SMALL IS BEAUTIFUL - NOT SMALL SCALE

By Balbir Talwar 

e-mail: <alankrit@touchtelindia.net>

 

Nothing is really invented. All so called inventions are really discoveries of what exists in nature but which has been tapped through scientific studies and experimentations (and dramatically so in the last century). When Newton saw an apple falling from the tree, he discovered (not invented) the law of gravity, which later on became the basis of the modern physics. Discovery of electricity in the thundering clouds became the basis of electricity and later of the modern electronics. This in turn enabled us to discover various possibilities in the field of communications, such as telephone,  wireless transmission and now internet communication and computer science, all of which has transformed this world into a global village.

 

When the German writer, Schumacher, wrote ‘Small is beautiful’, little did he envisage that the most populous country (India) so seriously accept this definition literally, that they would incorporate it in their industrial policy, which stipulates that ‘Small Scale Industry (SSI)’ will not only be given a special status and all measures shall be taken to help its establishment, but it shall be given full protection from outside competition (from large scale sector, local as well as foreign, through subsidies and other incentives. Small is beautiful, not small scale, specially when it relates to industrial development of a country, which is so relevant for employment generation and industrial production. After 58 years of industrial planning the above protective policy for small scale sector has resulted in the establishment of a ‘BONSAI’ industry. The protectionist policy, duly supported by small entrepreneurs, bureaucrats as well as the politicians, through a process of ‘reservation’ of over 700 items for SSI sector, became a positive incentive to block the natural growth of the SSI to the natural up-gradation to SME status and then to the Large Scale sector. In other words what was started of as a process of industrialization, it ended up in glorifying the SSI into a widespread field of ‘bonsai’ type SSIs..In this fashion India missed out on cashing in the greatest asset it has, that is the human asset.

 

It is in all humility suggested that policymakers in India take a close look at the ground realities, and see that the naturally growth of small scale sector to medium and large scale industries is given a full scope, so as to see this sector does not get converted into the ‘bonsai’ variety. A glaring example is found in China, where industrial units have been given a hassle free environment, specially with a ‘flexible labour policy of hire, fire and exit, and this has resulted in the establishment of large scale ‘state of the art’ industrial unit, a large number of which employ from 50 to 100 thousand workers. As against this there is not a single industrial unit (capital or labour intensive) which can boast of such large-scale employment. This in turn explains the fact that starting from the same state of industrial development in 1976, China today has a turnover of its manufacturing sector of over 700 billion dollars, as against a total turonover of less than 150 billion dollars per annum.