Economics notes in pdf
Q.4. Explain the meaning and scope of Small Scale Industries. Differentiate between cottage, medium and large industry.
Ans. The ‘small sector’, as the name implies, consists of small-scale industries. Following Dhar and Lydall, we can divide the small-scale industries into the following three categories, viz., (a) cottage industries,
(b) agro-based industries, and
(c) small industries.
(a) Cottage industries: These are generally associated with agriculture and part-time and whole-time occupations in rural and semi-urban areas.
(b) Agro-Based Industries: These industries are based on the processing of agricultural produce, or they cater to the input needs of the agriculturist. Agro-based industries may be organized on an (i) cottage scale; (ii). small scale, or (ii) large, scale. Large-scale agro-based industries are generally set up in large cities or in semi-urban areas. Rural agro-based industries are generally organized either on a cottage or small-scale; axis and possess most of their characteristics.
(c) Small-Scale Industries: We can distinguish between two types of small industries
(i) Modern small-scale manufacturing enterprises :
These are small firms using modern techniques to produce a modern product. The technology used by these firms Is on par with or closely approximates the modern large-scale industry. These firms, by their very nature. are located in large towns in order to take advantage of external production economies; they use hired labor and raw materials supplied by large
Different between Cottage Industry and Small Industry: We can distinguish between these two types on the basis of their links with the LC system rather than in terms of their absolute size or technological considerations along. These links are of the technical or input-Output kind as well as of the general economic kind. Small industries are technically and economically connected with the large-scale Sector while the cottage industries generally are not.
Different between Small Industry and Large Industry: The differences between the small and the large industries arise largely because of the distinct organizational character of the former which is indicated by such factors as ownership, management, technique, the flow of inputs, localization, and finally the historic sequence of development. In the official industrial policy formulation, a small industry is defined as a unit having investment up to Rs. 1 crore in plant and machinery. (It takes into account investments in plant and machinery only and does not consider money put into, effluent treatment, quality control, fire-fighting equipment, and safety. It also excludes the. ‘standby investments in land and buildings)
It also defines a ‘tiny unit as an enterprise having an investment up to Rs. 25 lakh (95%% of the small scale units are within the investment range of Rs. 25 lakhs.)