Page 115 - DECO303_INDIAN_ECONOMY_ENGLISH

Indian Economy

Notes India due to the British policy of motivating the import of manufactures and export of raw
materials from India.

!
Caution The impact of the British connection and industrial revolution led to the decay of
Indian handicrafts. Instead, machine-made goods started pouring into India.
The British Government in India offered distinguishing protection to some chosen industries
since 1923. This protection was escorted by the most preferred nation clause for British goods. In
spite of this factor, some industries like cotton textiles sugar paper, matches and to some degree
iron and steel did make advancement. But one thing was quite apparent that during the British
period no attempt was made to foster the development of capital goods industries. Instead the
British Government put definite obstacles and cold-shouldered their development. The chief
features of the industrial pattern in India on the eve of planning (1950) were as below:
1. Lop-sided Pattern of Industry: The Indian industrial structure mirrored a lop-sided
size-pattern. The total number of persons hired in manufacturing in mid-I956 was nearly
15 million. Out of this, only 3.9 million were hired in factories (described by the Act as unit
of production employing 10 or more persons); 11.1 million were hired in household
enterprises and workshops hiring less than 10 persons. Out of total factory employment
00.9 million persons, 1.2 million or 3.1% were in small factories, 1.0 million or 26 were in
medium factories and 1.7 million or 43 per cent were focused in large factories. The
distinctiveness of the industrial pattern of India was the high concentration of employment
either in small factories and household enterprises, that is, the lowest size-group or that
there was a high concentration of employment in large factories, that is, the highest size
group. The medium size factories did not develop in India. The existence of this lopsided
industrial pattern was because of the colonial nature of our economy. The foreign firms
and those owned by big business and industrial magnates were of a very huge size arriving
at the top of the pyramid, and at the bottom were a very huge number of indigenous small
size firms. The lop-sidedness of the industrial pattern was shown in the absence of the
middle entrepreneurs operating medium sized firms.
2. Low Capital Intensity: You must understand another characteristic of the Indian industrial
pattern was the occurrence of low capital intensity. It was the outcome of two factors-first,
the general level of wages in India was low, and, second, the small size of the home
market in opinion of the low per capita income and the restricted use of mass production
(or high capital intensity) techniques led to low capital per worker hired.
A comparison of the two sets of figures offered by the United Nations discloses that capital
employed per worker was very less in India vis-a-vis U.S.A. Low capital intensity was
mirrored not only in consumer goods industries such as bakery, cloth, sugar, etc., but also
in capital goods industries such as iron and steel. (Table 7.2.)

Table 7.2: Capital Per Worker Employed in Some Industries

(In Thousands of dollars at 1960 prices)
U.S.A India
Alcoholic Beverages 16.0 6.1
Bread bakery products 5.0 3.5
Cotton yarn and cloth 8.7 1.8
Flour and gristmill products 39.1 5.6
Iron and steel 32.1 5.7
Contd...

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