|
Why low priority for SSI?
Daya Krishna
Poverty is India's greatest problem, and Village and Small Industries
(VSI) have a very large potential for reducing poverty because they
have very low Incremental Capital Output Ratio (ICOR). The investment
required for generating a particular level of income is very low in
the small-scale industries as compared to the investment needed for
generating the same level of income in the big size or heavy industry.
Therefore, investment needed for creating one job in a small-scale
industry ranges between 1/10th and 1/20th of the investment needed
for creating one job in an industry. The Ninth Plan says that the
Village and Small Industries (VSI) sector comprises modern and the
traditional segment of industry. The modern segment includes Small
Scale Industries (SSI) and powerlooms, which use modern technology
in the manufacturing process. The traditional segment consists of
handloom, sericulture, Khadi and Village Industries (KVI), coir industry,
handicraft and wool development in the unorganised sector. (p. 637,
para 5.274). The Ninth Plan also says that because of the immense
potential of creating new jobs at low costs, the Village and Small
Industries sector (VSI) has been accorded high priority. The Ninth
Plan has also fixed some targets for production, employment and exports
for this section to be achieved during the period of Ninth Plan. The
targets and the actual growth for the Small-Scale-Industries during
the Ninth Plan period are given in the Table.
The Low Targets
In spite of the Ninth Plan claim of giving high priority to the SSI,
their targets for the Ninth Plan period are much less than the growth
rate achieved during the Eighth Plan period. During the Ninth Plan
period, the number of SSI is expected to rise at the rate of 2.6 per
cent per annum which is less than half of the growth rate of 6.7 per
cent achieved during the Eighth Plan period. During the Ninth Plan
period, the number of employees in SSI is expected to rise at the
rate of 2.9 per cent per annum which is 2/3 of the growth rate of
4.2 per cent achieved during the Eighth Plan period. During the Ninth
Plan period, the output of SSI is expected to increase at the rate
of 11.9 per cent per annum which is less than 2/3 of the growth rate
of 18.2 per cent achieved during the Eighth Plan period. During the
Ninth Plan period, exports of SSI are expected to grow at the rate
of 15.0 per cent per annum which is less than 2/3 of the growth rate
of 23.0 per cent achieved during the Eighth Plan period. It is important
to note that during the period of Eighth Plan the rate of growth of
exports by SSI was about double of the growth rate of India's exports.
Fixing of Ninth Plan targets at a level much below the level achieved
during the Eighth Plan period is contrary to the claim of giving high
priority to the SSI. How it could happen? Can it be the result of
an oversight or a mistake by the printer or the planner?
There are several mistakes in the Ninth
Plan. For example, statement 5.6 on page 665 gives the number of employees
for SSI not in lakhs but in crores of rupees!! This is a serious mistake
and raises the suspicion that there may be several mistakes in the
Plan document. A close scrutiny, however, leads to the conclusion
that the fixing of low targets for the SSI in the Ninth Plan is due
to the planners' anxiety to make the Plan conform to the WTO stipulation
for scrapping of all quantitative restrictions on imports which are
to be enforced from April 1, 2001. The planners have fixed low low
targets for SSI in view of the fact that the large imports of foreign
goods after April 2001 will adversely affect the functioning of SSI.
The dire necessity of reducing poverty necessitates a high priority
to the SSI; but the compulsion of following the WTO directives resulted
in giving a low priority to SSI in fixing the targets. Removing poverty
and following the WTO directives are two contradictory goals. Pursuing
the first means defying WTO and pursuing the second means betraying
the people of India. It is high time that the Government makes the
right choice and does not repeat the mistake of Congress Government
which was voted out in 1997.
|
|
|
