhs A: Rs. 75 lakhs SS: Rs. 10 lakhs A: Rs. 15 lakhs
service business (Industry Related) enterprises (g) artisans, village and cottage
industries, and (h) woman entrepreneurs‟ enterprises, i.e., a small scale unit where one
or more women entrepreneurs have not less than 51 percent financial holding.
1.4. Definition of Small Scale Industry in Pre Liberalisation Period
The definition of small business in India has changed over the years.
Retrospective views of this change in definition are presented in Table 1.3.
At present, a small scale industrial units is an undertaking in which investment
in plant and machinery, does not exceed Rs.1crore, except in respect of certain
specified items under hosiery, hand tools, drugs and pharmaceuticals, stationary items
and sports aids, where this investment limit has been enhanced to Rs. 5crore. A
comprehensive legislation which would enable the paradigm shift from small scale
industry to small and medium enterprises is under consideration of the parliament.
Pending enactment of the above legislation, current SSI tiny industries definition may
continue. Units with investment in plant and machinery in excess of SSI limit, and up
to Rs.10 crore may be treated as medium enterprises.
Table 1.3
Definitions of Small Scale and Ancillary Undertakings
undertaking while for ancillary units,
9
Source: Punjab National Bank Monthly Review, June 1990, p.351
1.5. Definition of Small Scale Industries after Liberalisation Period
In 1991 (the year in which economic reforms were initiated) the investment
limit for small scale industries was Rs. 60 lakhs, for ancillary units Rs. 75 lakhs, and
for tiny enterprises Rs. 51 lakhs. In 2000, the investment limit for SSI (Small-scale
industry) was Rs. 1 crore, for ancillary unit Rs. 1 crore and exporting enterprise Rs.
25 lakhs. Consequent to the enactment of Micro, Small and Medium Enterprises
Development (MSMED) Act, 2006, the small and medium sector has been defined as
micro, small and medium enterprises with effect from October 2, 2006 (the act
defined the medium enterprises for the first time). Further, separate investments limit
have been prescribed for manufacturing and service enterprises. The new definition is
as follows:
A: Manufacturing Enterprises
(i) A Micro enterprise, where the investment in plant and machinery does not
exceed Rs. 25 lakhs;
(ii) A small enterprise, where the investment in plant and machinery is more
than Rs. 25 lakhs but does not exceed Rs. 5 crore; and
(iii) A Medium enterprise, where the investment in plant and machinery is
more than Rs 5 crore but does not exceed Rs. 10 crore
B: Service Enterprises
(i) A micro enterprise, where the investment in equipment does not exceed
Rs. 10 lakhs;
(ii) A small enterprise, where the investment in equipment is more than Rs. 10
lakhs but does not exceed Rs. 2 crore; and
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(iii) A medium enterprise, where the investment in equipment is more than Rs.
2 crore but does not exceed Rs. 5 crore.
1.5.1. Micro and Tiny Enterprises
Till 2006, there was no law or Act which could regulate the small scale
industries and institutions which were supporting the MSME sector. Micro industries
are those whose installed capacity ranges from zero to Rs.25 lakhs. The tiny industries
include those whose installed capacity ranges form zero to Rs.5 lakhs. Some tiny
enterprises are clubbed together to form the micro sector.
1.5.2. Small enterprise
Investment in plant and machinery above Rs 25 lakhs but does not exceed
Rs. 5 crore. Investment in equipment above Rs.10 lakhs but does not exceed 2 crore.
1.5.3. Medium Enterprise
Investment in plant and machinery above Rs. 5 crore but does not exceed
Rs.10 crore. Investment in equipment above Rs. 2 crore but does not exceed Rs.5
crore.
1.5.4. Large Enterprise
Investment in plant and machinery is above 10 crore.
Source: Micro, Small and Medium Enterprises Development (MSMED) Act 2006.
1.6. Growth of Small Scale Industries in India: Pre and Post Liberalisation
Period
The small scale industries play a significant role in boosting the overall
economic growth of a country. The small scale industries set-up by the entrepreneurs
in different states and Union Territories of India have contributed to the increased
shares in overall production, fixed investment, exports, employment and capacity
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utilisation of SSI Units etc. The importance of SSI sector in providing large scale
employment is of paramount importance.
The policy framework right from the first plan has highlighted the need for the
development of SSI sector, keeping in view its strategic importance in the overall
economic development of India. The impact of Industrial liberalisation and
deregulatory policies on the growth of small scale industries has been captured by
computing and subsequently comparing the growth rates between pre and post
globalisation period. In this section, the overall performance of SSI sector has been
examined in depth on the basis of the different parameters such as number of units,
production, employment and exports.
1.7. Number of SSI Units in Pre and Post Liberalisation Period
The working number of units in small scale sector in Pre and Post
liberalisation Period in India is shown in Table 1.4. It shows that the Annual Average
Growth Rate of number of units in the pre- liberalisation period, from1973-74 to
1989-90 was 9.36 percent and in post-liberalisation it was 4.07 percent.
Table 1.4
Number of SSI Units in Pre and Post Liberalisation Period
(Units = Million Nos)
Pre-Liberalisation Period Post-Liberalisation Period
Year
Units % Increase to Previous year
Year
Units % Increase to Previous year
1973-74 0.42 - 1990-91 6.79 -
1974-75 0.5 19.05 1991-92 7.06 3.98
1975-76 0.55 10 1992-93 7.35 4.11
1976-77 0.59 7.27 1993-94 7.65 4.08
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Pre-Liberalisation Period Post-Liberalisation Period
Year
Units % Increase to
Previous year
Year
Units % Increase to
Previous year
1977-78 0.67 13.56 1994-95 7.96 4.05
1978-79 0.73 8.96 1995-96 8.28 4.02
1979-80 0.81 10.96 1996-97 8.62 4.11
1980-81 0.87 7.41 1997-98 8.97 4.06
1981-82 0.96 10.34 1998-99 9.34 4.12
1982-83 1.06 10.42 1999-00 9.72 4.07
1983-84 1.16 9.43 2000-01 10.11 4.01
1984-85 1.24 6.9 2001-02 10.52 4.06
1985-86 1.35 8.87 2002-03 10.95 4.09
1986-87 1.46 8.15 2003-04 11.4 4.11
1987-88 1.58 8.22 2004-05 11.86 4.04
1988-89 1.71 8.23 2005-06 12.34 4.05
1989-90 1.82 6.43 2006-07 12.84 4.05
2007-08 13.41 4.44
2008-09 14.09 5.07
2009-10 14.87 5.54
AAGR 9.36 AAGR 4.07
Source: Ministry of Micro, Small and Medium Enterprises, GOI.
AAGR= Annual Average Growth Rate or Exponential Growth Rate.
In pre-liberalized period, the yearly growth rate was higher than average
growth rate in the initial years and from 1984-85 to 1989-90, the yearly growth rate
was less than average growth rate. In 1989-90, the yearly growth rate was least in the
pre- liberalisation period. In the post-liberalisation period, in 1991-92 it was very high
and after that it fluctuated between 3.98 percent and 4.11 percent. In 1999-2000 the
yearly growth rate and average growth rate was the same. The number of SSI units
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was increasing in the study period but the average and yearly growth rate was higher
in pre-liberalised period than post liberalised period.
1.8. Production Growth in Pre and Post Liberalisation Period
Table 1.5 provides the information about the growth of small scale sector on
production from the period 1973-74 to 2009-10. It shows that the Annual Average
Growth Rate of production in the pre- liberalisation period, from 1973-74 to 1989-90
was 18.97 percent and in post- liberalisation it was 13.55 percent. In pre-liberalised
period, the yearly growth rate was decreasing in the initial years and from 1973-74 to
1978-79. It was increasing. The yearly growth rate was fluctuating from 1980-81 to
1983-84, after that it has shown increasing trend except in 1986-87. In the post-
liberalisation period, in 1990-91 the yearly growth rate was very low, it was negative
and after that it shows increasing trend from 1991-92 to 1994-95. The yearly growth
rate was showing decreasing trend from 1995-96 to 2002-03 except in 1998-99 and
2001-02. Most of the time, the yearly growth rate was less than average growth rate.
The production was increasing in the study period but the average and yearly growth
rate was higher in pre- liberalised period than post liberalised period.
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Table 1.5
Production Growth of SSI units in Pre and Post LiberalisationPeriod
(Production= Crores)
Pre LiberalisationPeriod Post LiberalisationPeriod
Year
Production
(Current
Prices)
% Increase
to previous
year
Year
Production
(Current
Prices)
% Increase
to previous
year
1973-74 7200 - 1990-91 78802 -
1974-75 9200 27.78 1991-92 80615 2.3
1975-76 11000 19.57 1992-93 84413 4.71
1976-77 12400 12.73 1993-94 98796 17.04
1977-78 14300 15.32 1994-95 122154 23.64
1978-79 15800 10.49 1995-96 147712 20.92
1979-80 21600 36.71 1996-97 167805 13.6
1980-81 28100 30.09 1997-98 187217 11.57
1981-82 32600 16.01 1998-99 210454 12.41
1982-83 35000 7.36 1999-00 233760 11.07
1983-84 41600 18.86 2000-01 261297 11.78
1984-85 50500 21.39 2001-02 282270 8.03
1985-86 61200 21.19 2002-03 314850 11.54
1986-87 72300 18.14 2003-04 364547 15.78
1987-88 87300 20.75 2004-05 429796 17.9
1988-89 106400 21.88 2005-06 497842 15.83
1989-90 132300 24.34 2006-07 585112 17.53
2007-08 692412 18.33
2008-09 813456 17.48
2009-10 972314 19.52
AAGR 18.97 AAGR 13.55
Source: Ministry of Micro, Small and Medium Enterprises, GOI.
AAGR= Annual Average Growth Rate or Exponential Growth Rate.
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1.9. Creating Employment Opportunities of SSI Units in Pre and Post
Liberalisation Period
In India, the major argument for promoting small scale sector is that the small
enterprises provide avenues for gainful employment. The performance of SSI in
creating employment opportunities is really a matter of great interest. The following
Table 1.6 provides the information for creating employment opportunities of SSI units
in pre and post liberalisation period.
It shows that the Annual Average Growth Rate of employment in the pre-
liberalisation period, from 1973-74 to 1989-90 was 6.77 percent and in post-
liberalisation it was 4.23 percent. In pre-liberalised period, the yearly growth rate was
more than average growth rate in the initial years and from 1973-74 to 1978-79, after
that the yearly growth rate was too much decreased from 1979-80 to 1989-90, it
fluctuated between 5.02 percent and 5.84 percent. In the post-liberalisation period, in
1990-91 the yearly growth rate was very high than the average growth rate. After that
the yearly growth rate fluctuated from 1991-92 to 2003-04. Most of the time, the
yearly growth rate was less than average growth rate. In the last three years, the
annual growth rate was increasing. The employment was increasing during the study
period but the average and yearly growth rate was higher in pre-liberalised period
than post-liberalised period.
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Table 1.6
Creating Employment Opportunities of SSI units in pre and post liberalisation
period
(Employment= Million Nos)
Pre Liberalisation Period Post Liberalisation Period
Year
Employment
% Increase
to prev. year
Year
Employmen
t
% Increase
to prev. year
1973-74 3.97 - 1990-91 15.83 -
1974-75 4.04 1.76 1991-92 16.6 4.86
1975-76 4.59 13.61 1992-93 17.48 5.3
1976-77 4.98 8.5 1993-94 18.26 4.46
1977-78 5.4 8.43 1994-95 19.14 4.82
1978-79 6.38 18.15 1995-96 19.79 3.4
1979-80 6.7 5.02 1996-97 20.59 4.04
1980-81 7.1 5.97 1997-98 21.32 3.55
1981-82 7.5 5.63 1998-99 22.06 3.47
1982-83 7.9 5.33 1999-00 22.91 3.85
1983-84 8.42 6.58 2000-01 24.09 5.15
1984-85 9 6.89 2001-02 25.23 4.73
1985-86 9.6 6.67 2002-03 26.37 4.52
1986-87 10.14 5.63 2003-04 27.53 4.4
1987-88 10.7 5.52 2004-05 28.76 4.47
1988-89 11.3 5.61 2005-06 29.99 4.28
1989-90 11.96 5.84 2006-07 31.25 4.2
2007-08 32.64 4.48
2008-09 34.37 5.30
2009-10 36.20 5.32
AAGR 6.77 AAGR 4.23
Source: Ministry of Micro, Small and Medium Enterprises, GOI.
AAGR= Annual Average Growth Rate or Exponential Growth Rate.
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1.10. Exports of Small Scale Industries in Pre and Post LiberalisationPeriod
In the context of liberalisation and globalisation of Indian economy, the
performance of small scale sector in the field of exports needs a closer look. The
exports from small scale sector found to be higher from the total export.
Table 1.7
Exports of Small Scale Industries in Pre and Post LiberalisationPeriod
(Exports = Million Nos)
Pre LiberalisationPeriod Post LiberalisationPeriod
Year
Exports
% Increase
to prev. year
Year
Exports
% Increase
to prev. year
1973-74 400 - 1990-91 9664 -
1974-75 500 25.00 1991-92 13883 43.66
1975-76 500 0 1992-93 17784 28.10
1976-77 800 60.00 1993-94 25307 42.30
1977-78 800 0.00 1994-95 29068 14.86
1978-79 1100 37.50 1995-96 36470 25.46
1979-80 1200 9.09 1996-97 39248 7.62
1980-81 1600 33.33 1997-98 44442 13.23
1981-82 2100 31.25 1998-99 48979 10.21
1982-83 2000 -4.76 1999-00 54200 10.66
1983-84 2200 10.00 2000-01 69797 28.78
1984-85 2500 13.64 2001-02 71244 2.07
1985-86 2800 12.00 2002-03 86013 20.73
1986-87 3600 28.57 2003-04 97644 13.52
1987-88 4400 22.22 2004-05 124417 27.42
1988-89 5500 25.00 2005-06 150242 20.76
1989-90 7600 38.18 2006-07 179258 19.31
2007-08 201342 20.76
2008-09 236508 17.46
2009-10 281439 21.41
AAGR 19.35 AAGR 19.42
Source: Ministry of Micro, Small and Medium Enterprises, GOI.
AAGR= Annual Average Growth Rate or Exponential Growth Rate.
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It is clear from the above table that the Annual Average Growth Rate of
exports in the pre-liberalisation period, from 1973-74 to 1989-90 was 19.35 percent
and in post-liberalisation it was 19.42 percent. In pre-liberalised period, the yearly
growth rate was too much fluctuating, it was sometimes very high than average
growth rate. In 1976-77, the yearly growth rate was 60 percent. It was highest during
the pre-liberalisation. In 1978-79 to 1984-85 the AAGR was yearly increasing or
decreasing, in 1982-83 it was on the lowest peak and showed negative trend. After
this, from 1985-86 to 1989-90, the yearly growth rate was increasing and reached at
38.18 percent. In the post- liberalisation period, from 1990-91 the yearly growth rate
changed its trend yearly, in one year its trend was increasing and then next subsequent
years the trend was decreasing. It was least in 2001-02 and highest in 1991-92. The
exports were increasing during the study period but the average and yearly growth
rate was higher in pre- liberalised period than post liberalised period.
1.13. Scope of the Study
The present study covers conceptual framework of small scale industries in
India. It also examines the number of small scale industrial units, production, creating
employment opportunities and export of small scale sector in the pre and post
liberalisation period. It also covers the prospects of small scale industries with the
help of Trend analysis, Ratio analysis and Correlation analysis.
The problems of small scale industries include area- wise, organisation -wise,
industry- wise and size- wise faced by the small scale industrialists in these areas.
The study of small scale industries has always been a subject of wide interest
and various interpretations. But the scope of the present study is restricted to those
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units, which fall under small scale sector as defined under the Industries Development
and Regulation Act of the Government of India (1999). A small scale unit is defined
as, “a unit engaged in manufacturing, repairing processing and preservation of goods
having investment in plant and machinery at an original cost not exceeding Rs.1
crore.” Keeping in view the growing importance of the small scale sector in the region
and the crucial problems faced by small scale sector, the present study is confined to
the problems and prospects of small scale industrial units in Krishnagiri district. The
study concentrates on prospects of small scale industrial units and factors influencing
to start the small scale industrial units, and production problems, labour problems,
financial problems and marketing problems in these area.