Sample Material of Our IAS Mains Sociology Study Kit
Subject: Sociology (Optional)
Topic: Industrialization And Urbanization In India
EVOLUTION OF MODERN INDUSTRY IN INDIA
Industrialisation is a process whereby the path of economic
development shifts from agricultural domain to industrial domain. Associated
with this there is a sharp increase in the industrial share of GDP (Gross
Domestic Product-National income calculated as money value of the goods and
services produced in the country during one year) and of the labour force. In
the process of industrialisation a large number of labour force shifts from
primary occupation to tertiary and secondary occupation.
Adoption of technologically superior techniques of production
that help to transform basic raw materials and intermediate goods into
manufactured goods and application of modern techniques of management and
organisation like economic calculations, accountancy and management techniques
etc. become the characteristics of an industrialising country.
Industrialisation is one of the most important aspects of
economic development taking place in most of the third world developing
countries including India. Once a developing country chooses the path of
industrialisation it gets confronted with a number of problems, some of which
can be identified such as: (i) the extent of industrialisation, (ii) the nature
of industries to be established, (iii) the order for the establishment of the
industries, (iv) the pace of industrialisation and (v) establishment of
small-scale and large-scale industries.
These issues are highlighted in the following ways.
The extent and pace of industrialisation available in a
developing country is determined by the amount of resources available both
domestic and foreign that the economy can mobilise.
A developing country is faced with different sets of choice e.g. choice between
export and domestic industries, choice between consumer goods and capital goods
industries. Export industries are required to finance the import needs of
development that industrialisation entails. Resources may have to be distributed
among export industries producing for domestic market. Similarly investment in
consumer goods industries is required to meet the ram immediate needs, whereas
investment in capital goods industries help to raise the productive potentials
of the economy.
LOCATION OF THE INDUSTRIES
In the case of extractive industries, the location is
determined by unalterable natural conditions. In all other industries, efforts
are generally made to secure a balanced regional development of the country.
Large industries are generally capitalintensive, whereas small industries are
labour-intensive. A labour-surplus economy would prefer labour-intensive small
industries. But it may not be feasible to see some core and basic industries on
a small scale. Hence, a decision may be taken to make use of the complementary
role of these industries by the developing countries.
Location of industries to be set up is important regarding
raw materials, market facilities, transportation and also the protection of
ecology of that region.
The process of industrialisation in the developing countries
began to take place only after British colonialism in these regions. One of the
most important economic exploitations that occurred in these regions is the
extraction of raw materials from these region by the British. This has become an
important factor for hindering the industrial development in these countries.
India as a developing country is no exception to this. In developing countries
economic factors are the most potent abstacles to economic development. First
there is a scarcity of capital. This results in low level of per capita income
and low productivity. Scarcity of capital adversely affects investment in
industry and infrastructure. Secondly, developing countries by their very nature
do not possess adequate infrastructure facilities such as transport,
communications, water, power etc. Thirdly, the absence of the industries to use
the by-product of existing industries results in waste and a bad economy.
Fourthly, in developing countries there are no proper institutions which can
give education and train labourers to improve their skill. Fifthly, lack of
repair facilities is another obstacle in a proper utilisation of machinery.
Sixthly, the absence of a specialised institutions to promote proper credit
facilities, sound banking, insurance cover etc., acts as a deterrent to
industrial investment and activity. Seventhly, industrialisation may also be
hampered by a lack of appropriate technology. Sophisticated technology is held
to be appropriate on the ground that they are so productive that unit production
costs are potentially lower than otherwise. The potential advantages, however,
are never realised because of the lack of higher level of technical managerial
skills that must accompany sophisticated technology. Finally, in many a
situation, industry in a developing country may be confronted with a very small
size of market which is inadequate to absorb production at an economically
viable level which is mainly due to lack of purchasing power because of low
level of saving among the people.
Among the demographic factors that hinder industrialisation
is the fast rising population. First, a fast-rising population implies a sharp
rise in the level of consumption in the economy. Given the fact that
productivity in these economies is low, as well as it grows only at a very slow
rate, a rising consumption level hardly leaves any surplus in the saving .
Inadequate saving makes investment impossible. Secondly, as the population
rises, the size of the labour force also increases. In the absence of
alternative employment opportunities a large part of the increased labour force
finds work for itself in already overcrowded agricultural sector which tends to
affect adversely the productivity in this sector.
As regards the social factors, the social organization and
social attitudes in developing countries are such as to hinder the growth of
industrial production. These act through influencing the supply of productive
factors like labour, capital and entrepreneurial ability and also other factors
like caste, kinship etc.
Various social customs and attitudes exercise a check on the
mobility of labour which tends to get glued down to their hometowns, more
generally in villages. The industrial labour tends to get back to land at any
early opportunity. This flux of labour between industry and agriculture affects
the stability of industrial labour.
The caste system in developing countries in such that people
hesitate to take many types of jobs because of the monopoly of a particular
caste. It restricts the mobility of labour leading to an inefficient and
wasteful use of labour.
As regards the supply of capital, social factors reduce the
accumulation of capital in developing countries. Conspicuous consumption and
wasteful expenditure on luxuries accounts for a large current income. The
propensity to consume is generally high. This restricts the level of saving and
adversely affects capital accumulation and thus investment.
Entrepreneurial ability also suffers on account of social
rigidities and attitudes. Due to these social evils it is very difficult to get
people who can unite and co-operate undertaking and be loyal to society and
government. The same factors also create personnel recruitment and industrial
management. Various administrative factors also adversely affect the
productivity and output in the industrial sector in developing countries.
Frequent changes in tax policy, inefficiency of administration generally leads
to mismanagement and loss in public sector undertakings. There is fluctuation in
foreign exchange rates, in customs and excise, in trade controls and licensing
policies etc which create uncertainty in the mind of investors who may be
reluctant to undertake new investment and improper and faulty labour legislation
is another element of public administration which causes tension in these
Industrialisation in these developing countries confront with
many pressures and challenges posed by the developed, industrialised countries
such as competition from the imported goods imposition of custom barriers high
costs of imports of source raw materials, technical know-how etc. High rate of
taxes are to be borne by the people partly to meet the defects suffered in
Growth of industrialisation in India can be summed up in the
following phases. The first phase was the pre-independence phase of imported
good; the second phase was a phase of import substitution.
This has been a phase of wide-ranging quantitative
capabilities with qualitative weaknesses. The country has u^ entered a third
phase, the phase of upgradation of the quality of Indian goods and services
before the country enters the fourth phase of major exports. In the present
third phase the primary need is to upgrade the quality of products, so that they
become exportable in the fourth phase.