COTTAGE AND SMALL SCALE INDUSTRIES

NEED OF THE HOUR

Employment is natures physician and is essential to human happiness.

In the light of the above mentioned well known quote, this is an attempt to find a solution
for unemployment by encouraging our youth to be an entrepreneur. The said study
becomes more important because we are facing the disadvantage of population explosion
with an increased rate of unemployment. According to CIA world fact book the
unemployment rate of India during 2010 is estimated to be 10.7%. From 2004 to 2009

there was a gradual reduction in the unemployment rate. Due to the world recession and
economic slow down the rate is estimated to touch the level of 10.7% during 2010. The
information technology revolution has made the world a smaller village, similarly the
challenges of globalised market economy contributes to unemployment. There are some
other factors of unemployment such as
Inflation
Recession
Rapid change in technology
Undulating business cycle.
Change in tastes etc.
Federation of Indian Chambers Of Commerce and Industry, New Delhi (FICCI) in its
report published in April 2010, highlighted the state of Indian economy. According to
this report, with an assumption of a normal monsoon and substantial good performance of
the Industry and service sector the latest RBI projection placed the real GDP growth at
8.8 per cent for the year 2010-11.

Considering the current state of Indian economy and the impact of International
economics on it makes the figure of GDP growth difficult to achieve. On the other hand
China is showing a GDP growth of 11.9% as against India, which is 8.6% and inflation
rate in China is just 2.8 %, while in India it is 13.33 % on June 10, 2010. A comparison
of Indian and Chinese economy on some economic parameters is provided hereunder
Parameter India China
GDP Growth 8.6% 11.9%
Interest Rate 3.75% 5.31%
Inflation Rate 13.33% 2.8%
Jobless Rate 7.32% 4.2%
(Source Trading Economics as on June 10, 2010)

So in order to rectify the socio economic problem prevailing in India we need to

undertake a number of economic reform activities, and one of such activities will be to
concentrate on manufacturing. As manufacturing takes an important position in most fast
moving economics of the world. If we compare India with countries in Asia, such as
Thailand, Indonesia, Malaysia, Singapore, Hong Kong, Taiwan, Philippines, Korea and
China we find that most of them have economics driven by manufacturing which is 30%
to 50% of GDP. India is lagging behind with 22-25% of GDP, in this sector. Chinas
manufacturing is nearly 50% of GDP at about $ 650 billion per year, which is nearly Six
times the size of Indias manufacturing sector.
Now we need to take this issue very seriously on individual as well as government level.
Encouraging our youth to set up the cottage and small scale industries become necessary
to increase the share of manufacturing in GDP and to cope up with such a drastic
economic condition.

Author
Aniruddha Sunil Gachake
Associate Professor
Bangalore School Of Business
Nagpur Campus.
Email asgachake@rediffmail.com
Mobile - 9423671642