 VILLAGE AND SMALL INDUSTRIES

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 skill 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 decen- tralised 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 modem 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 re- view of the progress of these industries in the first two Plans is given in the following paragraphs.

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,

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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, statu- tory 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 developed-the 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 develop- ment 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 facilities for the promotion of small scale industries. A programme for the manufacturer and distribution of Ambar charkhas on a large scale was under taken 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 engineering 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 co operatives and recommended measures for ensuring their accelerated development. Action is being taken on the proposal 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 industries 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 yarn) increased from 1.9 million yards in 1956-57 to about 26 million yards in 1960-61. Mostly

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part-time employment was provided by this programme to about 3 lakh spinners, besides fulltime 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 oilseeds, tanning and leather, palm gur, nonedible 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 Srinagar established. Production of raw silk rose from 2.5 million lb in 1951 to 3.6 million lb 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 yam and goods suffered serious setback in 1957-58 and, although they have since increased to some extent, they are still 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 employment to about 3 lakh persons.

III

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 :

(i) to improve the productivity of the worker and reduce production costs by placing relatively greater emphasis on positive forms of assistance such as improvement of skill, supply of technical advice, better equipment and credit, etc.;

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(ii) to reduce progressively the role of subsidies, sales rebates and sheltered markets;

(iii) to promote the growth of industries in rural areas and small towns;

(iv) to promote the development of small scale industries as ancillaries to large industries; and

(v) to organise artisans and craftsmen on cooperative lines.

The policies and measures proposed for achieving these objectives are out-lined 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 the beginning of the Second Plan for conversion on a cooperative basis from handlooms to powerlooms. 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-pounding 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 undertake the 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 charkhas for reeling. Similarly, in handicrafts the adoption of improved tools will be encouraged and assisted.