Sectoral Issues in

Development-I UNIT 2 INDUSTRY

Structure
2.1 Introduction
2.2 What is Industry?
2.3 Industrialization and Economic Growth
2.4 The Industry Agriculture Nexus
2.5 Industrialization in the World and in India
2.6 Industrial Development in India after Independence
2.7 Causes of Industrial Backwardness in India
2.8 Let Us Sum Up
2.9 References and Selected Readings
2.10 Check Your Progress - Possible Answers

2.1 INTRODUCTION
The growth of industry is usually considered an important and essential element
in the process of economic growth. It is considered as the secondary sector of
development. It contributes substantially to economic growth of a country. In
this unit you will study details of industry sector.
After reading this unit, you will be able to
• explain the meaning of industry
• discuss industrialization and economic growth
• establish relationship between agriculture and industry
• discuss industrialization in the world and Indian context
• explain industrial development in India after independence
• spell out the causes of industrial backwardness.

2.2 WHAT IS INDUSTRY?

Industry, or the industrial sector, is one of the three broad sectors into which any
economy may be divided, the other two being agriculture and services. A parallel,
but not identical division is between the primary, secondary and tertiary sectors
of the economy. In this alternative classification, the sector corresponding to
industry would be the secondary sector. In any period, each of the three sectors
produces a lesser or greater part of the total output of any country, and a greater
or lesser part of that country’s labour force is engaged in the production of each
sector . The distribution of the total production of the economy (GDP) between
the three sectors is referred to as its output structure and that of the labour force
as its employment structure.

Of course, in any economy, a very large variety of distinct production activities

are undertaken. In the usual or standard classification scheme followed the world
over, including in India, these are grouped into nine different activities or sectors.
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These nine sectors, too, are referred to as industries, and the classification scheme Industry
is called an industrial classification scheme. However, it should be remembered
that we are not, in this unit, referring to this general use of the term, industry. In
common usage also, the term, industry is used in this broader sense, as, for
example, when people talk about the film industry, or, of the financial services
industry. Rather, our concern will be with the more specific use, wherein are
included only some and not all of the industries. The industrial sector, in this
sense, can be divided into three broad groupings.

The division of the economy into agriculture-industry-services or primary-

secondary-tertiary sectors is based on some criteria rather than being entirely
arbitrary. Differences in the nature of the products produced in these sectors, the
distance of their production process from the natural environment, etc, are some
of these criteria. Agriculture and mining are, thus, primary, because they involve
extracting or harvesting the earth’s products, while the secondary sector involves
further processing of some of these primary products into other products. Tertiary
activities cannot, however, be placed in a similar continuum as a third stage of
processing. Rather, they are chiefly distinguished by the fact that their ‘products’
tend to be intangible (lacking a physical form) and involve providing some kind
of service to the user. Thus, the services sectors do not produce goods like the
other two major sectors do.

However, in practice, the demarcation of the industrial or secondary sector from

the other two sectors has never been an easy matter. For one, certain activities
may exhibit features of more than one sector. Mining for instance is a primary
activity as it involves the extraction of natural resources, and in a sense, is more
primary than agriculture because of the fact that the resources extracted are
exhaustible. The method of that extraction, however, is more akin to industrial
production than agricultural activity, and industry is also the major consumer of
the mining sector’s products. At the other end are cases like the railways, whose
‘product’ (i.e., transport) is intangible, like that of many services, and like many
of them, its production and consumption are simultaneous. The production activity
of the railways, however, is closer to manufacturing. Construction, too, has a
similarly ambiguous character. While this activity may result in something that
has a physical form (like a building or a bridge) it is not that final result, but the
activity giving rise to it, which is like a service rather than a good, that is more
often sold by the sector as its product.

For these reasons, it is not surprising that there has been a lack of unanimity
about the sub-sectors to be included in the industrial or secondary sector. Thus,
Simon Kuznets included transport and communication in industry, while Colin
Clark put even construction in services. The general practice, promoted by the
United Nations, however, has been to include, within industry, the following
four sub-sectors.

i) Mining and Quarrying – this covers the activity of extraction of natural

resources like metals, coal, and oil, and those like stone quarrying.

ii) Manufacturing – this covers the activities involving the mechanical or

chemical transformation of organic or inorganic substances into products
or the assembly of manufactured components into products, whether these
are done by power driven machinery or by hand, and in a factory or at
home. These include: production of food and beverage products like wheat 29
Sectoral Issues in flour, processed tea, and aerated drinks; wood products like furniture; textile
Development-I
products like yarn, cloth and garments; leather products like footwear and
bags; paper and paperboard; rubber and plastic products like tyres, tubes,
and toys; mineral products like cement and glass; refined petrol and
lubricants; chemical products like synthetic fibres, fertilizers and
pharmaceuticals; production of metals like steel and aluminium and metal
products like steel utensils; machinery, equipment, and apparatus like
industrial machinery, transformers, televisions and computers; and transport
equipment like bicycles, cars, and trucks.

iii) Electricity, Gas, Water Supply – the economic activities relating to

generation, transmission, and distribution of electricity; the manufacture
and distribution of gas; and the activities associated with collection,
purification, and distribution of water.

iv) Construction –activities relating to construction of buildings (dwellings,

office buildings, stores, etc.) and civil engineering works (roads, bridges,
ports, irrigation works, power and industrial plants, pipelines, airports, etc.).

While India’s National Accounts Statistics (NAS, CSO) contain data for all four
of these segments of industry, the Index of Industrial Production (IIP) covers
only three sectors – mining, manufacturing, and electricity. The construction
sector is excluded by the IIP, primarily due to constraints in data availability.
There is also a use-based classification of the industries included in the IIP, where
they are divided into four groups based on the nature of use of their products:
basic goods (like cement, steel, fertilizers, electricity, and diesel); intermediate
goods (like textile yarns and fibres, electronic components, automobile
components, paints and pipes); capital goods (like pumps, compressors, motors,
engines, industrial machinery and machine tools, electric transformers, computers,
and commercial vehicles), and; consumer goods, with the last being further sub-
divided into consumer durables (like cars, motorcycles, televisions, and watches)
and consumer non durables (like paper, lamps and tubes, edible oils, sugar, and
soaps).

It should be kept in mind that the different views about the specific composition
of the industrial sector notwithstanding, manufacturing is universally regarded
as the most important component of the sector. The manufacturing sector is,
itself, internally very diverse, more so than any other segment of industry. Taking
into account the differences between the varieties of manufacturing industries
can often also be more important than those between manufacturing and the
others.

In the Indian case, there is yet another division within the industrial, and
particularly manufacturing sectors, that is important. This is, the division between
their organized and unorganized components. The organized segment includes
overlapping components like public sector enterprises, registered factories, and
joint-stock companies in the industrial sector; the unorganized sector includes
households and unregistered private enterprises engaged in industrial production.

Now that you have a fairly good idea about industries and their sub-sectors,
please answer the following question in Check Your Progress-1.

30
Check Your Progress 1 Industry

Note: a) Write your answer in about 50 words.

b) Check your answer with possible answers given at the end of the unit
1) What is meant by the industrial sector of an economy?
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2.3 INDUSTRIALIZATION AND ECONOMIC

GROWTH
Industrialization has historically been an ingredient element of the process that
Simon Kuznets terms, ‘modern economic growth’ – the sustained growth of
output and per capita income of a country at a relatively rapid pace. This kind of
growth has been observed in the world only in the last two and a half centuries.
The countries which initially experienced such growth are those that are now
termed developed countries. These countries are spread mainly over North
America and Western Europe with Japan being the sole representative of this
group from the Asian continent. The developing countries, are primarily in Latin
America, Africa and Asia, and in which live more than three-fourths of the world’s
population, are those that were, at least till the middle of the 20th century, bypassed
by the process of modern economic growth. Whether this was despite, or because
of the fact that the countries that were bypassed were often linked to those where
such growth did take place (like India and Britain) is an issue that is still being
debated. We shall not enter into that debate here. Suffice it to say here that the
countries which came to constitute the group of developing countries were, in
the initial two centuries of modern economic growth, mainly exporting primary
commodities to the countries which experienced industrialization.

The term industrialization is associated with the emergence and expansion of

the mechanized large scale factory system of production. It is a process
characterized by rapid growth of per capita output and an increase in the share of
the industrial sector in output and employment. It involves growth as well as
structural change, these two aspects being related to each other. The industrial
sector’s share in the total output and employment increases during the course of
industrialization because production and employment in that sector grow faster
than the average for the economy as a whole.

What is the precise relationship between industrialization and rapid economic

growth? A typical pre-industrial economy is primarily an agrarian economy -
one where agriculture is the major sector of the economy. This means that the
larger part of the labour force in such an economy is engaged in agricultural
production, and most of the output is produced in that sector. While such an
economy also has an ‘industrial sector’, its share in the economy is small and
production is mostly of the simple cottage industry type. In such an economy,
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Sectoral Issues in the rate of growth of the economy as a whole will greatly be influenced by the
Development-I
growth rate of the agricultural sector, because of its sheer weight in the economy,
and this weight will remain high so long as the other sectors do not grow at a
significantly faster rate. Therefore the maximum rate of growth possible in the
agricultural sector essentially determines the pace of growth of an agriculture
dominated economy. In such an economy, if the industrial sector at some point
of time starts growing much faster than the agricultural sector then not only
would it increase its share in total output but it would also push up the overall
rate of growth of the economy beyond the ceiling set by the agricultural growth
rate. This is precisely what happens with an industrialization process and that is
why there is a link between industrialization and modern economic growth.

In this section, you read about industrialization and economic growth. Now,
answer the following questions in Check Your Progress-2.

Check Your Progress 2

Note: a) Write your answer in about 50 words.
b) Check your answer with possible answers given at the end of the unit.
1) What is meant by the industrialization of an economy?
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2) What is the relationship between industrialization and the transition to rapid
economic growth?
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2.4 THE INDUSTRY AND AGRICULTURE NEXUS

All agricultural production requires land, and there is a maximum amount of
land that can be used for such production. Technological developments can, and
have increased the effective quantity of land that is available. Nevertheless, the
land required to produce output of some value in the agricultural sector is still
typically many times larger than the land required for a factory capable of
producing industrial output of equivalent value. Agricultural production, therefore,
32
cannot be multiplied in the same way as factory production can be. Further, Industry
industrial production is not dependent on the quality of the land in the way that
agricultural production is. In industry, particularly manufacturing, the productivity
of labour can be increased by using more and better machines. It is not so simple
in agriculture. While technological developments can contribute to improving
the productivity of any land, the inherent qualities of that land will still remain
of major significance. Nature, thus, imposes a greater constraint on improving
agricultural productivity.

Nature also constrains the range of produce that is available from the agricultural
sector, again subject to some increase through scientific and technical
development. This means that even if it were to be possible to raise the rate of
growth of agricultural production to a level much higher than the growth rate of
population, beyond a point that additional output would have no use. As people’s
incomes increase, the range of products they consume also tends to increase. No
one, with his or her belly full, wants any more food, but would like to consume
other things which cannot be produced by the agricultural sector. The increasing
diversification of consumption accompanying increasing incomes, therefore,
requires a corresponding change in the production structure, whereby the share
of non agricultural products increases. This, in itself, implies to an extent an
increase in the share of the industrial sector in output. In addition, the industrial
sector is also capable of producing a far greater range of products than the
agricultural sector – products that can be used to further produce products, or
products that can be consumed. Indeed, many of the improvements in agriculture
are themselves, dependent on products produced in the industrial sector (e.g.,
fertilizers, pesticides, tractors, harvesters.).

In countries with high densities of population, like India,, there is another sense
in which agriculture cannot be the leading sector of economic development.
Given limits to the quantity of land and of the productivity of that land, there is
a limit beyond which the agricultural sector cannot sustain employment. If gainful
employment is to be provided to a large work force, expansion of non agricultural
activities becomes crucial.

Thus, it is clear that even though the agricultural sector’s product is not an
exhaustible natural resource, its primary character does constrain it in such a
way that its declining relative importance in the economy is more or less inherent
to the process of rapid growth. A continuous decline of this kind fits in with the
typical pattern of modern economic growth exhibited by developed countries in
the past. However, in this typical pattern one also sees that while the non
agricultural sectors become correspondingly more important over time, the leading
non agricultural sector driving this process tends to be different in different phases.
Initially it is the industrial sector which drives this process so that its share
increases in output and employment. This is the period of industrialization. This
is followed by a subsequent post industrialization stage where it is the services
sector that increases its share, particularly in employment, at the expense of
industry. The movement of the relative shares of the three sectors in output and
employment accompanying the process of increasing per capita income can be
described by the following figure (which shows it for employment).

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Sectoral Issues in
Development-I

Fig. 2.1: The Changing Structure of Employment during Economic Development

There are various reasons why the services sector assumes great importance in
the later stages of modern economic growth which we cannot go into here. Suffice
to say here that the initial driver of the process is always industrialization, and
the needs of an economy catered to by its industrial sector cannot be met by the
services sector. The importance of industrialization for any country’s economic
development, therefore, remains. Critically important for a successful process
of industrialization in an agrarian economy is the achievement of some
breakthrough in agricultural productivity. Why that is the case may be understood
as follows.

Whatever may be the level of industrialization achieved, complete substitution

of agricultural products by products of the industrial sector is not possible.
Specifically, a large part of the food requirement of the population and the raw
material requirements of many industries will remain dependent on the agriculture
sector. If industrialization involves the movement of a significant part of the
workforce to non agricultural activities, those remaining in the agricultural sector
have to become productive enough to be able to produce a surplus of food over
their own requirement, sufficient to feed the non agricultural population. How
can such a change in the employment structure happen unless labour productivity
in agriculture improves? The rapid growth of industry also means a rapidly
growing demand for raw materials produced by the agricultural sector (e.g.,
cotton). How can this demand be met if agricultural improvement does not
happen? Crucially, how can both the demand for food and non food raw materials
be met simultaneously, when the land constraint does not allow increasing the
amount of land devoted to one without reducing that for the other?

Industrialization is also a process that requires large initial investments from

which products and incomes flow in the future. Once an industrial sector is
developed it can meet the requirements for financing such investment internally
- from the income from past investments. But in the initial stages of
industrialization these investments have to be financed by resources coming from
outside the industrial sector, which means that the agricultural sector may have
to generate the surplus for financing this investment. A similar scenario
characterizes the issue of the market for the products of a rapidly growing
industrial sector. Unlike what is possible in small scale agricultural production,
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the producers in any large scale industry, typically, cannot consume or use more Industry
than a small fraction of the total volume of their own production. They need to
find a market for this surplus product outside their own industries in those from
whom they can acquire other products in exchange. When the industrial sector is
developed and diversified, each industry may be able to find this outside market
in other industries. That is, the different industries may serve as markets for each
other. In the early stages of industrialization however, such markets have to be
found outside the industrial sector and in a pre-industrial economy it is only the
agricultural sector that can meet the need. Its ability to do so in turn depends on
its productivity and growth.

So far, we have not brought foreign trade into the picture. It may appear at first
sight that even if agricultural productivity cannot improve, an economy could
still industrialize by importing the shortfall of agricultural products and exporting
its surplus industrial products. However, it would require exceptional
circumstances for a pre-industrial economy to develop, in a short period of time,
such a pattern of trade. What is more likely is that it would initially need to
export agricultural products, and obtain, in exchange, those industrial products
(capital goods, etc.) required for development of its industrial sector. Thus,
agriculture may also have to play the role of foreign exchange earner for enabling
industrial expansion. Only at a later stage, when the industrialization process
has proceeded some distance, could it become an exporter of mainly industrial
products. Foreign trade, therefore, does not provide any escape from the
requirement of improvement in agricultural productivity.

Thus, a low productivity, backward, primarily agrarian economy may need

industrialization to achieve rapid economic growth. But to achieve this, it must
be first able to make a breakthrough in the agrarian sector which would provide
the necessary support to the industrialization process. The possibility of this
breakthrough would lie in the fact that even though there are limits to raising the
productivity of agriculture, a backward agrarian economy may be far below the
maximum level possible at any point of time. A change in the agrarian context
which would allow that gap to be bridged quickly, therefore, is a crucial
precondition for successful industrialization.

In this section you read about the nexus between industry and agriculture. Now,
answer the following questions in Check Your Progress-3.

Check Your Progress 3

Note: a) Write your answer in about 50 words.
b) Check your answer with possible answers given at the end of the unit.
1) Distinguish between industrialization and post-industrialization.
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Sectoral Issues in 2) Why is prior development of agriculture important for industrialization?
Development-I
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2.5 INDUSTRIALIZATION IN THE WORLD AND

IN INDIA
The first country in the world to experience a successful process of
industrialization was India’s erstwhile colonial master, namely Great Britain.
The British Industrial Revolution began in the last quarter of the 18th century,
just as Britain’s empire in India was being expanded under the aegis of the East
India Company. Before that revolution marked the beginning of factory
production, India and China had been the great manufacturing regions of the
world and there was great demand for their products in Europe. Indeed, the East
India Company first came to India to buy Indian manufactured products. It has
been estimated that in 1750 roughly 25% of the world’s manufacturing production
took place in the Indian subcontinent. However, by the end of the 19th century,
this share had come down to under 2%. During this period, India’s per capita
level of industrial production fell to a sixth of its initial level. In other words,
India experienced in the 19th century a process that is quite the opposite of
industrialization, and indeed has been termed de-industrialization. To an extent,
at least this was the other side of Britain’s industrialization process. The leading
sector of the British Industrial Revolution had been the cotton textile industry.
This industry had no prior existence in Britain where, traditionally, the woollen
textile industry had been important, and was always heavily dependent on export
markets. In India, on the other hand, the traditional hand spinning and weaving
based cotton textile industry was the most important manufacturing sector. British
industry was able to grow at the cost of India’s manufacturing sector by capturing
the market that was catered to by the traditional manufacturing activity in India.
Yarn and cloth, produced in British factories at much lower cost, displaced Indian
textile products not only outside India but also within. The latter was aided by
the Indian market being deliberately kept open by the British rulers through the
policy of free trade.

The destructive impact of British industrialization on India’s traditional

manufacturing sector continued throughout the 19th century. In the second half
of the century, this was aided by the development of the railways. By connecting
36
India’s vast expanse to ports where foreign-produced goods first arrived, the
railways enabled the deeper penetration of British manufactures into the Indian Industry
market. However, with railway development providing the impetus, the mid 19th
century also saw the beginning of modern factory production in India. The
principal expression of this was the setting up of a number of cotton and jute
textile mills from 1854 onwards by Indian and European businessmen. Thus,
one can say that modern industry has a continuous history in India that stretches
back over a period more than one and a half centuries long. During this period
the industrial sector did not stand still. The growth of industrial output has been
accompanied by a constant evolution of the industrial structure over time with
the emergence of new industries and changes in the relative importance of existing
ones. Technological developments taking place in the world have also, in one
way or the other, regularly penetrated into the Indian industrial sector. Modern
factory industry has also impacted on the older traditional manufacturing industry,
transforming it in many ways. But, looked at in relation to its impact in
transforming India from an agrarian to an industrial economy, the Indian
experience stands out as one of the most stunted cases of national industrialization.
This is true whether we compare India’s experience with developed countries or
with other important fellow developing countries, which, like India, had not
experienced significant industrial development till the middle of the 20th century.

In the mid-19th century, much of the world was mainly agrarian. This was true
for even the developed countries in our group, the United Kingdom being the
solitary exception. In the United States in 1839, the agricultural sector’s output
was more than double that of industry, and even in 1870, 51% of its workforce
was engaged in agriculture. The latter figure for Germany and France was also
close to 50%. Japan, at the same time, had more than 70% of its workforce in
agriculture, and Italy over 50%. In other words, seen at least in terms of the time
of birth of modern factory industry, India was not a particularly late entrant into
the industrialization process. At that time, the industrialization process of most
countries had either not begun or was in an incipient stage.

While the decline of agriculture’s share in output and employment has been
consistently maintained, many countries have already passed the peak of the
degree of industrialization of their output and employment. Table 2.1 does not
necessarily show the peak values for the industrial sector’s share in output and
employment for all countries, but only the peak and current values observable in
data series that extend over the last half century, or so. But it is adequate to
establish that India has not come even remotely close to traversing the distance
others have managed in this regard. The maximum share of industry in output of
all the other 11 countries in the group had, at the least, reached 35% and in most
cases, including the late industrializers, it had exceeded 40%. In India the same
share never touched even 30%, and in addition shows no signs of even heading
in that direction. The comparative picture of the degree of industrialization of
employment between developed and developing countries is a replication in
inverted form of the story of agricultural employment, including India’s laggard
position.

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Sectoral Issues in Table 2.1: Indicators of Industrialization of Selected Countries in Selected
Development-I
Years
Country Industry, value Employment in industry Share in Civilian
added(% of GDP) (% of total employment) Employment of
(WDI 2007) (WDI 2007) Industry (%)(OECD)
% Year % Year % Year % Year % Year % Year
United 43.08 1971 26.19 2005 37.2 1980 22 2005 48.4 1956 22 2006
Kingdom
United 34.51 1971 21.99 2004 30.8 1980 20.6 2005 37.3 1956 19.8 2006
States
France 35.09 1972 20.92 2005 35.9 1980 24.6 2004 39.5 1973 21.4 2006
Italy 40.24 1974 26.86 2005 37.2 1980 30.7 2005 39.7 1971 29.8 2006
Germany 46.43 1971 29.68 2005 40.3 1991 29.7 2005 49.3 1970 30.5 2006
Japan 45.55 1973 30.15 2004 35.3 1980 27.9 2005 37.2 1973 28 2006
China 48.52 1980 47.54 2005 22.4 1988 2005
Indonesia 46.81 2001 45.77 2005 19 1997 18 2005
Korea, Rep. 42.62 1991 40.33 2005 36 1991 26.8 2005 36.8 1991 26.3 2006
Brazil 45.88 1987 38.41 2005 25.4 1983 21 2004
Mexico 38.00 1987 25.93 2005 27.8 1990 25.7 2005 27.4 1990 27.4 2006
India 28.12 1995 27.33 2005 17.6* 2005

Source: World Bank, World Development Indicators, 2007 (WDI 2007), and [Link] ([Link]
* Based on NSS data

In this section you read about industrialization in the world and the Indian
experience in expansion of industry and growth of industrialization. Now Check
Your Progress-4.

Check Your Progress 4

Note: a) Write your answer in about 50 words.
b) Check your answer with possible answers given at the end of the unit.
1) Why can we say that industrialization in India has been limited in comparison
to other major countries?
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 Industry
2.6 INDUSTRIAL DEVELOPMENT IN INDIA
AFTER INDEPENDENCE
The overall record of Indian industrialization could be divided into two parts,
with independence from British rule serving as the dividing line. Indian
industrialization was, at no stage, a priority for the imperial government that
was focused on ensuring that India played its key role in propping up the British
imperial order. Therefore, the industrialization process lacked the crucial backing
of the state in its formative period. Therefore, the industrial development in
colonial India remained extremely limited. Between 1900-01 and 1946-47, the
secondary sector’s output grew at barely 1.5% per annum. At independence,
India was still a primarily agrarian economy, with the agricultural sector
accounting for over half the output and three-quarters of total employment. The
modern industrial sector, even after nearly a century of development, accounted
for only a small part of the economy. It also co-existed with a surviving traditional
manufacturing sector (or its modified version) that was as large in terms of its
contribution to national output, and accounted for a larger share in employment.
These are shown in Table 2.2.

Table 2.2: Structure of India’s GDP, 1948-49 (Percentage to Total GDP)

Primary Agriculture Secondary Manufacturing Registered Unregistered Teritary

Manufacturing Manufacturing

53.7 50.4 16.4 12.5 6.0 6.4 29.9

Source: S. Sivasubramonian, India’s National Income in the 20th Century (2000), Appendix
Table 9 (d).

At independence, India’s industrial sector was not only small but, also, very
narrow. The limited extent of industrial development in the colonial period
expressed itself in lop sided development where there existed important gaps in
the production structure, particularly in the case of capital goods and key
infrastructure sectors.

After independence however, the situation was different and promotion of

industrialization became an explicit element of state policy. In the history of
Indian industrialization after independence, the nature of the economic policy
regime in place makes for a distinction being made between the pre and post1991
periods. The economic policy of the Indian State was obviously not frozen
between independence and 1991. The central defining features of the pre 1991
strategy were the imposition of restrictions on international economic transactions
so as to maintain a relative autonomy of India’s economy from the international
economy, and the accordance of a major role to the state, both as a producer
(public sector production) and as a regulator of private economic activities.
Increasing openness of the economy to commodity and capital flows from outside,
and the granting of greater freedom to the private sector and the operation of
market forces, are instead the hallmarks of post-1991 policy.

2.6.1 Industries in India

Some of the major industries during the industrialization process in India are:

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Sectoral Issues in i) Iron and Steel: after independence, special attention was paid to the
Development-I
development of the iron and steel industry. The second Five Year Plan gave
top most priority and during the period three large scale steel plants were
established in the public sector at Bhillai, Rourkela, and Durgapur. In the
private sector also, two plants namely, TISCO and IISCO were taken into
hand.

ii) Jute Industry: the jute industry was one the oldest industry in India. Most
of the jute industries were found in West Bengal. After partition major jute
growing industries went to Bangladesh. The production of jute textile
increased from 837 thousand tonnes in 1950-51 to 1392 thousand tonnes in
1980-81 and further to 1430 thousand tonnes in 1990-91.

iii) Textile Industry: the textile industry is the largest industry in modern India.
It contributes 20 percent of total industrial output and provides employment
to about 17 million people. It also contributes 30 percent to total value of
exports.

iv) Sugar Industry: the sugar industry is also an important industry in India.
Sugar industries were initially established in Bihar and Uttar Pradesh.
However, in the last three decades, the industry has developed at a faster
rate in Maharashtra, Andhra Pradesh, Karnataka, and Tamil Nadu. A
significant fact about the sugar industry in India is that most of the sugar
mills are in the cooperative sector.

v) Cement Industry: the manufacture of cement was started in Madras in

1904. This industry operates mainly in the private sector. In 1981, government
allowed private companies to establish mini industries. Most of the cement
plants in India are located in Andhra Pradesh, Karnataka, Madhya Pradesh,
Gujarat and Rajasthan.

vi) Engineering Industry: in the Second Five Year Plan which laid emphasis
on industry, a large part of investment in the industrial sector was earmarked
for engineering establishments. As a result massive investments were made
in the heavy and capital goods industries. There industries are found both in
the public and private sectors. Some of these are: The Bharat Heavy Plate
and Vessels Ltd. (BTTPV), Bharat Pumps and Compressors Ltd., Triveni
Structurals Ltd., Bharat Wagon and Engineering Co. Ltd.

vii) Food Processing Industry: India is the world’s second largest producer of
food, next to China. However, food exports accounts only 1.5 percent of
international food trade. There is scope for large investment in food and
food processing industries. Government is now encouraging private
investment in the food processing sector. India’s food processing sector
covers fruit and vegetables; meat and poultry, milk and milk products,
alcoholic beverages, fisheries, plantation, grain processing, etc. States like
Punjab, Andhra Pradesh, Madhya Pradesh, Maharashtra, and Haryana are
doing better in the food processing sector.

viii) Small Scale and Cottage Industry: small scale and cottage industries play
an important role in India’s economy. This sector accounts for 35 per cent
of the value added by the entire manufacturing sector, 6.9 per cent of the net
domestic product and 30 per cent of the country’s exports. The Second Five
40
 Year Plan emphasises the role of small scale and cottage industries on the Industry
following grounds
i) generation of employment opportunities
ii) an equal distribution of national income
iii) mobilization of capital
iv) mobilization of entrepreneurial skills
v) regional dispersal of industries.

2.6.2 Industrial Growth Trends

The pace of expansion of the Indian economy and of industrial production after
independence was considerably more rapid than in the first fifty years of the 20th
century. But post-independence industrialization in India was marked by an
inability to achieve prolonged spells of rapid growth. Apart from the year to year
fluctuations in growth, there were also different trends in different phases.

As Table 2.3 indicates, three phases are distinguishable in the post independence
and pre liberalization period. The first phase corresponding to, roughly, the first
three five year plans saw an acceleration in industrial growth which was rudely
halted in the mid-1960s in the background of two successive droughts and military
conflicts. Industrial growth slackened and then began a period that has been
referred to as the decade of industrial stagnation. Industrial growth started reviving
from the late 1970s and the next decade, again, saw reasonably rapid growth.
This positive growth trend appeared initially to receive a further impetus from
liberalization in the early 1990s. However, in the second half of the 1990s,
industrial growth again slackened for a period of about six years before rebounding
from 2003-04 onwards. This growth has however again been halted in the
aftermath of the global economic crisis, with industrial growth in 2008-09 being
reduced to just 3.8% and manufacturing growth to a mere 2.4%. In other words,
the unstable nature of Indian industrial growth has survived the transition to a
liberalized economy.

Table 2.3: Annual Average Rates of Growth Real GDP in India (Per cent
per annum)
Sector 1950-51 1965-66 1980-81 1991-92 1997-98 2003-04
to to to to to
1964-65 1979-80 1990-91 1996-97 2002-03 2007-08
Mining & Quarrying 5.59 3.33 7.97 3.87 3.97 6.02
Manufacturing 6.72 4.41 5.82 8.10 4.07 9.11
Electricity, Gas & 11.51 7.89 8.58 7.68 4.50 5.74
Water Supply
Construction 6.72 2.80 4.41 3.37 6.92 13.68
Industry 6.75 4.04 5.87 6.58 4.71 9.69
Source: Central Statistical Organization, National Accounts Statistics (CSO, NAS)

It can be also seen that the manufacturing sector’s growth trends mirror the overall
trend observed since independence. The electricity sector on the other hand
generally grew faster in the early post independence period, with its growth being
41
Sectoral Issues in substantially slower after liberalization. Construction activities, on the other hand,
Development-I
appeared to have experienced accelerated growth since the mid 1990s, with this
growth being exceptionally high in the most recent period. The parallel
movements in the growth of manufacturing and industry as a whole is not
surprising in view of the fact that manufacturing has always accounted for a
large part of the industrial sector. However, particularly since the mid 1970s, its
weight in the industrial sector has been declining – it accounted for over 75per
cent of industrial value added in 1950-51 and about 73 per cent in 1974-75, but
this share came down to only 55 per cent by 2007-08. In recent years, the segment
within industry which has raised its share considerably is construction. In the
case of electricity, on the other hand, a consistent trend of increase in its share,
which went up from 1.64 per cent in 1950-51 to 10.90 per cent in 200-01, has
been sharply reversed so that its share came down to just 5.97 per cent in 2007-
08.

2.6.3 Structural Change in Manufacturing Output

The one change that did unambiguously accompany the growth of India’s
manufacturing sector after Independence was that structure of industry. Though
the process was not entirely a linear one, the general direction after Independence
was towards greater diversification in manufacturing activities, and a decline in
the relative importance of relatively simple, technology-based, light
manufacturing activities. Much of this change, which meant that India’s industrial
sector came to be in a position to produce most manufactured products, had
been achieved before the onset of liberalization.

The organized or, registered manufacturing sector reflected the structural change
to a greater extent than unregistered manufacturing. Much of its growth, after
Independence, was accounted for by industry groups which had just about emerged
towards the end of the colonial period. As shown in Table 2.4, manufacturing
industries accounting for over 80 per cent of the manufacturing value added in
2007-08 had a share of under a third in 1950-51. The most dramatic decline in
relative importance was in the case of textiles, the largest segment at
independence. This decline in the relative importance of textile industries in
organized manufacturing in part however was the result of a major shift in textile
production (of fabrics) from organized textile mills, mainly to what is called the
powerloom sector, which mostly, consists of unorganized sector units. At
Independence, the major part of cloth production came from mills. By the end of
the 1980s the powerloom and handloom sectors came to account for a share of
85 per cent and mill production of cloth was barely half of the levels in the
1950s.

Table 2.4: Composition of Gross Value Added of Registered Manufacturing

in India at Current Prices (Percentages to Total)
Manufacturing Industry 1950-51 1990-91 2007-08

food products 15.62 8.10 6.37

beverages and tobacco products 2.84 2.37 4.03
textile products 42.60 13.47 6.67
leather & fur products 0.81 0.89 0.40
42
 Industry
wood and wood products, furniture, 0.81 0.39 0.27
fixtures, etc.
paper and printing, etc. 5.07 4.27 2.04
Total 67.75 29.50 19.80
rubber, petroleum products, etc. 2.64 8.22 10.34
chemical and chemical products 7.30 14.63 20.57
non-metallic products 3.45 5.47 4.47
basic metals 4.67 12.85 17.88
metal products and machinery 3.04 11.20 8.25
electrical machinery 0.81 7.01 7.46
other manufacturing 2.23 3.47 4.53
transport equipment 7.91 7.65 6.69
Total 32.05 70.50 80.20
Source: CSO, NAS

Despite the shift in cloth production to the unorganized sector, the relative share
of traditional industries has declined even in the unorganized manufacturing
sector. Industries like textiles, food products, and wood products constituted the
large bulk of the sector at independence, but by now more than 56 per cent of the
unorganized manufacturing output is accounted for by other industries. In other
words, structural change has occurred even in unorganized manufacturing and
in the same direction as in the organized segment.

a) Organized and Unorganized Sectors

The organised sector comprises of enterprises for which the statistics are available
regularly from the budget documents or reports, annual reports in the case of
Public Sector, and through the Annual Survey of Industries, in the case of
registered manufacturing. On the other hand, the unorganised sector refers to
those enterprises whose activities or collection of data is not regulated under any
legal provision and / or which do not maintain any regular accounts. Non
availability of regular information has been the main criteria for treating the
sector as unorganised. This definition helps to demarcate organised from the
unorganised. For example, the units not registered under the Factories Act, 1948
constitute unorganized component of manufacturing as these are not regulated
under any Act. In the case of sectors like trade, transport, hotels and restaurants,
storage and warehousing, and services, all non public sector operating units
constitute the unorganised sector. However, the enterprises covered under the
Annual Survey of Industries do not fall under the purview of the unorganised
sector.

Within the industrial sector, the unorganized component is relatively large only
in manufacturing and construction activities, its share in the other two segments
being somewhat marginal though increasing in mining and quarrying. In
construction, typically, half to more than half of the domestic product has been
generated by unorganized construction activities. Within the unorganized
industrial sector, the size of the construction segment seems to be fast catching
43
Sectoral Issues in up with that of manufacturing which till now has been the most important
Development-I
component.

At Independence, as mentioned earlier, the unregistered manufacturing sector

was larger than the registered manufacturing sector. As far as output distribution
is concerned, the picture steadily changed thereafter as the registered segments
share increased (Table 2.5). Currently, the registered segment’s value added is
nearly two and a half times that of unorganized manufacturing. This reflects a
deep imbalance within the manufacturing sector since it is unregistered
manufacturing which is employs the major part of the industrial labour force.
Unregistered manufacturing also accounts for a large part of the increment in
manufacturing employment. Organized manufacturing employment, on the other
hand, has been stagnant for a long time.

Table 2.5: Distribution of manufacturing Value Added between Registered

and Unregistered Segments (Percentage Shares)

Manufacturing 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2007-08

Segment

Registered 46.78 51.35 56.52 55.99 65.07 66.33 69.29

Unregistered 53.79 48.95 43.46 44.01 34.93 33.67 30.71

Source: CSO, NAS

b) Public and Private Sectors

At Independence, there were very little industry established in the Public Sector.
The post-Independence strategy, however, accorded the public sector an important
role in the development of the certain key industries, including infrastructure
industries, and this set the stage for an expanding public sector presence in
industry. In the initial period after Independence, this was mainly public
investment driven and did not involve nationalization of industries. The growth
of public investment, however, slipped after 1965 but the period immediately
succeeding its deceleration also saw the high tide of nationalization. This process
covered, apart from banks and general insurance, the mining industries and the
oil sector. Manufacturing activity was largely excluded from the ambit of
nationalization. However, there were government takeovers of private companies
in the textile and engineering industries, mainly of those that had turned
chronically sick, a process that continued up to the early 1980s. As a result of all
of these, the public sector presence in the industrial sector increased more or less
consistently before liberalization, in all segments of industry, though it was in
the mining and electricity sectors that this presence came to be an overwhelming
one (See Table 2.6). Manufacturing and construction remained largely the domain
of private sector units. After liberalization the trend of increasing public sector
share was been reversed in all segments of industry as the focus shifted to
privatization.

44
Table 2.6: Share of Public Sector In Output of The Industrial Sector Industry
(Percentage)
Industry Segment 1960-61 1970-71 1980-81 1990-91 2000-01 2007-08
Mining & Quarrying 10.73 25.38 73.74 87.59 74.81 76.66
Manufacturing 2.61 9.53 13.11 20.23 12.48 13.08
Electricity, Gas & 73.63 90.85 56.89 116.71 105.70 101.21
Water Supply
Construction 7.72 7.81 16.21 15.99 14.63 8.63
Industry 6.05 14.06 20.90 33.74 27.12 22.88
Source: CSO, NAS

Note: The more than 100% share of the public sector in the electricity sector in
some years is made possible by the use of different methods by the CSO to
calculate the value added in such activities for the economy as a whole, and for
the public sector. Obviously the actual public sector share cannot exceed 100%
and the figures shown in the table should be taken as showing the broad trend in
these shares rather than their precise values.

In this section you read about industrial development in India after independence.
Now answer the following questions in Check Your Progress-5.

Check Your Progress 5

Note: a) Write your answer in about 50 words.
b) Check your answer with possible answers given at the end of the unit.
1) What are the two main features, one negative and the other positive, of Indian
industrial development since Independence?
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
2) Why does the rising share of the organized sector in manufacturing sector
output reflect an imbalance?
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
45
Sectoral Issues in
Development-I 2.7 CAUSES OF INDUSTRIAL BACKWARDNESS
IN INDIA
We have seen the limited nature of India’s industrialization and how industrial
growth in India after independence has been characterized by instability. This
instability has remained a persistent feature, even though many other things in
the context of industrialization have changed in a major way over the six decades
after Independence. Let us briefly list these changes between the early post
independence period and the current phase of the Indian economy.

i) At the time of Independence, a highly unstable and slow growing agricultural

sector was the major sector of the economy. The industrial sector in
comparison produced only 30 per cent of the output produced by agriculture.
By now, the services sector, which grew steadily and at a very high rate,
replaced agriculture as the largest sector of the Indian economy. The industrial
sector, too, produces one and a half times what agriculture produces. Within
the manufacturing sector, significant change has occurred in the structure
so that industries, like the textile industries and food products industries
which are dependent on raw materials produced by the agricultural sector,
have declined in relative importance.

ii) At the time of Independence, India’s savings rate and therefore, its capacity
to undertake the investments required by the industrial sector was very limited
– savings, as a percentage of GDP was under 10 per cent. At the same time
investments were also very critical in view of the narrowness of the industrial
sector – given the inter-linkages between industries the growth of many
industries depended on others being able to grow correspondingly to provide
the necessary inputs and capital goods. Most of the gaps in the industrial
structure were in heavier industries and infrastructure industries which
required large investments. In contrast, today we have a situation where,
not only is the industrial structure much broader, India’s savings and
investment rate have touched historically high levels, close to 35 per cent.

iii) After Independence, the economic policy adopted by the Indian state involved
a number of restrictions on the private sector and the free play of market
forces, including restrictions on imports and foreign investment. After
liberalization there has been a change in the opposite direction.

The subject of the reasons for India’s persistent industrial backwardness is a

more controversial one. In the literature on Indian industrialization one can find
many different explanations being offered at different points of time. One kind
of explanation, which has also been a justification for liberalization, laid the
blame for India’s industrial difficulties after independence on the doors of the
restrictive economic policy adopted after independence. It was argued that this
thwarted competition and generated inefficiencies in the industrial sector, and
did not allow Indian industry to take advantage of export markets in the manner
that other countries in East and South East Asia did. Two other shortcomings at
the level of policy may, instead, offer more reasonable explanations for the long
run limitations in Indian industrialization – these are the failures on the agrarian
front, and in sustaining public investment growth.

46
Earlier, we mentioned the importance of agrarian change for industrialization. Industry
In India the kind of agrarian breakthrough typically associated with
industrialization never happened. In the colonial period, the agrarian sector had
been the principal base for India’s exports, which financed not merely its imports
of industrial products, but helped maintain a recurrent export surplus. The agrarian
sector had also provided a substantial part of the state revenue for a long time
and financed the unilateral transfer of tribute from India to Britain. The potential
that had then existed for utilizing such exports and the surplus for expanding
industry was no longer available after independence.

There are many ways in which agrarian backwardness held back industrialization,
some more important in some phases than in others. One important way that has
been of a long term nature is the holding back of the development of a large
domestic market for industrial products. In India, since a large part of the
population derives its livelihood from agriculture, low average incomes coupled
with inequality in the distribution of agricultural income have meant the exclusion
of a large part of the population from the market for industrial products. The
consequent narrowness of the domestic market has had two further implications.
One is that it has not adequately provided the base on which exports of
manufactured products could have been developed over time. Second, the
dependence of the industrial sector on a narrow market provided by the relatively
well-to-do has also made the industrial structure more biased towards capital
intensive production than it need have been, since the rich demand relatively
more of such products. This has reinforced the market constraint since large
scale employment in industry, which could have created an internal market within
the industrial sector, has not materialised. These difficulties associated with
agricultural backwardness still persist. Therefore, despite the fact that relative to
industry and services the importance of agriculture in total output may have
declined, the agricultural sector may still hold the key to a successful
industrialization process in India.

Investment, on one hand, is an expenditure which creates demand for the products
produced by others. At the same time, investment also creates the capacity to
produce and supply products to others. The difference between private and public
investment lies in their motivation, and this makes for complementarities between
them. Private investment is undertaken only in expectation of a return or profit,
and will be forthcoming only when the investor expects a reasonable return within
a reasonable time. Private investment, therefore, tends to be less in many areas
where large investments with low returns and long gestation periods are required.
These are characteristic features of many infrastructure sectors in any economy,
and even of some heavier manufacturing industries in the early stages of
industrialization. These sectors are however critical for industrial growth and
deficiencies in them also hinder private investment in industries dependent on
them for supply of necessary inputs. Inadequate infrastructure can not only limit
the quantity of production possible, it can also increase the costs of production
of industrial products – which also limits their competitiveness in international
markets. Profit oriented private investment is also susceptible to being depressed
if investors do not anticipate that there will be adequate demand for the products
that would eventually flow from such investments. Public investment, in such
circumstances, can generate the demand for a wide range of industries, which
then induces private investment in them. Public and private investments are,
47
Sectoral Issues in therefore, complementary and it is extremely difficult for a process, driven entirely
Development-I
by private investment, to sustain itself over long periods of time.

2.7.1 Causes of Industrial Sickness of Small Scale Industries

(SSIs)
The small scale industries play an important role in industrial development.
However, many of them are victim of industrial sickness. A few important causes
of sickness are listed.

1) Lack of finance: finance is important for opening, maintaining, and sustaining

industries. Lack of finance, along with other factors like inefficient working
capital management, absence of costing and pricing, planning, and budgeting
also affect SSI’s.

2) Bad production policies: the wrong selection of sites, production,

inappropriate plant and machinery, lack of quality control, and poor research
and development.

3) Marketing: the third cause of sickness is related to marketing. The poor

sales techniques and branding also affect the proliferation of SSI’s.

4) Human resources: one of the important reasons for sickness of SSIs is non
availability of skilled manpower. Even if available, there is no provision for
human resource development.

In India however, the government has not been able to ensure adequate levels of
public investment for supporting the nation’s industrialization effort. The only
period in which public investment grew somewhat rapidly was during the first
three Five Year plans. Once this growth slipped in the mid 1960s, it never really
recovered and this problem of inadequate public investment plagues the Indian
economy till today. Inadequate public investment, in turn, has also reinforced
the agrarian constraint because some part of this investment is that which
contributes to improving agricultural productivity (e.g., in irrigation).

In this section you read about the dynamics of industrial movement in India.
Now answer the following question in Check Your Progress-6.

Check Your Progress 6

Note: a) Write your answer in about 50 words.
b) Check your answer with possible answers given at the end of the unit.
1) Give two reasons why India may still need industrialization.
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
.......................................................................................................................
48
 Industry
2.8 LET US SUM UP
Though modern industry made its first appearance in India a long time ago,
India’s industrialization has remained an incomplete one. Very limited industrial
development happened in the colonial period, since government policy remained
oriented to a different direction. After Independence, a conscious effort was made
towards promoting industrialization. While this succeeded in raising the level of
industrial development much beyond what had been possible under colonialism,
there were also critical shortcomings in policy which prevented the optimum
level performance. As a result, industrial growth took place in fits and starts and
its transformative impact on the Indian economy remained limited. Liberalization
of the Indian economy since the early 1990s was considered the panacea for
India’s industrial woes. But liberalization does not address either of the two
issues that have been highlighted above as the major constraints on Indian
industrialization. Indeed, it makes the problems more acute even while increasing
their significance. At the same time, Indian industry is exposed to foreign
competition from countries where conditions are more favourable for industrial
production. In such circumstances, a successful and widespread industrialization
process, perhaps, requires some rethinking on the policy front.

2.9 REFERENCES AND SELECTED READINGS

Babu, M. S. (2005), “India’s Recent Economic Growth: Some Limits and
Limitations”, Economic and Political Weekly, Vol. 40, No. 30, July 23.

Balakrishnan, P. and Babu M.S. (2003): “Growth and Distribution in Indian

Industry in the Nineties”, Economic and Political Weekly, Vol. 38, No. 38,
September 20.

Byres, T. J. (ed.) (1994): The State and Development Planning in India, Oxford
University Press, Delhi.

Byres, T. J. (ed.) (1999): The Indian Economy: Major Debates Since

Independence, Oxford University Press, New Delhi.

Chakravarty, S. (1987): Development Planning: The Indian Experience,

Clarendon Press, Oxford.

Ghosh, A., Subrahmaniam K.K., Mridul E., and Haseeb A.D. (eds.) (1992): Indian
Industrialization: Structure and Policy Issues, Oxford University Press, Delhi.

Kuznets, S. (1972): Modern Economic Growth: Rate, Structure, and Spread,

Indian Edition, Oxford and IBH Publishing Co. Pvt. Ltd., New Delhi.

Maddison, A. (1995): Monitoring the World Economy, OECD Development

Centre, Paris.

Nagaraj, R. (2003): “Industrial Policy and Performance since 1980: Which Way
Now?”, Economic and Political Weekly, August 30, Vol. 38, No. 35.

Nayyar, D. (ed) (1994): Industrial Growth and Stagnation: The Debate in India,
Oxford University Press, New Delhi.
49
Sectoral Issues in Papola, T.S. (2005): “Emerging Structure of the Indian Economy: Implications
Development-I
of Growing Inter-Sectoral Imbalances”, Presidential Address, 88th Conference
of the Indian Economic Association, Andhra University, Vishakhapatnam (http:/
/[Link]).

Sandesara, J.C. (1992): Industrial Policy and Planning, 1947-91, Sage

Publications, New Delhi.

Sivasubramonian, S. (2000): The National Income of India in the Twentieth

Century: Oxford University Press, New Delhi.

Soubbotina, T. P. and Katherine A. S. (2000). Beyond Economic Growth, Meeting

the Challenges of Global Development. The World Bank, Washington D.C.

2.10 CHECK YOUR PROGRESS - POSSIBLE

ANSWERS
Check Your Progress 1

1) The industrial sector in any economy encompasses the activities of mining

and quarrying, manufacturing, production and distribution of electricity, gas
and water, and construction. Like the agricultural sector, and unlike the
tertiary or services sector, it is chiefly a producer of goods through further
processing of primary products or manufactured inputs.

Check your Progress 2

1) Industrialization is a process of rapid growth of per capita income

accompanied by an increasing share of the industrial sector in the economy’s
output and employment. It is historically associated with the increasing use
of machinery, or the mechanization of production.

2) Rapid economic growth implies increase in output of an economy at a high

pace. Industrialization is associated with the transition of an agrarian
economy to such a trajectory because it lifts the maximum possible level of
growth of output beyond the levels previously set by the agricultural sector’s
growth.

Check your Progress 3

1) Industrialization represents the early stage of economic development when

the importance of the industrial sector in the economy increases at the
expense of the agricultural sector. Post-industrialization is a later stage when
the relative importance of the industrial sector declines after reaching a peak
and the services sector gains in importance.

2) A prior development of the agricultural sector is important for

industrialization because: a) agriculture has to provide food for the growing
non agricultural population; and, b) it has to, in the early stages of
industrialization, provide a corresponding supply of raw materials for the
expanding industrial sector, a surplus for investment, and a market.

50
Check your Progress 4 Industry

1) We can say that industrialization in India has been limited in comparison to

other major countries because the maximum levels attained by the share of
the industrial sector in total output and employment in India are considerably
lower than the peak levels of these in case of other countries.

Check your Progress 5

1) The main negative feature of industrial development in India after

independence has been the instability in it growth. The principal positive
feature on the other hand has been the structural change and increasing
diversification experienced by the sector.

2) The rising share of the organized sector in manufacturing output reflects an

imbalance because the overwhelmingly and increasingly larger part of
manufacturing employment is in its unorganized rather than organized
component.

Check your Progress 6

1) India may still need industrialization for the twin purposes of providing non
agricultural employment opportunities to its large and growing workforce,
and to supply to its population, manufactured consumption goods whose
consumption levels are presently very low. Both of these are critical for
raising the standards of living of the vast majority of Indians to even
reasonable levels.

51