The active role played by the small scale industries in the process of development of modern economies has now widely accepted. This paper makes an in depth analysis of the major characteristics and development of SSI sector in Meghalaya, a state located in the North-Eastern region of India. In the process, size distribution, classification, characteristics of different categories of labor, firm size and organization have been dealt with to study the role of labor, capital and technology as productive resources for SSI. Efforts have also been made to identify the determinants of output and to evaluate its relationship with inputs like labor and capital. At the first stage, these issues have to be ascertained for the aggregate level, i.e., for the SSI sector as a whole and at the disaggregated level, i.e., at the subsector level. All indicators of industrialization reveal that the state economy is a simple economy where emergence of small scale sector in a significant manner has begun in the last thirty years only, where large and medium scale industries are yet to develop. SSIs are showing decreasing returns to scale. The reason for this is that manufacturing industries are dominated by household goods industries and agro and forest based industries. The minimum size for efficiency in these industries tends to be relatively small. The state economy is passing through a preliminary stage of `industrialization', where the full advantage of technology and economies of scale are not being enjoyed by the existing SSIs. As a policy measure, it is recommended that additional manufacturing industries are developed in the state, as this would lead to the full exploitation of economies of scale and technical advantages to put the state economy on rapid growth trajectories.
The Small Scale Industrial (SSI) sector has been considered as a powerful instrument for realizing the twin objectives of achieving `Accelerated Industrial Growth' and creating `Productive Employment Opportunities' in an economy. This sector also plays two important roles as producers of consumer goods and absorbers of surplus labor thereby addressing the problems of poverty and unemployment. Small scale industries also have a merit of being agents that help in mitigating regional imbalances, act as a nursery for entrepreneurship and facilitate mobilization of local resources and skills, which might have otherwise remained unutilized. In recent years, the SSI sector has emerged as a dynamic and vibrant sector of the Indian economy displaying its phenomenal growth in the varied fields of production, employment, and dispersed development, in general, and exports, in particular. |
