No nation was ever ruined by trade – Benjamin Franklin
Desires, wants, demand and supply are some of the basic concepts of economics. But these basic concepts play a major role in the development of an economy. It is on these fundamental concepts an economy accelerates. All nations look for rapid economic expansion and are in search of new markets. The policies framed by the government are very significant in enhancing the pace of economic development in a country. Similarly the era of globalization brought in rapid changes in the fields of investment, production, finance, trade and technology and hence it is often cited that the world has shrunk in size and the world is a global village.
All the countries in the world are bestowed with natural resources and no country is self sufficient on all the resources. Some countries are superfluous in resources while the others are inadequate. It only at this situation trade take place, the earlier form of trade was the barter system which prevailed across civilizations. Due to practical difficulties, the barter system was abandoned and new and complicated versions of trade took shape in the form of trade barriers and economic policies. With complications on trade on the rise, a new economic policy that would guide nations was the need of the hour and the elucidation to that was Globalization.
Globalization is a process wherein the production of goods and services take place across nations, without any barriers on production, distribution, exchange and consumption. But the pros and cons of globalization continues to be a highly debated topic.
Structural changes in the economy
India attained independence in the year 1947 and the planning for the economy started from 1951 onwards with the introduction of the first five year plan. India is an agrarian economy where 70 percent of the population depends on agriculture and agro related industries for their livelihood. It was only during the Second Five year plan (1956-1961) importance was given to the development of industries. Gradually the industrial policies paved way for rapid economic expansion, gainful employment, introduction of basic and heavy industries, export promotion and progress of small scale industries.
The small scale industries has been a major contributor to the country’s Gross Domestic product with about 45 percent share in industrial goods and 35 percent share in exports. The small scale industries are the bridge linking the large and medium industries and act as an engine of Growth in the 21st century.
Gradual development of industries
Let me take an example of Thanjavur District in Tamilnadu (India) to explain how a place acclaimed as the ‘Granary of South India’ slowly transformed itself as an industrial hub providing employment opportunities to the people of nearby villages. Thanjavur is famous for its architectural wonder – The Big temple and also for the ancient handicrafts and musical instruments.
Setback in the agriculture sector
Even though agriculture yielded good harvests, a majority of the workforce suffered due to seasonal unemployment, procurement and issue price for the food crops, migration of laborers, poverty and other such problems. Further added to the woes of the farmers, the climatic conditions played havoc in the productivity of food crops. To overcome these problems people started to shift to agro based and other allied industries.
The path taken
The small scale industries played a crucial role to tackle the twin objectives of unemployment and poverty. The setting up of the District industries center in 1979 played a vital role in the development of small scale industries located in the Thanjavur district. The small scale industries were successful because they were not only agro based but also chemical, engineering, textile and other miscellaneous industries were set up in rural areas. These industries were labor intensive and they provided employment opportunities to the people and increased their standard of living.
It was only after 1980, the government started the initial process of liberalization and the trend was to diminish the strict licensing system and to allow more freedom to the entrepreneurs. There were fluctuations in the economy that could be felt throughout the industries.
During the post liberalization (1991 onwards) era the focus shifted from ‘protection’ to ‘competition’ based growth. The industrial policies followed by the government were successful in bringing about a change in the development of Thanjavur. Along with this the functioning of commercial banks and private banks, cooperative societies were instrumental in the progress of the district.
The district per capita income at current prices in the year 1999-2000 was Rs.16269 and during the year 2006-07 it had increased to Rs.26714. During the 1980s the number of industries registered was 146 and in the 1990s the total number of industries stood at 227 and during 2009 – 10 the number of units registered were 15028. This is clear from the above data analysis that there is considerable progress of small enterprises sector contributing to the development of the district.
Since Thanjavur is an agricultural dominated district, paddy husks are available in plenty. Industrial units are set up, that use this husk as a raw material to produce card boards and wax can be produced from rice bran. Some of the agro based industries successful in this area are Coconut products, Confectioneries, Banana Products, Dairy products, Electronic Items, Toys and Games, Ready Made garments, Bio fertilizers and Coir based industries.
Globalization has brought in a plethora of opportunities, it is up to the country to optimize the resources and bring in escalation in every segment. Encouraging one sector and neglecting the other will lead only to lopsided expansion. It is a lesson to be remembered by the planners that sustainable growth in agriculture will alone solve the food security problem as well as employment, as majority of them are depended on agriculture. Appropriate policies can be framed to attract the foreign direct investments in manufacturing, automobile and IT related services industry.
Asst. Prof. M.B.A
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