Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsINDUSTRIAL SECTOR3 Marks
Question
Explain any things/matters/points to prove importance of small scale industries.
✓
Answer
Importance of small scale industries:
Small scale industries are extremely important for social and economic development of India economy.Some of the importance and contributions of $SSI$ are discussed below.
$1.$ Employment generation:
Since small scale industries are primarily labour intensive industries they have huge potential for generating employment.
In the year $1994-95$ small scale industries generated $191.40$ lakhs employment opportunities. It rose to $249.33$ lakhs in $2001-02$ and it sharply increased to $1,012.59$ lakhs in the year $2011-12.$
So, small scale industries have continuously increased their employment generation capacity which is serving like a blessing for the nation.
$2.$ Increase In production:
Generally, large scale industries produce machinery and small scale industries produce essential goods for the nation using these machineries. Owing to a very large number of small scale industries in India, their production capacity is very huge.
Small scale industries produced goods worth $₹ 4,22,154$ crores in $1994-95.$ It rose to $₹ 2,82,270$ crores in the year 2001-02 and to $₹ 18,34,332$ crores in the year $2011-12.$
Thus, small scale industries contribute significantly in India’s total production that too using very less capital.
$3.$ Increase in production units $($industries$):$
Rise in production is only possible with rise in production units i.e. rise in number of industries.
India had $79.60$ lakh small industrial units in $1994-95.$ It increased to $105.21$ lakhs in $2001-02.$ It then rose to $447.73$ lakhs units in $2011-12.$
The number clearly shows that development of small scale industries has led India towards industrialization.
$4.$ Exports:
Small scale industries have noticeable role in exports of India.
Small scale industries of India had exported goods and services worth $Rs. 29,068$ crores in $1994-95.$ It reached to $₹ 71,244$ crores in the years $2001-02$ and it rose to $₹ 1,77,600$ in the year $2006-07.$
The numbers tell that small scale industries helps India earn a huge foreign exchange. This is extremely beneficial for India to manage import-export balance.
$5.$ Labour intensive production technique:
Labour intensive production technique makes maximum use of labourers for production.
It utilizes more labour and less capital and helps in maintaining the ‘land to entrepreneur proportion’.
In a country like India which has a huge population these techniques serve as blessing.
$6.$ Saves foreign exchange:
Small scale industries on one hand generate export incomes and on the other hand reduce India’s import expenditure by producing many necessary goods locally.
This helps to improve balance of payment and save spending foreign exchange unnecessarily.
$7.$ Short period of time:
Small scale industries can be started within very short time.
A very big advantage is that these industries can start producing goods within a very short time of investment. This helps to quickly overcome scarcity of goods.
Shorter set-up and production time are the key factors to achieve production targets of the nation.
$8.$ Balanced regional development:
In contrast to large scale industries, small scale industries can be started with less capital, less material and less resources at any part of nation. This is a unique advantage since the development does not remains concentrated to large cities and can be spread to any region the nation wishes. This results in balanced regional development.
This unique advantage also helps to reduce imbalance between rich and poor and developed and developing regions.
$9.$ Decentralization:
Large scale industries need very large amount of capital. So, they can be started only by very few people who are extremely rich. This results in centralization of capital and wealth.
In case of small scale industries very less amount of capital is needed and so it can be started by small producers.
Moreover, small scale industries can also make use of such resources and equipment which are otherwise dormant, unutilized and scattered. As a result, resources of every nook and corner are put into use and hence overall production volume increases.
When such resources are used for production, they generate employment and income for people who were otherwise deprived.
In all these senses we can say that small scale truly does the task of decentralization.
$10.$ High rate of development:
Large scale industries are few. Also they invest very huge capital and so they need high profits to run their expenses.
These industries develop the economy at an irregular rate because they cannot change their products and production methods as per the changes of market.
Contrast to this, small scale industries are set up with small amount of capital. So, several producers are producing a given product. This increases the volume of production and income in the economy.
Additionally, small scale industries are more capable to bring change in products and production techniques as per market changes because they do not need very huge capital or long term investment.
Owing to these benefits small scale industries give very high rate of development highly needed to develop nation.
Need a full question paper?
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.