GOUTAM SIPANI, Kolkata

RATIONALISATION OF SMALL SCALE INDUSTRIES
The small industry sector is considered to have a major role in the Indian economy, due to its 40 percent share in the national industrial output along with an 80 percent share in industrial employment and nearly 35 percent share in exports. Most of the policies before the 1990s were aimed at protecting the small sector rather than making it competitive. Some of the major issues that these policies did not address are as follows and which are to be expected from finance minister in the budget ‘10
1) Problems in obtaining credit One of the serious problems affecting the small scale sector is the hardship of obtaining credits from the banking sector. Through speeches by government in the past in its budget for , none of the policies seem to solve it. Due to unstable profits which prevent the banks from issuing unsecured loans, many of these SSIs are still dependent for funds on money-lenders who charge unhealthy interest rates. And those who have tried to obtain loans from the various financial institutions have only faced corruption associated with grant of loans and long delays in delivery.
2)Sickness in the SSI. Many of the SSI units ultimately close down due to finance, marketing along with poor management problems, has also being identified as a major cause of sickness. SIDBI, is hopefully a step towards solving this problem through pioneering management training.
3)Negative impacts of reservation policy The SSI policies have followed the policy of reserving certain items like mechanical engineering, chemical products ,auto-ancillary industry et al to be manufactured only by the SSIs. Though the policy was mainly aimed at protecting the small firms from cut throat competition from the large firms, The policy is actually counterproductive as those producing non-reserved items have performed better than those in reserved areas.
GOUTAM SIPANI ,
STUDENT(PGDMM)
KOLKATA
goutam.iimt@gmail.com