This GSEB Class 12 Economics Notes Chapter 10 Industrial Sector Posting covers all the important topics and concepts as mentioned in the chapter.
Industrial Sector Class 12 GSEB Notes
Importance of Industrial Sector:
Industrialisation is a process. It means making rapid increase in industrial production by increasing investment and infrastructure facilities in the economy. The process of industrialisation is associated with mechanisation and modernisation.
Importance: Importance of industrial sector in India is due to the following reasons:
- It increases contribution in National Income: In 2013-14, industrial sector contributed 27 % (at constant prices) in National Income.
- It increases employment: In 2011-12, 24.3 % labourers were employed in industries. Small-scale industries used labour intensive production technique which substantially increased employment.
- It increases export income and earn foreign exchange: In 2013 – 14, industries 2 earned about – share of export income.
- It does balance economic development: It makes speedy and balanced development of economy by establishing public sector in less developed or backward areas.
- It helps in modernisation of agricult are: Industries can provide technology to help modernisation of agriculture.
- It strengthens economic structure: By producing iron, cement, machines, vehicles, safety instruments it reduces dependence on other nations and make India much stronger economically.
- It changes social structure: Due to industrialization new industrial culture emerged which change social structure and inspire economic development.
1. Types of Industries on the basis of size of investment:
- Cottage industries: Industries with negligible use of electricity, machines and investment, e.g., khadi, khakhra, papad, incense stick, etc.
- Tiny industries: Labour-intensive industries along with the investment limit up to ₹ 25 lakhs, e.g., artistic products, leather, clay items, etc.
- Small-scale industries: Industries which have investment of more than ₹ 25 lakhs and less than ₹ 5 crores. Labour intensive and ancillary to big industries, e.g., Units producing tools, consumer goods, auto repair units, etc.
- Medium-scale industries: Industries which have investment of more than ₹ 5 crores and less than ₹ 10 crores. Labour intensive or capital intensive, e.g., machinery units, chemicals, electronic equipments, etc.
- Large-scale industries: Industries which have investment of more than ₹ 10 crores and utilise capital intensive production technique e.g., iron, railway equipments, big vehicles, etc.
2. Types of Industries on the basis of ownership:
- Public Sector Industries: Industries having ownership and administration under government control, e.g., railway, post, telephone, etc. They are classified in three categories:
- Departmental Industires: Industries run directly by Government as its department, e.g., railway, post, etc.
- Public Corporations: Owned by Central Government or State Government but administration under independent control of corporation, e.g., LIC, State Transport Corporation, etc.
- Joint Stock Companies: Managed by government within prevailing company laws, e.g., BHEL, ONGC, IOC, etc.
- Private Sector Industries: Industries owned and managed by private sector, e.g., car, TV shoemaking, etc.
- Joint Sector Industries: Ownership rights of industries to people and firms in the form of shares having 51 % or more and remaining ownership rights in the control of government e.g., GSPC.
- Co-operative Sector Industries: Industries run on co-operative activities, e.g., shops of essential commodities, dairies, co-operative banks, IFFCO, KRIBHCO, etc.
3. Types of Industries on the basis of products:
- Consumer goods industries: Industries which directly satisfy the requirements of people, e.g., ghee, oil, soap, shampoo, powder, etc.
- Intermediate goods industries: Indus¬tries having semi-furnished production and still one stage of production remains, e.g., yarn, steel sheets, machineries, etc.
Measures taken by Government for Industrial Development:
1. State owned enterprises: Government should own and run such industries which require heavy investment and contains high risk at the same time it is important for development of industries.
2. Encouragement to private sector industries: To start and to run private sector industries, government provides help like land at concessional rate, electricity, water, tax breaks, cheap and enough finance and tries to make them competitive.
3. Import tariff: Import tariff means a policy of government such that foreign products become expensive and costlier than our domestic products. This way domestic products may become competitive to foreign products.
4. Technical skills and training: Government provides technical and professional training to domestic industries to sustain in competition in the period of liberalisation and globalisation.
5. Economic support: Government also provides various economic help to industries to reduce their production cost which enable them to sell their products in international market and having price benefits that maximise its demand.
6. Infrastructural services: By availling infrastructural facilities like road, water, electricity, banks, insurance, etc. industries can save their money, time and efforts to attain least cost levels and become competent and get encouragement to run industries.
7. Setting up various institutes and policies: Government helps industries by setting up various industrial policies like import-export policy, monetary policy, fiscal policy, tax policy, etc. to favour the industries. Government has also created institutes like IDBI, SIDBI, ICICI, IFCI, LIC, GIC, etc. to provide financial help to industries. Thus, government provides help and protection from all aspects to create suitable environment for industrial development.
Special Economic Zones – SEZ:
- Special Economic Zones (SEZ) were introduced from 1st April, 2000 in India.
- Its main purpose is to attract foreign investment and to develop control free environment for export.
- SEZ are developed from the model of Special Economic Zones of China.
- SEZ Eire that types of geographical areas, where economic laws remain different and are tax free zones.
- India has set up eight SEZ which are
- Santacruz (Maharashtra)
- Kochin (Keral)
- Kandala and
- Surat (Gujarat),
- Chennai (Tamil Nadu),
- Vishakhapattanam (Andhra Pradesh),
- Falta (West Bengal) and
- Noida (Uttar Pradesh).
- New eighteen special economic zones are proposed.
- In India SEZ can be started by any private person, government, joint sector, stqte governments or their representative bodies. Even foreign institute can also start SEZ.
- All SEZ may be controlled by government.
Importance of small-scale industries:
- Small-scale Industries have remained much important and progressive during the last five decades.
- Industries which have investment more than ₹ 25 lakhs and less than ₹ 5 crores are known as small-scale industries. Normally, these industries use labour intensive techniques and use very less capital.
Following are the points which describe the importance of small-scale industries:
1. Employment generation: Small-scale industries have generated 249.33 lakhs employment opportunities in 2001-02 and it sharply increased to 1012.59 lakhs in the year 2011-12. Thus, small-scale industries have continuously increased their employment generation capacity.
2. Increase in production: Small-scale industries can increase production very sharply. They produced goods worth ₹ 2,82,270 crores in the year 2001-02 and it rose to ? 18,34,332 crores in the year 2011 – 12.
3. Increase in production units: Rise in production is only possible with rise in production units. India had 105.21 lakhs small industrial units in 2001-02 which rose to 447.73 lakhs units in 2011-12. This shows that the development of small-scale industries lead India towards industrialisation.
4. Export: Small-scale industries have noticeable role in exports of India. Small- scale industries exported goods worth ₹ 71,244 crores in 2001-02 which rose to ₹ 1,77,600 crores in the year 2006-07. Also it generates income of foreign exchange.
5. Labour intensive production technique: Labour intensive techniques are blessing for the nation like India where labour is in excess. Also labour intensive technique has more scope of employment. Therefore it is more suitable to our nation.
6. Saving of foreign exchange: Small-scale industries generate export incomes and reduce import expenditure by producing many necessary goods locally. Thus, they help to improve balance of payments.
7. Short period of time to produce: Small- scale industries can start production in a very short period which is useful to over-come scarcity of goods.
8. Balanced regional development: Small- scale industries can be started with less capital, material and resources in any part of the nation. This makes a possible balanced regional development.
9. Decentralisation: Small-scale industries need very less amount of capital. Therefore it can be started by even small sized producers. They utilise the resources and equipments which are not used and increase volume of total production. So they generate employment and get income. Thus, by decentralisation small-scale industries distribute benefits of production equally.
10. High rate of development: Small-scale industries can be set up with small amount of capital and therefore large number of producers can increase the volume of production and income. As they require shorter gestation period they bring changes in production as market changes. Thus, small-scale industries contribute high rate of development to develop a nation.