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 countries.

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 industrial sectors.

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.

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