Pattern of Indian Industrial Growth - Textiles, Cement, Sugar, Steel Industry

Pattern of Industrial Growth

The specific pattern of industrial growth can also be seen through the use based classification of industries. This classification consists of four major components viz.

1. Basic goods such as cement, chemicals, fertilizers, etc.

2. Capital goods such as machineries, machine tools, and engineering goods.

3. Consumer goods such as cycle, television, refrigerators, bikes, cars, food articles, soft drinks, etc.

4. Intermediate goods such as paint, plywood, pipe & tube, ancillary parts, etc.

Pattern of Industrial Growth

Average Annual Growth Rates

1980-91      1992-2000  2001-05

Basic goods          7.4     5.9     4.6

Capital goods       9.4     5.4     8.6

Consumer goods  6.0     6.5     8.0

Intermediate goods        4.9     8.6     4.5

Table indicates the trends in the average annual growth rates of all these four sectors. The pattern shows that the industrial growth was consistently led by the growth of consumer goods industries. Its growth has increased from 6 per cent in eighties to 8 per cent during 2001-05.

The growth rate of capital goods industries has declined from its peak of 9.4 per cent during eighties to 5.4 per cent during nineties before making a recovery to 8.6 per cent in recent years.

The growth of basic goods is declining steadily since eighties.

Steel Industry

Steel industry, being the key industry, forms the base for almost all other industries. Manufacturing, mining, construction, power, transport and other infrastructures and service sectors are all using steel as their inputs.

Thus the development of steel had a multiplier effect on almost all other sectors of the economy. Hence, it is popularly called as 'mother industry'.

Its critical role and importance in terms of its contribution to industrialization, national income, employment generation, is noteworthy. However, unremunerative prices, inefficient management practices of giant public sector, mostly by bureaucrats rather than technocrats are some of the major problems of the steel industry.

The Steel Authority of India (SAIL) was established in mid-seventies to extend support regarding raw materials and coordinate the development of many steel industries. The removal of price and distribution controls were the significant policy reform made in 1992.

The production of steel has increased more than about fifty seven times since independence. It has increased from .7 million tons per annum in 1951 to 40 million tons in 2004-05.

Textiles

Textile industry is one of the oldest as well as the largest industries in India. It has spread to almost all parts of the country. It has been well organized in terms of the labour employed and turnover of the output.

Textile industry accounts for 20 per cent of the total industrial output. It also employs 25 million people. The fabric produced during the First Plan period was 4775 million square metres. The industry underwent many changes since then. The production of fabrics in 2004-05 was 45378 million square metres. This is almost tenfold increase since independence.

The major problems of the industry are non-availability of enough raw material (cotton), increasing input costs, low profitability of small mills, and high cost of modernisation.

In recent years, budgetary concessions, rationalisation of duty structure and assistance under the Technology Upgradation Fund Scheme (TUFS) started paying some marginal dividends in the textile sector.

Cement

Cement is one of the emerging major industries with greater development potential. Cement, being the key raw material of the construction industry, plays a significant role in the country's current phase of development. The industry is almost self-sufficient in terms of raw materials, machinery, technology and increasing local demand.

India, with all such advantage, produces only 6 per cent of world cement production. It has recorded an annual growth rate of 8.4 per cent over the last two decades. Cement industry has an installed capacity of 140.53 million metric tons (mmt) with 120 large and 365 mini plants. The capacity utilization of large plants has been very high at 80 percent.

The current policy reforms are expected to increase the capacity utilisation further. High input costs and poor export infrastructure are some of the problems facing the industry. The Tenth Plan has fixed a production target of 203 mmt and the estimated investment during 2002-07 would be Rs. 17,600 crore.

Sugar

Sugar industry is an important agro-based industry. Its contribution to the economy is manifold. This industry has been the source of rural development through employment and income generation, and increased transport and communication facilities. In addition, sugar industry also provides input for some other industry. It is also earning from abroad through exports.

India has emerged as the largest sugar producing country in the world. It contributes 15 per cent of the world sugar production. However, the share of India's sugar in the international trade is very meagre at 0.05 per cent. Underutilization of capacity, unremunerative prices to sugar cane cultivators, industrial sickness and industrial closure are some of the major problems of the sugar industry.

Adequate support from government, banks and financial institutions should come forward to provide enough relief to revive the sick units. The Tenth Plan has estimated an investment of Rs. 1300 crore during 2002-07.