Institutional Financial Assistance for Technological Modernisation of Small Industries: Opportunities and Constraints

Abstract

Small-scale industries play an important role in the economic development of a developing country. like India. Having the inherent. advantages of low investment and high potential for employment generation, diversificaiton of industrial base, dispersal of industries in rural and semi-urban areas and equitable distribution of national income, small industries have been accorded a strategic place in India's planned economic development.The small industrial sector in India has been making significant progress since independence and has contributed to the fulfilment of the socio-economic objectives of growth-with-equity. This is evidenced by the fact that the number of registered small industrial units increased from 16,000 in 1950 to 27.24 lakh in 1996. The number of workers employed in small industries went up from 16.53 lakh in 1972 to 152.61 lakh in 1996, and gross investment jacked up from Rs 1,334 crore, to Rs 6,671 crore during the same period: Output in the small industry sector expanded from Rs.2,603 crore in 1972, to Rs 3,56,213 crore in 1996. Net value added registered an increase from Rs.841 crore to Rs.3,230 crore, and export earnings from small industry jumped from Rs.

Financing of Small-Scale Industries in India: A Survey of Literature

“…The study concluded that SFCs are equally important as all India DFIs (Developmental Financial Institutions) and commercial banks for national development and therefore, should be treated on par. Chadha (1999) indicated that the growth in hire-purchase of machinery supplied by NSIC (National Small Industry Corporation) has increased from 9.16 crore in 1972-73, to Rs. 17.58 crore in 1988-89, showing an average annual growth of 9.48%.…”