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1.Unbalanced Industrial Structure
Despite all efforts India has not been able to attain self sufficiency in respect of industrial material. India is still dependent on foreign imports for transport equipments, machineries (electrical and non-electrical), iron and steel, paper, chemicals and fertilisers, plastic material etc. In the total industrial production consumer goods contribute 38 per cent. In newly industrialised countries like Singapore, South Korea and Malaysia this percentage is 52, 29 and 28 respectively. This shows that import substitution is still a distant goal for the country.
2. Low Demand
There is low demand for industrial products in the country due to low consumption level, weak purchasing power and poor standard of living. The domestic market is chronically underdeveloped through lack of enthusiasm generated by the middle and upper class segment who do not wish to raise their standard and improve their living conditions.
3. Regional Concentration
In India most of the industries are located in few selected areas leaving out vast expanse of the country devoid of industrial establishments. Most of the industries are located in and around metropolitan cities like Mumbai, Kolkata, Delhi etc. Tables 18.1 and 18.11 present uneven concentration of industries. While the states like Maharashtra, Gujarat, Tamil Nadu etc are well ahead in industrial development others like Meghalaya, Manipur, Jammu and Kashmir, Himachal Pradesh, Tripura, Orissa, Assam etc are far behind. This has not only created regional imbalance and regional disparity but has encouraged fissiparous tendency including unrest, violence and terrorism.
4. Loss in Public Sector Industries
5. Industrial Sickness
In the private industrial sector a growing number of industrial units are becoming sick. Widespread sickness has, indeed, become a major problem of this sector. The causal factors for this sickness are: (i) deficient management, (ii) under-utilisation of capacity due to shortage of raw materials, coal and power and transport, (iii) obsolete machinery, equipment and production techniques, (iv) uneconomical scale of production, (v) faulty choice of products and processes, (vi) difficulties in selling the products, (vii) diversion of funds to new units under same ownership, and (viii) conflict between different interest groups among the owners. As at the end of March 1999 there were 3, 09,013 sick/weak units (3, 06,221 in SSI and 2,792 in non-SSI sectors). A total of Rs. 19,464 crores of bank credit was locked up in these sick units. Sometimes, the government takes over sick units which further worsen the problem.
In order to provide a focal point for the revival of sick units, the Industrial Reconstruction Corporation was reconstituted in 1985 as the Industrial Reconstruction Bank. It is now the principal agency for reconstruction and rehabilitation of sick units.
The Central Government set up in 1986 two Funds, the Textile Modernisation Fund (TMF) and the Jute Modernisation Fund (JMF) to provide assistance on concessional terms to healthy as well as sick units for modernisation. These two Funds are being administered by the IDBI and the IFCI respectively. There is also a need for constant monitoring and deterrent penalties to the parties responsible for sickness.
6. Lack of Infrastructure
7. Improper Location Base
Industrial locations, in several instances, were established without reference to cost-effective points. Each state clamors for the establishment of major industries in the public sector within its boundaries, and the location decisions are often politically motivated.
8. Lack of Capital
9. Shortage of Industrial Raw Material
10. Higher Cost of Production and Low Quality of goods
This increases the cost of production and brings down the quality of products produced. Since these industries have virtual monopoly they hardly bother to improve their quality. Public sector units, under direct control of the government, frequently increase the prices which provide golden opportunity to private industrialists also to increase the prices. Our industrial products are not able to make wide market abroad.
11. License Policy
12. Lack of Institutional Organization
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