|3rd Five Year Plan||
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Role In Planned Development
Village and small industries have made a significant contribution in the First and Second Plans in realising the objectives of expanded employment, larger production and more equitable distribution. With the larger dimensions of the tasks to be accomplished in the Third Plan, their role will be even more important. The objectives of the programmes for these industries as set out in the Industrial Policy Resolution, 1956, and in the Second Plan are to create immediate and permanent employment on a large scale at relatively small capital cost, meet a substantial part of the increased demand for consumer goods and simple producer's goods, facilitate mobilisation of resources of capital and skiU which might otherwise remain inadequately utilised and bring about integration of the development of these industries with the rural economy on the one hand and large-scale industry on the other. They also offer a method of ensuring more equitable distribution of the national income and avoiding some of the problems that unplanned urbanisation tends to create. With improvement in techniques and organisation, these industries offer possibilities of growing into an efficient and progressive decentralised sector of the economy providing opportunities of work and income all over the country. One of the principal aims of planning in this field, therefore, is to assist in the adoption of improved techniques and more efficient forms of organisation, so that full advantage is taken of the basic facilities and services available as a result of general economic development, and over a period the entire sector becomes self-reliant and self-supporting. At the same time, the pace of technical change will have to be so regulated that large-scale technological unemployment with consequent hardship and misery to millions of people is avoided.
2. An important lesson of the past decade is that where individual small industries, including village industries, have failed to adopt improved techniques or to achieve economies of scale and organisation through cooperation, production costs have remained relatively high and problems of unsold stocks and of decline in production and employment have arisen. These problems have come up in some of the traditional industries. Constant adaptation to the conditions of rapid change in a dynamic economy and the adoption of new techniques, methods and forms of organisation are important factors in the stability and development of various village and small industries. In the last ten years, large programmes of assistance have been organised for these industries and considerable support has been given to them through provision of loans, subsidies, technical and marketing advice and, in some cases, through reservation of spheres of production. In the latter part of the Second Plan, marketing conditions for some of the small scale industries improved markedly following the intensification of import restrictions. The need for these restrictions may not continue indefinitely. Moreover, with the supply of electric power over large areas of the country, improvements in means of transport and communications, use of modern machines and techniques and the general advance of science and technology, the entire economy is being transformed. The problems of village and small industries, therefore, need to be constantly reviewed and necessary measures taken to realise the full potential of decentralised industry as an essential and continuing element in the national economy.
3. The progress during the First and Second Plans of different small industries, including handloom, khadi, village industries, small scale industries, handicrafts, sericulture and coir, was reviewed towards the middle of the Second Plan by a number of Working Groups and Committees. A special Study Team assessed the working of 25 industrial pilot projects which were taken up in community development blocks about six years ago. The Programme Evaluation Organisation also made a study of rural industries in selected community development blocks. Data collected in the course of these studies and the findings and conclusions reached have been of considerable value in formulating programmes for the Third Five Year Plan. A brief review of the progress of these industries in the first two Plans is 'given in the following paragraphs.
II. Review of Progress
4. In the First Plan, a major step taken for the development of village and small industries was the establishment of All-India Boards to advise and assist in the formulation of programmes of development for the Handloom Industry, Khadi and Village Industries, Small Scale Industries, Handicrafts, Sericulture and Coir. The Khadi and Village Industries Board not only prepared programmes for the industries with which it was concerned but also had them implemented through registered institutions and cooperative societies. In the case of other industries, responsibility for the implementation of programmes mostly rested with State Government, although for a few programmes the Boards functioned on behalf of the Central Government for purposes of implementation. A notable development during the Second Plan was the establishment of a statutory Khadi and Village Industries Commission with more extensive executive powers than those enjoyed by the Khadi and Village Industries Board, which continued as an advisory body closely associated with the Commission. Further, in almost all States, statutory State Khadi and Village Industries Boards were created under legislation sponsored by State Governments. Steps were also taken to strengthen State Departments of Industries. Thus, a three-tier organisation was developedthe Ministry of Commerce and Industry at the Centre, All-India Boards, and State Departments of Industries and State Boards. In addition, industries officers were appointed at the district and block levels. At the end of the Second Plan, Extension Officers for Industries had been provided in more than 1650 development blocks out of 3110 blocks. Steps were also taken for the co-ordination of programmes by setting up at the Centre a Co-ordination Committee for Small Industries consisting of the representatives of the Ministries concerned and the Chairmen of the All-India Boards and the Khadi and Village Industries Commission. Coordination Committees were also constituted in most of the States.
5. An essential feature of development programmes in the First Plan was the provision of assistance in different forms such as credit, training facilities, technical advice, supply of improved tools and equipment on easy terms and establishment of sales depots. In the Second Plan, the scale of assistance for all these purposes was considerably enlarged, the total anticipated outlay being a little less than Rs. 180 crores as against about Rs. 43 crores in the First Plan. A number of new programmes were also organised. About sixty industrial estates were set up for providing factory accommodation and a number of common faculties for the promotion of small scale industries. A programme for the manufacturer and distribution of Ambar charkhas on a large scale was undertaken by the Khadi and Village Industries Commission. A scheme was also introduced to assist handloom weavers' cooperatives to change over to powerlooms. Apart from these various programmes of assistance, steps were taken to provide a more assured market for the products of some of the industries. Production of certain varieties of cloth was reserved for the handloom industry and of certain types of agricultural implements for small scale industry. It was also decided that there should be no further expansion in certain large scale industries like vegetable oils, rice milling, leather footwear, match, etc. where the existing capacity was not being already fully utilised. Separate targets of production were laid down for the small-scale and the large-scale sectors of certain industries like bicycles and sewing machines.
6. In many of the industries, particularly small scale industries and handicrafts, assistance had to be given to individual artisans and entrepreneurs because a sufficient number of artisans' organisations had not developed at the field level. In handloom and coir however, assistance was channelled mostly through cooperative societies and in khadi and village industries mostly through registered institutions. In the First Plan considerable emphasis was laid on the organisation of industrial cooperatives as a means of promoting village and small industries. The number of industrial co-operative societies increased from 7105 in 1951 to about 15,300 in 1956. The handloom industry accounted or about 8000 cooperative societies; the next largest group was of palmgur societies, followed by tanners' and leather workers' societies, societies of small scale industries including light engineer-nig goods, and sericulture. By 1959-60, the total number of industrial cooperatives increased to about 29,000, including about 11,200 handloom weavers' societies. On the whole, however, industrial cooperatives did not cover more than a small proportion of those engaged in village and small industries. In 1958, a special Working Group examined the difficulties impending rapid progress in the formation of industrial cooperatives and recommended measures for ensuring their accelerated development. Action is being taken on the proposals of the Working Group.
7. The strengthening of administrative and organisational machinery and the expansion of assistance programmes combined with measures for giving an assured market for certain indus-ries produced conditions favourable to the development of village and small industries. A detailed assessment of the progress made over the past ten years cannot be given for each industry in the absence of complete and reliable data, but in several industries a notable advance has been recorded.
8. According to information available at present, production of handloom cloth increased from about 742 million yards in 1950-51 to about 1900 million yards in 1960-61. Fuller employment was provided for nearly 3 million weavers and exports of handloom cloth on an annual average have been about 36 million yards during the last three years, valued at over Rs. 5 crores. The number of looms in the cooperative fold increased from less than 7 lakhs in 1953 to almost 13 lakhs by the middle of 1960. Production of traditional khadi (cotton, silk and woollen) increased from 7 million yards in 1950-51 to about 48 million yards in 1960-61. Employment, mostly part-time, was provided to nearly 11 lakh additional spinners, besides whole-time employment to about 1.4 lakh weavers, carpenters, etc. Production of Ambar khadi (produced from the admixture of Ambar yarn and ordinary charkha yam) increased from 1.9 million yards in 1956-57 to about 26 million yards in 1960-61. Mostly part-time employment was provided by this programme to about 3 lakh spinners, besides full-time employment to about 51,000 weavers and others.
9. As regards the progress of village industries information is available only about the activities of registered institutions, cooperative societies and centres assisted by the Khadi and Village Industries Commission. The total disbursements for the programmes during the Second Plan period were a little over Rs. 18 crores, of which the major portion was accounted for by assistance in the form of supply of improved equipment and training and marketing facilities for the processing of cereals and pulses, crushing of oilsteeds, tanning and leather, pahn gur, non-edible oils and soap, match, hand-made paper, gur and khandsari, bee-keeping, pottery, etc. A substantial part of the disbursed amount remained unutilised in the earlier years of the Second Plan period. The Evaluation Committee for Village Industries which about the middle of the Second Plan reviewed the working of certain production centres set up with the assistance of the Khadi and Village Industries Commission, concluded that the results obtained in respect of both production and employment were not commensurate with the expenditure incurred. Since then, however, there has been considerable improvement in the utilisation of funds and also in the working of these centres. Village industry programmes in the Second Plan have provided partial relief to about 5 lakhs of artisans and under-employed women workers in villages. They have also furnished experience which should be useful in working out future patterns of industrial development in rural areas.
10. The programme for sericulture has been directed mainly towards improvement in the methods of mulberry cultivation and of the quality of silkworm seeds, supply of improved spinning and reeling equipment and organisation of research. The Central Sericultural Research Institute at Berhampore and its sub-section at Kalimpong was expanded and a training institute at Mysore and a Silkworm Seed Station at Sri-nagar established. Production of raw silk rose from 2.5 million Ib in 1951 to 3.6 million Ib in 1960. At the end of the Second Plan period, it was reckoned that the industry provided part-time employment to about 27 lakh persons, besides full-time employment to about 35,000 persons. The high cost of production continued to be the main problem of the industry largely due to the low yield of mulberry per acre, low yield of cocoons, etc.
11. Progress in the coir industry was generally slow owing to organisational deficiencies of coir cooperatives, inferior quality of coir yarn due to the inefficient equipment used for spinning, and competition from substitutes in foreign markets. Exports of coir yarn and goods suffered serious setback in 1957-58 and, although they have since increased to some extent, they are sdll below the level reached at the end of the First Plan period. The industry is at present estimated to provide employment to about 8 lakh persons.
12. Handicrafts programmes were enlarged in the Second Plan and included the establishment of four Regional Design Centres, and a number of emporia and sales depots, besides training and production centres for specific crafts like ivory and conch shell products, bidri, decorative pottery, toys, bamboo articles, papier mache products, etc. There has been an increase in internal sales as well as exports of handicrafts. Over 100 emporia and sales depots have been set up and the annual sales through these increased from about Rs. 1 crore at the end of the First Plan period to about Rs. 2.5 crores in 1959.60. It is estimated that handicrafts including carpets worth over Rs. 6 crores per annum were exported during the last three years of the Second Plan period. Favourable conditions for stable and fuller employment were created for skilled craftsmen which in turn resulted in considerable improvement in their earnings. Progress was somewhat retarded by the shortage of technical personnel and certain basic raw materials and the difficulty in channelling credit to the artisans.
13. In the field of small scale industries progress during the past five years has been quite impressive. In spite of shortages of certain basic raw materials, many small industries, notably machine tools, sewing machines, electric fans and motors, bicycles, builders' hardware and hand tools have expanded considerably, the increase in production being as much as 25 to 50 per cent per annum. Import restrictions have to some extent given an impetus to the growth of these industries. The number of registered companies, with authorised capital of less than Rs. 5 lakhs each and engaged in processing and manufacturing, increased during 1957-61 by about 1160. In the programme of industrial estates also, considerable progress has been made, and by 1960-61 about 60 industrial estates were completed, of which 52 with about 1035 factory sheds employing about 13,000 persons were actually functioning. The programme for small scale industries as a whole is estimated to have provided full-time employemnt to about 3 lakh persons.
Ill. Approach In The Third Plan
14. The main objectives to be kept in view in implementing programmes for village and small industries in the Third Plan will be:
The policies and measures proposed for achieving these objectives are outlined below.
15. Improvement of skill and productivity. Training facilities for meeting the requirements of technical and managerial personnel in the, field of village and small industries will be considerably enlarged in the Third Plan. The arrangements to be made in this regard for the training of craftsmen and engineers are given in the Chapter on Technical Education. For rural artisans, a scheme has been drawn up to set up in selected areas 'cluster-type' institutions serving groups of villages for providing courses in certain allied trades such as blacksmithy, carpentry, etc. extending over a year or more with a view to training the artisans in the maintenance and repair of agricultural implements and parts of heavy agricultural machinery, etc. These institutions are intended to replace, where 'necessary, the production-cum-training centres set up earlier. In addition, training facilities will be available from peripatetic demonostration and training parties organised in rural areas by State Governments. Besides these general training programmes, special schemes for training in khadi, village industries and handicrafts will be taken up as a part of the development programmes for these industries. An All-India institute will also be set up to provide facilities for training in industrial extension techniques.
16. In all village and small industry programmes, emphasis is being laid on the introduction of improved tools and equipment. For small scale industries, a scheme for supply of machines on hire-purchase terms was introduced during the Second Plan period and it is proposed to expand it in the Third Plan so as to supply machines to a larger number of small industrialists and cooperatives. In the hand-loom sector, provision has been made for the introduction of 'take-up motion attachments' and semi automatic looms and also for continuing the limited programme introduced at thd beginning of the Second Plan for conversion on a cooperative basis from handlooms to power-looms. In the field of khadi and village industries, research and experiments for further improvements of the Ambar charkha and oil ghanis and of equipment used in hand-poundirig of paddy and in other village industries will be continued. In the coir industry, on the basis of a pilot scheme for the introduction of improved coir spinning equipment, it is proposed to undertakethe manufacture and supply of such equipment on a large scale. In sericulture, an important item of the programme is to encourage the use of cottage basins, in place of char-khas for reeling. Similarly, in handicrafts the adoption of improved tools will be encouraged and assisted.
17. Efforts will be organised on a larger scale to provide technical advice to artisans and craftsmen engaged in various industries. In the field of small scale industries, an industrial extension service has been built up through the Small Industries Service Institutes, the Extension Centres and the Extension Officers (Industries) at the block level. In the field of khadi and village industries, similar advice is made available through technical officers in the various registered institutions and centres and through extension officers in the blocks. Much, however, remains to be done to provide technical assistance and advice to every artisan and craftsman who needs it and efforts in this directioiii will have to be pursued more vigorously in the Third Plan.
18. Special attention will be paid to research for developing improved tools and equipment, processes of manufacture, designs, etc. The programmes for the expansion of existing facilities are outlined in the Chapter on Scientific and Technological Research.
19. Credit and finance.Credit facilities which are an essential requirement of all village and small industries, have to be organised on a larger scale in the Third Plan to be made available on reasonable terms and with the minimum of procedural delays. In the allocation for srnaU scale industries in the Third Plan, a substantial provision has been made for loans under State Aid to Industries Acts to meet the need for long and medium term capital as well as working capital. Similarly, in the allocation for khadi and village industries, substantial amounts have been provided for the grant of loans. However, the provision which can be made for loans in the Plan is necessarily limited in relation to the requirements, and the aim to be kept in view is that increasing measure the credit required for village and small industries should be available from normal banking and financial institutions. Under a pilot scheme operated by the State Bank of India for coordinated provision of credit to these industries, the credit limit sanc-toined and in force by the end of March, 1961, was nearly Rs. 9 crores. Three other notable measures were taken during the Second Plan period for making credit available to village and small industries through institutional, agencies. The Reserve Bank of India provides special facilities for advances to central cooperative agencies to meet the working capital requirements of the handloom industry. A pilot credit guarantee scheme under which Government shares with certain specified banks and other financial institutions risks on loans granted by them to small industries was introduced in July, 1960, and guarantees for loans amounting to Rs. 2 crores were issued by the end of 1960-61. A proposal was also formulated for providing a Government guarantee for loans given by banking and institutional agencies to well-established organisations in the field of village and small industries such as the Khadi and Village Industries Commission, the National Small Industries Corporation, etc. In the Third Plan it is proposed to continue efforts along these lines. To ensure that the credit needs of artisans in rural areas are not overlooked while providing loans under State Aid to Industries Acts, it has been agreed that a portion of the funds to be disbursed under these Acts should be earmarked for artisans in rural areas and an equal amount for the same purpose should be made available from the budget of community development blocks.
20. Role of subsidies, sales rebates, etc. The progressive enlargement of programmes of positive assistance is expected to make it possible to reduce the role of subsidies, sales rebates and sheltered markets in the Third Plan. In the field of khadi, it is hoped to bring about a gradual reduction of prices through technical improvements, pooling of production costs and economy in transport ancf other distribution charges. Rebates on sales of khadi, particularly of silk and woollen khadi, will be reviewed with the object of replacing them, as far as possible, by suitable management grants. As regards village industries also, it is proposed that the present subsidies and/or rebates on sales in respect of their products should be replaced by gradually tapering management grants. Similarly, in the handloom industry emphasis will be shifted from sales rebates to more positive forms of assistance.
21. Positive measures of organisation and assistance including arrangements for the supply of raw materials and coordination for research, training, etc. were mentioned in the First and the Second Plans as being among the element of a common production programme. The term 'common production programme' was adopted as a convenient way of describing the basic approach adopted for determining, while formulating programmes of development for different sections of an industry, the respective contributions which the large-scale and small scale and cottage sectors could make towards the total requirements of the community, in the context of the social and other objectives. The other elements of the programme which had the object of providing a degree of preference or assurance in marketing to the small-scale sector were reservation of spheres of production, limiting the expansion of the capacity of the large sector of the industry, imposition of cesses on large-scale units and giving a rrice advantage to the smaller units through differential taxation, subsidies, sales rebates, etc. It was recognised that the general principles underlying common production programme should be applied only after detailed study and investigation of the problems of particular industries. For instance, in the case of some of the traditional industries, measures for ensuring preferential treatment and assurance of market for their products may have to be continued for a somewhat longer period than in the case of small scale industries.
22. Industrial development in rural areas and small towns.Although several industries such as village industries, khadi, sericulture, coir and to an appreciable extent, handloom, are already located in rural areas, the development of small scale industries has so far been, by and large, in or near the cities and the larger towns. Since one of the principal objects of programmes in this field is to provide opportunities of income and employment in a dispersed manner all over the country, emphasis in the implementation of the programmes in the Third Plan will be on encouraging the further growth of industries in rural areas and in small towns as well as in less developed areas having a marked industrial potential. The first step in this direction should be to identify the areas in which various basic facilities such as electricity, larger supply of agricultural raw materials and improved means of transport will become available as a result of development envisaged in other sectors during the course of the Third Plan and to prepare programmes for assisting the growth of industries in such areas. The desirability of linking up the promotion of small industries with programmes of power development in the rural areas has also been stressed in the Chapter on Irrigation and Power. The other essential step will be to provide various kinds of assistance such as training facilities, credit, technical advice, tools and machines, etc. in an integrated manner to, those who set up industries in the rural areas and small towns. This aspect should be borne in mind in implementing schemes for cluster-type training centres for groups of villages, provision of credit to rural artisans, setting up of common facility workshops and rural industrial estates. For the better utilisation of resources under the Plan, the attempt should be to provide assistance intensively at points where conditions are relatively more favourable and to build up in this manner a number of successful centres which may serve as models and as nuclei for more widespread development. This would not only promote the growth of small industries under conditions favourable to their continuous growth, but will also help integrate industry with development in related fields.
23. With the increase in the production of cereals, pulses and a number of cash crops like suagrcane and oilseeds visualised in the Third Plan, there will be considerable scope for the expansion of processing industries in rural areas, With a view to providing fuller employment and strengthening and diversifying the rural economy, it will be desirable to develop these industries to the maximum extent in the decentralised and small scale sector and on a cooperative basis. The availability of basic facilities like power, trained labour and organised arrangements for the storage of raw materials and finished products will facilitate economic working of these industries. In rural areas, where such basic facilities may not be available for some time to come, rural artisans should be assisted to organise on cooperative lines to purchase and stock raw materials, adopt improved techniques and to establish arrangements for the sales of their products.
24. Development of small industries as ancil-laries.Some efforts were made during the First and Second Plans to promote the development of small scale industries as ancillaries to large industries, and such industries also grew up spontaneously in some measure. Various methods of promoting such growth are being examined by a special Committee. In the Second Plan, an important scheme was taken in hand for linking up the production of small units located in a new industrial estate at Bangalore with the production of a large project in the public sector, viz., Hindustan Machine Tools Limited. It is proposed to encourage similar schemes for some of the other projects in both the public and private sectors. In each branch of industry, with a view to planned development it is essential to take a comprehensive view of the requirements of the community, the contribution which small industries can make in relation to large-scale industries and the extent to which processes and stages of production can be decentralised. During the First and Second Plans, spheres of production of small and large units were demarcated in the case of some industries, such as cotton textiles and agricultural implements. In a few other industries such as bicycles, sewing machines and storage batteries, after estimating the requirements, separate targets of production were laid down for the large-scale and the small-scale sectors. Various aspects of integration between large and small industries have to be considered in detail for each industry. Among industries which are at present being studied are agricultural implements and machinery, machine and hand tools, bicycles and bicycle parts, sewing machines and sewing machine parts, automobile and diesel engine parts, radio receivers and amplifiers, tanning and foot-wear, fruit and vegetable preservation, cotton textile machinery parts, electric motors (fractional) and fans, paints and varnishes, storage batteries, scientific and table glassware, surgical and mathematical instruments and plastic products.
25. Industrial cooperatives.In those industries where considerable progress has been made in the formation of cooperatives such as handloom and coir, the emphasis in the Third Plan will be on consolidation of the organisation and finances of the existing cooperatives and on bringing more of the workers within the cooperative fold. In other industries efforts will be directed towards the formation of industrial cooperative societies. The main steps proposed to be taken include provision of financial assistance to cover the expenditure on managerial and supervisory staff for a limited period, subsidisation of the rate of interest charged by the central cooperative financing agencies to the primary cooperative societies, expansion of facilities for the training of staff particularly at the middle level for industrial cooperatives and strengthening of the staff in the State Departments of Industries or Cooperation dealing with industrial cooperatives. A small nucleus organisation is also being set up at the Centre for ensuring coordinated implementation of the programmes for the promotion of industrial cooperatives. In some selected areas, separate industrial cooperative banks may be set up provided certain conditions such as a large concentration of industrial units organised on cooperative lines and the prospects of raising of part of the resources through deposits are satisfied. In the case of those small scale industries where industrial entrepreneurs or partnerships predominate, the formation of industrial associations will be encouraged for obtaining and distributing raw materials and for undertaking other functions such as dissemination of technical and other information, maintenance of accounts, etc.
26. Arrangements for coordination.While at the Centre and at the State levels overlapping and duplication of effort in the formulation and implementation of programmes for village and small industries are avoided, as far as possible, in practice some overlapping and duplication do come about in such matters as establishment of emporia and sales depots, exhibitions, training, etc. Further means will need to be devised to secure coordination among the various Boards and agencies concerned with the implementation of the programmes. However, it is more at the field level that the need for greater coordination is being felt. This applies particularly to the programmes for khadi and village industries where the activities of State Governments, State Khadi Boards, registered institutions and the block level staff have to be more closely integrated. Moreover, with developments envisaged in the field of agriculture, power, transport, etc. it is necessary to take a unified view of the entire problem of rural industrialisation. The existing Boards may not always be able to take such a view because each of them operates in its own specified field. The rural industries pro'gramme of the Khadi and Village Industries Commission is at present limited to only 12 traditional industries. A comprehensive programme of rural industrialisation will have to take into account the various aspects of development in each area and it will be necessary to ensure that close cooperation of the various institutions and agencies working at the regional or block level is obtained for preparing local plans and implementing them. It is proposed to examine the various aspects of this question further in consultation with State Governments and the Boards.
Outlay And Allocations
27. In the Third Plan, a total outlay of Rs. 264 crores has been proposed for programmes of village and small industries, as compared with an estimated expenditure of a little less than Rs. 180 crores in the Second Plan. This is made up of about Rs. 141 crores for schemes of the States and Union Territories and about Rs. 123 crores for the Central and Centrally-sponsored programmes and schemes. The break-up of this outlay between different industries is given in the Table below :
for different industries
It will be seen that considerably increased expenditure is contemplated on small scale industries and industrial estates. In the case of handlooms, khadi and village industries, the level of expenditure is expected to be somewhat higher than in the Second Plan.
28. In addition to the outlay indicated above, there is a provision of about Rs. 20 crores made for the development of these industries in the programmes of community development and some provisions for the purpose have also been made in the programmes for the rehabilitation of displaced persons, social welfare and the welfare of backward classes. Further, about Rs. 275 crores are expected to be invested from private sources including banking institutions.
IV. Handloom, Khadi And Village Industries
29. The development programmes for the Third Plan have been formulated in the light of the experience already gathered and the findings and suggestions of the Evaluation Working Groups referred to earlier. In the case of khadi and village industries, there have been some modifications in the general conception of the programme. Under each programme, it is essential that expenditure on buildings and overheads is kept to the minimum.
30. Handloom and powerloam industries. The principal aim of the handloom programme during the Third Plan period will be to bring about further expansion of handloom production through fuller employment of the handloom weavers and the introduction of improved techniques. Emphasis will be shifted gradually from rebate on saleswhich has already been reduced from 6 nP. to 5 nP.and other schemes involving subsidy to more positive forms of assistance. Loan assistance on a more liberal scale will be provided to weavers, so that on the basis of the larger share capital in the cooperatives, it becomes possible for them to borrow larger funds from institutional agencies. Further, a higher priority will be accorded to the supply of improved appliances including semi-automatic looms, provision of facilities for processing and training, introduction of improved designs and purchase of yarn requirements increasingly from cooperative spinning mills. It is proposed to revitalise a number of weak cooperative societies and also to set up some worksheds for common weaving centres on a pilot basis mainly to meet export requirements. Steps will also be taken to stimulate the exports of handloom cloth. The bulk of the handloom programme will be implemented by the State Governments and the Administrations of Union Territories. The programme which the Handloom Board will itself implement includes the expansion of the weaver's service centres already set up at Bombay, Madras, Varanasi, Calcutta and Kancheepuram, reorganisation of the two Institutes of Handloom Technology and publicity and propaganda.
31. With a view to improving the economic condition of handloom weavers, a programme for conversion of handlooms into, powerlooms on a cooperative basis was undertaken early in the Second Plan period. This envisaged the installation of 35,000 powerlooms during the two years 1956-58. Progress was, however, very slow and only 35004000 powerlooms were installed out of about 13,000 sanctioned upto the end of the Second Plan period. The remaining 90009500 will be installed during the next few years. Effective steps have already been taken to check installation of powerlooms except by the handloom weavers' cooperatives.
32. Of the total production target of 9300 million yards of cloth set for the last year of the Third Plan period, the share of the decentralised sector, namely, the handloom, power-loom and khadi industries, has been fixed at 3500 million yards, as compared with its output of about 2350 million yards in 1960-61. The major portion of the additional production is expected to come from the handloom industry but no precise allocation of it between these different sections has yet been made. The position will be reviewed from time to time. in the light of progress made in each sector.
33. Khaditraditional and Ambar.With the introduction during the Second Plan period of the Ambar charkha with its superior efficiency and output, it was thought that traditional khadi might, relatively speaking, become less important and the Ambar charkha might play a larger part in the future development of khadi. These expectations were not entirely fulfilled. Work on the Ambar charkha was new to the spinners and altogether different from that on the traditional charkha; the Ambar charkhas manufactured in the earlier stages were not al' upto the mark and arrangements for servicing could not be organised to the extent required. Because of these initial difficulties, the Ambar charkhas were worked on an average for about two hours in a day for about 200 days in a year and the average production was only 1.8 hanks per day. The results fell considerably short of the earlier assumptions that the Ambar charkha could be plied for 8 hours in a day for 300 working days in a year and produce 8 hanks per day (the Ambar Charkha Enquiry Committee estimate was 6 hanks per day). The assumptions themselves might not have been realistic as hand-spinning is done largely by women and only as a part-time occupation. Even so, the earnings of spinners who took to the Ambal charkha show a fair improvement over those of traditional spinners, the average annual earnings being about Rs. 52 for Ambar as against about Rs. 35 for the traditional charkha. In some regions this average for spinners on the Ambar charkha has risen to about Rs. 80 to Rs. 100, and is similar to the average earnings of a large proportion of agricultural labourers. The Ambar spinners have been able to earn this amount in spite of the fact that the rate of spinning wage for the Ambar charkha has been fixed at 2 annas per hank, as against 2i annas for the traditional charkha. It is also deserving of note that the prices of khadi have not been allowed to rise in spite of the substantial rise which has taken place in the prices of cotton, and which has led to a rise in the prices of mill cloth. On the other hand, the increased production of khadi, both traditional and Ambar, resulted in the accumulation of large stocks in the last two years of the Second Plan period. Special steps have been taken for further development of sales including absorption of production locally.
34. Further development of khadi in the Third Plan will be mainly along the lines of the reoriented programme drawn up by the Khadi and Village Industries Commission in which the emphasis will primarily be on intensive efforts to secure integrated rural development of selected compact areas or gram ekais, It is proposed to organise 3000 gram ekais, each covering a village or group of villages having a population of 5000 each. The areas to be selected will be those in which some work has already been carried out under the Commission's intensive area scheme or the community development programme, or by some of the voluntary organisations, registered institutions and cooperatives. Another distinguishing feature of the future programme will be the preparation of local plans for the maximum exploitation of available resources for local use with a view to achieving local self-sufficiency to the extent possible, These plans are to be executed by registered institutions as well as service cooperatives and gram panchayats. Thus, the responsibility of the Commission will be largely limited to provision of financial and technical assistance and training facilities and the preparation and execution of the programmes will be left to the State Boards, the institutions and the local agencies at the village level. Some steps have already been taken to ensure coordination with the other agencies engaged in rural development programmes but arrangements for bringing about coordination with the programmes for public participation like the Lok Karya Kshetra Programme, etc. have not yet been completed.
35. The programme for khadi for the Third Plan will aim at gradual reduction of dependence on urban markets and correspondingly greater production for local use and improving the techniques of spinning and weaving so as to raise the output and earnings. Special attention will be given to improvement in the quality of khadi. By the end of the Third Plan period, about 40-50 per cent of the khadi production is expected to be marketed locally and the prices to be reduced by 1520 per cent. Certain improvements in the Ambar charkha have already been introduced which are expected to raise the productivity from 1 hank per hour to 1.5 hanks per hours. These improvements are at present undergoing field trials. A Committee has also been set up to suggest measures for increasing the sales of hand-spun yarn and khadi.
36. The traditional charkha will continue to play a definite role, but greater efforts will be made to popularise the Ambar charkha. It is also proposed to bring into effective use 2.5 lakh Amber charkhas out of 3.5 lakh charkhas already distributed and to introduce another 3 lakh charkhas in the gram ekais. Efforts will continue to be made to increase the productivity of the Ambar charkha from the present average of about 2 hanks to an average of 4 hanks and also gradually to increase their working period in the gram ekai centres, so that during the Third Plan period they will be worked on an average for considerably more than 2 hours in 200 days in a year, which was the average during the Second Plan period. As stated earlier, no precise allocation of production targets of cloth has been fixed for the different sections of the decentralised sector but a target of about 160 million yards of khadi is envisaged at present.
37. Village industries.Rural artisans are usually dispersed in a large number of scattered villages and this, combined with their low standard of literacy and poor economic condition, is a considerable impediment to rapid implementation of development programmes. Among the other factors responsible for the slow progress of village industries' programmes have been the general lack of previous experience in regard to the development of these industries, lack of trained and qualified staff, location of production centres in unsuitable places, lack of adequate funds and organisation for procurement of raw materials in bulk and failure to introduce more efficient techniques of production. Even such technical improvements as were introduced did not go far enough to secure a material increase in productivity. They did not, therefore, gain general acceptance.
38. An intensive area scheme was undertaken during the Second Plan period which aimed at intensive development of khadi and village industries as part of a larger effort for developing an integrated rural economy. The basic unit for working out the scheme was a selected area comprising 3040 villages with a population of about 20,000. The approach in this work has been to prepare village plans for utilising all available manpower and other idle resources and, therefore, the scope of the scheme includes measures for improvement of agricultural production through construction of wells and distribution of seeds and manure as well as construction of houses, roads, dispensaries, etc. At the end of September, 1960, the scheme was in operation in 65 intensive areas and 18 pre-intensive areas. Experience of the working of the scheme has suggested three ro", - conclusions. Firstly, there is great scope fc i introducing improved techniques and mechanical power in villages without creating any difficulties in regard to the full employment of manpower. This is because there is considerable development potential in the village economy. Secondly, through proper local planning and organisation, it is possible to convert idle manpower into a productive resource. Thirdly, the development of village industries, if it is to be enduring, has to be closely linked up with itie development of the rural economy as a whole.
39. In conformity with the reoriented approach and the aims referred to above, programmes for village industries for the Third Plan period have been prepared for implemen tation in compact areas and mainly to meet local requirements. Schemes for aid and assistance will be continued but, as mentioned earlier, present subsidies and/or rebates on sales in respect of the products of certain village industries will be replaced by suitable management grants on a progressively decreasing scale. The existing character of many of these industries is expected to change through the use of improved techniques and also the use of power, wherever available and considered desirable.
40. Some of the more important details of the programmes for different industries arc given below :
(i) Hand-pounding of paddy.It is proposed to introduce improved processes of parboiling, to train persons in improved methods of production, to continue research for production of improved equipment and to construct godowns.
Under the Rice Milling Industry (Regulation) Act, 1958, powers were delegated to the State Governments for licensing the installation of new rice mills or resumption of operation of defunct mills keeping in view not only the likely effects on the existing hand-pounding industry but also the scope for its further development, further it was also laid down that in permitting new rice milling capacity, preference should be given to rice mills to be run by cooperative societies. The actual working of the Act shows that new milling capacity has been licensed in some of the States and some of the main intensions of the Act have not been fulfilled. It is proposed to consider further the problems which have arisen with a view to ensuring that the policies visualised in the legislation are carried out effectively.
(ii) Oilseeds crushing.The programme consists of storage of oilseeds and arrangements for their distribution, effecting improvements in the existing Wardha ghani and developing cheaper models with higher productivity. The improved ghanis are proposed to be manufactured in the centres for blacksmithy and car-pentary.
(iii) Tanning and leather.A study group is already examining the working of the flaying and carcass recovery centres with a view to suggesting a practical scheme for better flaying, curing and grading hides and skins and for improving the tanning of hides and skins. In the meanwhile, a special drive has been initiated to intensify the development of flaying, carcass recovery and tanning and it is proposed to set up 200 centres for intensive development.
(iv) Match.There has been a change in the pattern of techniques and tools with the object of producing matches with a better marketability. In pursuance of the recommendations of the Cottage Match Special Enquiry Committee, it is proposed to set up 200 new 'D' c'ass production units.
(v) Gur and khandsari.Production units of varying sizes, equipped with hand-driven or pedal-driven centrifugals will be set up with a view to facilitating the use of power. Introduction of power-driven sugarcane crushers is also being encouraged and assisted.
(vi) Bee-keeping.The main emphasis during the Third Plan period will be on a gradual expansion of the industry wherever possible on more intensive lines and developing the industry with a view mainly to the secondary results such as improvement of crops and fruits, etc. rather than the primary results. The programme envisages organisation of 44 area offices, 975 sub-stations and distribution of 94,500 bee-boxes.
(vii) Other village industries.The programmes for other village industries like palm gur, hand-made paper, soap, fibre etc. include schemes for setting up production units, distribution of improved equipment, etc. It is also proposed to set up a few centres for the production of methane gas and to draw up a programme for the development of the lime industry.
V. Sericulture And Coir
41. Sericulture.The emphasis in the development programme for the sericulture industry will be on reducing the cost of production, creating a suitable marketing organisation and exploring possibilities of increasing exports. The main factors affecting the cost of production of raw silk are of a continuing nature and a determined effort will have to be made in the Third Plan to bring about an appreciable improvement in the existing position. The cost of mulberry constitutes 60 per cent of the cost of raw silk and it is necessary that the yield per acre of mulberry which is at present comparatively low should be increased. At present only a small proportion of the area under mulberry is irrigated and mulberry cultivation has to face competition from more remunerative cash crops. The first step to be taken is, therefore, to make mulberry cultivation a paying occupation by increasing the yield per acre through irrigation and application of fertilisers. The other important factors affecting the cost of production of raw silk are the supply of disease-free seed and of more efficient reeling equipment. Greater attention will be given to these aspects in the Third Plan. It is proposed to develop an adequate seed organisation so that the supply of disease-free seed could be increased. In regard to reeling equipment, experience of the programme in the Second Plan is that where cottage basins have been introduced in place of traditional charkhas, the quality of silk has improved. In the Third Plan, it is intended to encourage this process of substitution further, especially as it would be easier to shift over to cottage basins from traditional charkhas without changing the decentralised character of reeling industry. Regarding marketing facilities, organised efforts will have to be made during the Third Plan period to provide facilities for cooperative marketing for both cocoons and raw silk. This would ensure an economic price to rearers and prevent an undue rise in prices of raw silk. The possibilities of increasing exports will have to be explored, in view of keen loreign competition, by producing fabrics of oriental design, colour and pattern. The efforts of the Central Silk Board and the State Governments will be directed towards the achievement of these objectives in the Third Plan. It is envisaged that production of mulberry and non-mulberry silk will increase to 5 million Ib in 1955-66, as against 3.6 million Ib in 1960.
42. Coir industry.Over 55 per cent of the production of the coir industry is exported and the main emphasis in its development programme in the Third Plan will have to be on stepping up exports. The internal organisation of the industry which has grown up around the four process of collecting husk, retting the husk, spinning coir yarn and making coir goods such as mats, mattresses, etc. has not been sufficiently strong and stable and has not helped in the growth of the industry on sound lines. Success of the development programme depends largely on organising properly the primary producer of coir yam who is often a person with meagre resources "hemmed in between the husk dealer at the bottom and the exporter of fibre and yarn at the top who arc in a position to dictate terms". A number of primary cooperative societies for these small producers have been formed, but quite a number have run into losses and it is essential that stricter control and greater supervision over their operations is introduced to ensure healthy development. Apart from placing the coir cooperatives on a more stable footing, an important task in the Third Plan win be to supply to the coir spinners treadle spinning machines with a view to improving the quality of yarn and also to make suitable arrangements for dyeing. A special export promotion scheme has been drawn up to assist registered manu-facturers-cum-exporters of coir yarn and other products, who will be given facilities for import of baling hoops, sisal yam and dyes. Other important items in the programme will be (i) promotion of new lines of production like bristle and mattress fibre, rope-making, utilisation of coconut pith and coir waste and blending of coir with other fibres and materials like rubber, and (ii) setting up of defibring plants for the manufacture of matress and bristle fibre-
43. The All-India Handicrafts Board is concerned with the development of about 40 different crafts. Specific measures of development are being adopted for 12 of these crafts namely, carpets, art metalware, hand-printing, ivory, zari, wood work, papier mache, lacquer-ware, cane and bamboo and allied crafts, dolls and toys, pottery and jewellery. For these crafts the Board is assisted by special craft committees composed of representatives of craftsmen, manufacturers, dealers, exporters and State Governments. As a result of work undertaken in recent years, the key problems of various crafts have been identified and special steps will be taken to deal with them more fully during the Third Plan. Progress in some crafts depends largely on arrangements for the import and distribution of imported raw materials, as in art metal-ware and ivory; and in some, on improvements in processing and design and the solution of urgent technical problems, as in wood-work, lacquerwarc, pottery and papier mache; and in some on quality control and observance of specifications and standards, as in zari and brassware. In all crafts more effective organisation of the artisans is a prerequisite for assuring sustained employment, bringing about technological improvements and providing larger facilities. The number of handi-cratf cooperatives has increased from about 1000 in 1957-58 to nearly 1600 at the end of the Second Plan. Handicrafts emporia, of which there are now 115, can do much to facilitate the development of cooperatives by providing orders, technical advice and raw materials and credit and other facilities. In the Third Plan work along these lines should be expanded. While cooperatives will constitute the main line of development in the field of handicrafts, there is scope also for the organisation of small entrepreneurs engaged ip handicrafts into associations with a view to ensuring the adoption of improved business standards, control over quality and better conditions for artisans.
44. With a view to carrying to artisans throughout the country the results obtained at the four regional design development centres which were established during the Second Plan at Delhi, Bombay, Bangalore and Calcutta, it is proposed to set up design extension centres at selected places in which there are concentrations of craftsmen. Other activities to be undertaken include market research, promotion of inter-State marketing, laying down standards and specifications and extension of training facilities in the management of emporia, salesmanship and display. A Central Handicrafs Development Centre has been recently established with the object of studying the tools and techniques employed in different handicrafts and evolving suitable improvements. Common facility centres have been set up for certain crafts and will need to be extended during the Third Plan. For undertaking surveys and providing for training and experimentation, it is proposed to develop craft institutes for carpets, handprinting, bamboo and cane work, metalware, embroidery -and various carving crafts.
is considerable scope for the expansion of exports in handicrafts, specially
through ensuring quality control, pre-shipment inspection, provision of
raw materials, credit and other services to exporters of handicrafts,
securing orders from abroad and greater publicity with a view to the development
of new markets. These programmes should be accelerated. In the past handicrafts
catered mainly to the needs of foreign markets and the higher income groups.
In addition to exports, the production of handicrafts has to be oriented
towards meeting the needs of customers in different income groups within
the country itself and the promotion and development of rural crafts.
45. The growth of small scale industries constitutes one of the most significant features of development during the Second Plan. This is illustrated by such statistical data as are available for individual small industries. For instance, between 1956-60, the number of small scale. units engaged in the production of bicycles increased from 44 to 150, of sewing machines from 35 to 75, of machine tools from 344 to well over 500, of electric motors from 6 to 74 and of electric fans from 22 to 47. The production of bicycles in the small-scale sector increased from about 25,500 in 1956 to 228,000 in 1960 and of sewing machines from 23,600 to 52,000. The value of ungraded machine tools produced by small units rose from Rs 1.3 crorcs in 1956 to Rs. 4.0 crorcs in 1960. Large numbers of new units have also come into existence for the manufacture of dycstuffs and plastic products. There is little doubt that the growth of the economy anticipated during the Third Plan will provide large opportunities for both existing and new small scale industries. Development programmes in this sector have to be oriented and strengthened so as to enable small units to take the fullest advantages of these opportunities.
46. In the course of the Second Plan, a series of measures have been initiated with a view to making technical advice and information, credit and other facilities available for small scale industries. These will need to be developed further in line with the larger tasks set by the Third Plan. In addition to increase and diversification of production, programmes in the T'h'rd Plan must aim at securing closer integration between small-scale and large-scale units over a wide range of industries and the development of small industries as ancillaries. Small scale industries which now tend to concentrate in the larger cities and towns, should be promoted increasingly in small towns and at rural centres. Special efforts will also be made to develop cooperatives for production to the extent possible and also for purchase and distribution of raw materials, provision of common facilities, assembling of parts and components,marketing of products and securing orders in bulk. Along with cooperatives, trade associations comprising all small-scale units in each industry can also play a useful part. An essential aspect of development in the Third Plan will be to secure the fuller utilisation of available capacities through the adoption of two shifts and the provision of the requisite raw materials.
47. In the course of the Second Plan, the organisation for the development of small scale industries has been strengthened both at the Centre and in the States. It now includes 16 Small Industries Service Institutes with 4 Branch Institutes and 53 Extension Centres. Together, these have a corps of technical and specialised personnel which now comprises over 300 officers and 1500 other staff. In^ the States also, Departments of Industries are 'now much better equipped. More than one-half of the development blocks served by the community development programme already have Extension Officers for Industries. Small Industries Service Institutes have undertaken surveys of about 60 small industries and 102 different areas. In several districts, special studies of the possibilities of developing small scale industries have been carried out. Surveys of individual small scale industries undertaken at regular intervals can materially assist the planned development. 'Prospect Sheets' are being prepared for a series of industries. A large number of model schemes have also been drawn up. Guidance along these lines for starting new industries should be made available to new enterpreneurs and to cooperatives of artisans as well as educated youth. The programme for the expansion of training facilities during the Second Plan included training in business management and in engineering and non-engineering trades as well as training for district industries officers and block level extension officers. Mobile workshop vans provided a measure of training for artisans in the operation of machines. In each area, in cooperation with State Industries Departments and other agencies, the existing facilities will be further extended during the Third Plan.
48. Besides building up the necessary organisation for the development of small industries, progress v/as made in the Second Plan in establishing facilities for the provision of credit, supply of machines and development of marketing and stores purchase. In each of these directions considerable expansion is envisaged for the Third Plan, the main aim being to provide larger facilities for cooperatives, small entrepreneurs and new entrants. Although a beginning has been made in the grant of credit facilities through the scheme operated by the State Bank of India and guarantees for bank loans provided by the Reserve Bank of India, there -is vi.st scope for the extension of credit to small industries by commercial banks generally. Similarly, State Financial Corporations could also provide a larger measure of assistance to small scale industries. The National Small Industries Corporation has supplied machines on hire-purchase terms of the total value of about Rs. 4.2 crores, including over Rs. 1 crore during 1960-61. It should be possible to extend this scheme and to enable much larger numbers of cooperatives and small entrepreneurs to avail of hire-purchase facilities. Extension of hire-purchase facilities on the part of State Governments and their various agencies would facilitate the development of small scale industries. Stores purchase policies can make a valuable contribution both towards increase in the production of small units and towards the development of new lines of production. Thus, the value of purchases made by the Central Government from cottage and small scale industries rose from Rs. 74 lakhs in 1953-54 to nearly Rs. 6 crores in 1960-61. The benefits of stores purchase can be considerably enhanced if purchases are planned for sufficiently in advance and this is accompanied by carefully worked out development programmes. Stores purchase policies and related programmes need to be developed more extensively in the States and also at the Centre.
Among other developments in the field of small scale industries envisaged
in the Third Plan, reference may be made to the proposed establishment
of depots for stocking raw materials in short supply to be made available
to small units with a view to assisting in the fuller utilisation of existing
capacity. Facilities for training in the manufacture of small machines
will be enlarged through the establishment of additional proto-type production
and training centres. It is also proposed to set up an industrial design
institute and to encourage inventions through prizes and other means.
Schemes for quality marking of certain products, such as were initiated
during the Second Plan in some States, will be further developed. Three
States have recently set up Small Industries Corporations for constructing
industrial estates and running raw material depots and common service
facility centres. Similar Corporation'.: are. bcina considered in some
52. At appropriate places, particularly near large cities and towns, it is envisaged that only developed sites should be provided on which small entrepreneurs could erect their own factory buildings, instead of establishing an industrial estate complete with factory premises. With a view to promoting small ancillary industries, it is proposed to start some 'functional estates' for the specific purpose of accommodating small units which will be working as ancillaries to related large-scale industries. A few industrial estates are also proposed to be set up on a pilot basis in selected universities to enable students to earn while they are pursuing their studies and also to provide them with training, so that later they can start their own businesses. Certain suggestions have already been made by a team set up by the Committee on Plan Projects for securing economies in the general lay-out of industrial estates and the construction of factory buildings, etc. These will have to be followed closely in setting up new industrial estates during the Third Plan.
53. On the basis of the total investment under the Third Plan, including outlay in the public sector and investment from private sources, it is estimated that the development programmes for village and small industries outlined in this Chapter will provide part-time employment or fuller employment for about 8 million persons and whole-time employment for about 9 lakh persons. Programmes for the production of khadi are expected to provide mostly part-time employment and those for the handloom industry, powerlooms in the hand-loom sector, village industries, sericulture and coir industries to provide mainly fuller employment to those already engaged in them. The programmes for small scale industries, including industrial estates and handicrafts and, to a limited extent, some of the other industries, are expected to create mostly whole-time employment.
54. Exports of coir yarn and manufactures, handloom fabrics and handicrafts are valued at an annual average of about Rs. 21 crores. In several directions products of small scale industries have also begun to contribute towards exports. For instance, 600,000 pairs of leather shoes supplied by small units were exported during the Second Plan. Items of production like cotton hosiery, sports goods, builders' hardware, leather goods, canned fruits and vegetables and other products have been recently selected for export promotion. It should be possible to secure stable and expanding markets for a growing range of products of small industries. It will, however, be essential to give constant attention to improvement and standardisation of quality, reduction of cost, introduction of new designs and to the proper organisation of production. Schemes of quality marking should be extended widely as they are an important means for bringing about improvements in production and for creating confidence among foreign buyers.
55. Although surveys of a number of industries and specific areas have been carried out by different agencies and organisations in the past, basic statistical data for small industries for the country as a whole, which are essential for making a quantitative assessment of the impact of the programme and for drawing up new plans, are still lacking. A complete list of industrial units is, however, expected to be available through the Census of 1961 and, using this as the 'frame', it is proposed to conduct bi-annual surveys to cover initially all units which employ 10 or more workers (whether using power or not) and having a capital investment not exceeding Rs. 5 lakhs each.
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