Trends and patterns of industrial growth

Development Of Industries:-

Industrial Development in India during the British Rule:-

1. Subject Matter of Industrial Development
2. Early Efforts of Industrialization
3. Industries in the Inter-War Period (1919-38)
4. Industries during 1939-47
5. Reasons for Low Industrial Development in India.

 

Subject Matter of Industrial Development:

Underdeveloped countries are greatly handicapped by shortage of capital for Industry and enterprise.

Finance is the prime maker of Growth. Anyway, capital for industry and entrepreneurial zeal were severely and conspicuously scarce in India when the East India Company (1600-1874) stepped into this country.

It was very difficult to raise capital on private initiative in the days of the Company rule and, thereafter, because of damped forces of demand and supply capital remained shy.

Naturally, under the circumstance, the state is supposed to act as a godfather for promoting and financing industries. Since India was under the British rule for almost 200 years (1757-1947), the British Government, found it unprofitable and unnecessary to go for industrialization in India. However, imperialist capital came in this country as a matter of colonial policy—the policy of subordination of Indian to British capital. It was only after the First World War (1914-1918), that state patronage for industrial development was visible as Britain’s supremacy all over the globe came under serious threat.

Against this backdrop, a “new” pattern was evolved to overcome the obstacles of

• shortage of Entrepreneurship;
• non-availability of, mainly, Venture Capital; and
• dearth of managerial skill and knowhow.

This new pattern of industrial organization that evolved came to be known as the Managing Agency System (MAS)—a peculiar business entity in the early years of the nineteenth century. Before we embark upon this form of industrial organisation, we will make a brief review of the industrial development during the British rule.

Early Efforts of Industrialization:

Modern industry or the large-scale industry is a mid-19th century pheno­menon. Before the British conquest, India’s supremacy in the industrial field reached its high watermark—India was called ‘the industrial workshop of the world’ during the 17th and 18th centuries. Demand for Indian Cotton goods in England during this time was unprecedented. Indian cotton cloth was considered by Englishmen as the badge of ‘style and fashion’ of the time.

Woolen and silk items were also in huge demand. All this development brought untold miseries in England and other parts of Europe. Firstly, import of Indian goods destroyed the prospect of woolen and silk industries. Secondly, Unemployment and suffering among the weavers mounted up. Thirdly, change in the composition of India’s trade led to the export of treasure from England to India.

To counteract these unhappy developments, some measures were taken to pacify the British nationals, but with little relief. Ultimately, the way out was found through legislations. Acts were passed, first in 1700, then again in 1720, to prohibit or restrict import trade of Indian cotton good, silks, calicos, etc., by total Prohibition or by imposing heavy duties. As these measures did not yield desired result, one British author commented in 1728: “two things amongst us are ungovernable: our passions and our fashions”.

What was the net effect of this state of industrial development? What was ‘industrialization’ to India by the standards of time was ‘de-industrialization’ to Britain. India, however, had not been fortunate enough as soon as the ‘ugliest’ thing came on us in 1757—the loss of freedom through British conquest of India.

Growth of Indian Industries till World War I:

India had never been an industrial country in the modern sense of the term. In this sense, even England and other industrialized countries of today had not been so, until recently. What strikes most about India was that even being pre­dominantly an agrarian country large varieties of industries existed in India and some of them competed quite successfully with many other countries.

But her industrial supremacy started crumbling when the English cotton industry raised its head rapidly by the mid-18th century.

Two important developments of this were:

(i) The beginning of the era of Industrial revolution in England around 1750 and

(ii) The Battle Of Plassey in 1757 that established the Company (foreign) rule.

As soon as the battle was won, the foreign ruler started abusing both economic and political power in an UN-sympathetic and hostile way. Under pressure from the powerful rising English manufacturing interests, EIC dealt a severe blow to Indian industries that led to final extinction—the phase of India’s ‘deindustrialization’. Now the cycle turned inside out. It employed the arm of political injustice on Indian products (one-way free trade) to strangulate a competitor with whom she could not contend ‘on equal terms’.

The last nail in the coffin was hammered in 1813 when the trading monopoly of the EIC was withdrawn. It was the political domination and the commercial policy of Britain that threw open India to all. India now suddenly was reduced to an importing country from an exporting nation. Indian market now became flooded with machine-produced goods at a lower price and also witnessed the loss of export markets. Further tragedy was in store.

Being a colonial country, she had to pay a large sum for England’s industrialization scheme. India was forced to supply raw materials for triggering industrial revolution with greater rapidity in England. India was then forcibly transformed from being a country of combined agricultures and manufactures into an agricultural colony of British manufac­turing capitalism.

A history of modern Indian large scale private industry between 1850 and 1914 is associated with the developments in mainly plantations like jute, cotton, and steel. Beginning of these modern Indian industries was the ‘product of India’s economic contact with Britain’.

There was also a limited development of mining, especially coal. One thing that is worth noting is that most of these industries, except textile factories, were under European control.

In the early days of the Company rule, Indian raw jute had been in great demand for the Dundee mills. World conditions after 1850 were quite propitious for the growth of jute manufacturing and the credit for jute spinning firm in Rishra, near Serampore, Bengal, went to George Acland—a Scottish. The founda­tions of cotton textile industry were laid also during the early 1850s. Though the jute industry was dominated by the foreigners the cotton industry was shaped and cared by the natives, mainly the Parsee entrepreneurs.

Some abortive attempts were made by the East India Company in the 19th century to develop iron and steel industry. However, the credit for the development of large scale manufacture of steel in India goes to Jamshedji Tata and his son Dorabji. Tata Iron and Steel Company were set up in 1907 and it started function of producing pig iron in 1911 and steel ingots in 1912.

The progress or the achievements of modern large scale industries can be visualized by considering the output produced and the EMPLOYMENT data. Between 1880 and 1914 large scale industrial output grew at the rate of 4-5 p.c. p.a. —a rate of growth that is comparable to other contemporary countries of the world. But in the Light of total economic activity in India, output produced was rather insignificant. This is also true about the employment situation; it came to less than eight-tenths of 1 p.c. of the total labor force in 1913-14.

Meanwhile India’s industrial structure started diversifying. In spite of inadequacy of domestic demand and high production costs, industries like woolen mills, breweries, and paper making industries made significant march during this time. Though these industries were recorded officially as the large industries, they were small in character.

Other industries having small-scale character that operated were tanning, vegetable oil processing, glass-making, leather goods manufacturing, etc. Despite diversification, India’s modern manufacturing industry could not develop on a Sound footing before the outbreak of the World War I.

The three important reasons behind such industrial development were:

(i) Young in experienced entrepreneurs,

(ii) Absence of State aid towards industrialization,

(iii) Steep uninhibited competition with developed foreign machine manufactures.

 

1. C. Majumder then adds: “The pattern of industrial development which had emerged in the 19th century—confined to a limited sector and concentrated in a few unevenly distributed areas—remained virtually unchanged till the beginning of World War I, though within these narrow limits the years 1905-14 witnessed a relatively rapid growth”.

Industries in the Inter-War Period (1919-38):

No country under colonial dependence could undertake any industrial transformation, if not all-round development. Up to the First World War, India experienced the classic period of imperialism of free trade and the British Government’s unsympathetic, hostile policy against industry.

In addition, shortage of capital, management experience and technical expertise, as well as the absence of a growing indigenous market, and, above all, general POVERTY, caused slow expansion of Indian industries. Even then, one can safely conclude that during 1850-1914, the foundations of modern industries were laid in India.

Meanwhile, the outbreak of the First World War exposed the weakness of Britain’s strategic position in the East as India had been deprived to develop the most elementary basis of modern industry. In order to impress upon the Indian people and the (industrial) bourgeoisie, Britain granted some political and economic concessions, particularly future industrialization during the War and immediately after the War.

As the issue of tariff protection crept into the heads of Indians, the British Government appointed the Industrial Commission in 1916 and assured that industrialization efforts would henceforth continue with utmost sincerity. Unfortunately, industrialization scheme as prepared by the Industrial Commission ultimately came to nothing.

However, during the war-period, industries like cotton and jute made much headway. Steel industry also experienced substantial growth. Consumer goods industries like chemicals, cement, Fertilizers, mineral acids, etc., for which India depended on foreign countries, also progressed during the War.

However, such prosperity of Indian industries was not a long-lasting one. Above all, promises made by the foreign ruler remained, however, unaddressed—as usual. On the contrary, faced by the intense foreign competition, Indian industries in the mid- 19205 demanded protection in an unwavering manner. To this end, the Fiscal Commission was appointed in 1921 that ushered in a policy of discriminating protection.

This was indeed a belated response to repeated demand made by the Indians from at least since the 1880s. The policy definitely helped some industries to develop. But the end result was rather a haphazard development of certain industries and not general Economic Development as such. In 1936, ‘The Economist’ observed India’s industrialization effort: “Although India has begun to modernize her industries, it can hardly be said that she is as yet being industrialized”.

On the whole, during the inter-war period, output of cotton piece goods, steel ingots, paper, etc., increased substantially. Many other industries also progressed even in terms of employment and the number of factories. But as far as diversification was concerned, it was indeed slow and the state of transformation of the economy was only ‘marginal’.

Industries during 1939-47:

The Second World War, however, opened a new phase in India’s industrial history. As the character of the World War II was different from that of the First, the latter created a far more urgent and intense demand for the rapid growth of India’s basic and key industries. Against the backdrop of this favoured ambience of industrial development and the near-cessation of imports due to war operations, Indian industries somehow came to take pleasure in having a quasi- monopoly situation in the home market.

As a result, not only industrial output of large scale industries expanded significantly, but also a more widening of the industrial diversification became possible during the war-time years. During 1938-39 and 1945-46, the general index of output of all large scale manufacturing activity (at 1938-39 prices) rose from 100 to 161.6 and that of factory employment increased from 100 to 159.

Despite this headway, India’s manufacturing before independence displayed many frailties. Firstly, India did not possess Capital Goods industries worth the name. This, therefore, hampered her potentiality to reproduce its existing productive capacity. Secondly, import dependence of the Indian manufacturing sector was enormous.

Thirdly, possession of technical skill and institutes offering technical Education were virtually negligible. Industrial development is largely conditioned by the stock of ‘Human Capital’—the stock of scientific and technical cadre. India was still a country denied to grow by the apathetic foreign government.

However, the prospect for industrial development in India after indepen­dence must not be undermined as she had already constructed enough possibilities for industrial development.

Reasons for Low Industrial Development in India:

In this connection, it is better to point out some reasons behind the low level of industrial development in India.

It was the result of:

(i) Inadequate capital accumulation;

(ii) Mobilisation of unproductive Investment; (Keynes castigated inordinate love for liquidity of Indians. Male people were desirous of seeing jewellery in the neck of their female counterparts);

(iii) Undue preference for quick-return yielding commerce and trading activities of the Indian capitalist classes; and

(iv) Concentration of entrepreneurship in the hands of a few small sections of Indians.

 

In addition, shortage of capital goods and absence of skilled personnel also acted as drag on India’s industrial development.

Though these acted as strong depressants, colonial status seemed to be the strongest stumbling block for India’s drive for industrialization. Above all, the contribution of the British Government towards India’s industrialization was minimal before 1916, that is, before the establishment of the Industrial Commission. The Industrial Policy of the imperial power could be described as ‘a case of too little and too late’.

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The Industrial Revolution was the transition to new manufacturing processes in the period from about 1760 to sometime between 1820 and 1840. This transition included going from hand production methods to machines, new chemical manufacturing and iron production processes, the increasing use of steam power, the development of machine tools and the rise of the factory system. The Industrial Revolution also led to an unprecedented rise in the rate of Population growth.

The Second Industrial Revolution, also known as the Technological Revolution, began in the late 19th century and lasted until World War I. It was characterized by the introduction of new technologies such as electricity, the internal combustion engine, and the telephone. These technologies led to the development of new industries such as automobiles, chemicals, and steel.

The Third Industrial Revolution, also known as the Information Revolution, began in the late 20th century and continues to the present day. It is characterized by the development of new technologies such as computers, the Internet, and mobile phones. These technologies have led to the development of new industries such as information technology, E-Commerce, and Social Media.

The Fourth Industrial Revolution, also known as the Digital Revolution, is a new technological era that began in the early 21st century. It is characterized by the development of new technologies such as Artificial Intelligence, Robotics, and blockchain. These technologies are leading to the development of new industries such as artificial intelligence, robotics, and blockchain.

Industrial policy is a government policy that aims to promote the development of certain industries. Industrial Policies can take many forms, such as subsidies, tax breaks, and regulations. The goal of industrial policy is to increase economic growth and competitiveness.

Industrial organization is the study of the structure, conduct, and performance of firms in an industry. Industrial organization economists study how firms interact with each other, how they compete, and how they affect the market.

Industrial districts are geographic concentrations of interconnected businesses that share common Resources and compete in the same market. Industrial districts are often characterized by a high level of cooperation between firms, as well as a strong sense of community.

Clusters are geographic concentrations of interconnected businesses that share common resources and compete in the same market. Clusters are often characterized by a high level of cooperation between firms, as well as a strong sense of community.

Agglomeration economies are cost Savings that arise from the concentration of economic activity in a particular location. Agglomeration economies can arise from a number of factors, such as the availability of skilled labor, the presence of suppliers and customers, and the existence of agglomeration externalities.

Marshallian externalities are cost savings that arise from the concentration of economic activity in a particular location. Marshallian externalities are named after Alfred Marshall, who first described them in his book Principles of Economics. Marshallian externalities can arise from a number of factors, such as the availability of skilled labor, the presence of suppliers and customers, and the existence of agglomeration economies.

Knowledge spillovers are the transfer of knowledge between firms and individuals. Knowledge spillovers can occur through a number of channels, such as face-to-face interactions, the movement of workers between firms, and the publication of research papers. Knowledge spillovers can lead to innovation and economic growth.

Technological change is the process of introducing new technologies into the economy. Technological change can be driven by a number of factors, such as new scientific discoveries, the development of new products, and the introduction of new production methods. Technological change can lead to economic growth and productivity growth.

Innovation is the process of introducing new products, Services, or processes into the market. Innovation can be driven by a number of factors, such as new scientific discoveries, the development of new technologies, and the introduction of new business models. Innovation can lead to economic growth and productivity growth.

Diffusion of innovation is the process by which new technologies and ideas are adopted by firms and individuals. The diffusion of innovation can be slow or rapid, depending on a number of factors, such as the cost of the innovation, the benefits of the innovation, and the uncertainty surrounding the innovation.

R&D is research and development. R&D is the process of creating new knowledge and technologies. R&D can be conducted by firms, governments, and universities. R&D is a key driver of economic growth and productivity growth.

Productivity growth is the increase in the amount of output produced per unit of input. Productivity growth can be driven by a number of factors, such as technological change, innovation, and the accumulation of capital. Productivity growth is a key driver of economic growth.

Economic growth is the increase in the amount of goods and services produced in an economy over time. Economic growth can be driven by a number of factors, such as technological change, innovation, and the accumulation of capital. Economic growth is a key driver of improvements in living standards.

Structural change is the change in the composition of an

What are the trends and patterns of industrial growth?

Industrial growth is the increase in the output of goods and services produced by a country’s industries. It is usually measured as the annual Percentage change in the value added by industry to GDP.

There are a number of factors that can affect industrial growth, including:

• The level of investment in industry
• The availability of skilled labor
• The level of technology
• The size of the domestic market
• The level of international trade

In recent years, industrial growth has been relatively slow in many countries. This is due to a number of factors, including the global financial crisis, the rise of China, and the increasing automation of production.

However, there are some countries that have experienced strong industrial growth in recent years, such as China, India, and Brazil. These countries have benefited from a number of factors, including low labor costs, large domestic markets, and government support for industry.

What are the benefits of industrial growth?

There are a number of benefits to industrial growth, including:

• Increased employment
• Increased tax revenue
• Increased innovation
• Increased productivity
• Increased exports

Industrial growth can lead to increased employment, as new factories and businesses are created. This can lead to increased tax revenue, as businesses pay taxes on their profits. Industrial growth can also lead to increased innovation, as businesses compete to develop new products and services. Increased innovation can lead to increased productivity, as businesses find new ways to produce goods and services more efficiently. Finally, industrial growth can lead to increased exports, as businesses sell their products and services to customers in other countries.

What are the challenges of industrial growth?

There are a number of challenges associated with industrial growth, including:

• Environmental pollution
• Social inequality
• Resource depletion
• Overcrowding
• Traffic congestion

Industrial growth can lead to environmental pollution, as factories and businesses release pollutants into the air and water. This can have a negative impact on human Health and the Environment. Industrial growth can also lead to social inequality, as the benefits of growth are often not shared equally among all members of Society. This can lead to poverty, crime, and social unrest. Industrial growth can also lead to resource depletion, as businesses extract resources from the environment at an unsustainable rate. This can lead to shortages of resources, which can have a negative impact on the economy. Finally, industrial growth can lead to overcrowding, as new factories and businesses attract workers from rural areas. This can lead to traffic congestion, housing shortages, and other problems.

How can we address the challenges of industrial growth?

There are a number of ways to address the challenges of industrial growth, including:

• Investing in environmental protection
• Promoting social Justice
• Using resources more efficiently
• Planning for Sustainable Development

Investing in environmental protection can help to reduce pollution and its impact on human health and the environment. Promoting social justice can help to ensure that the benefits of growth are shared equally among all members of society. Using resources more efficiently can help to reduce resource depletion and its impact on the economy. Planning for sustainable development can help to ensure that industrial growth is compatible with the long-term needs of the environment and society.

Question 1

Which of the following is not a factor that contributes to industrial growth?

(A) Increased demand for goods and services
(B) Increased investment in capital goods
(C) Increased productivity of workers
(D) Increased government regulation of industry

Answer
(D) Increased government regulation of industry

Explanation
Government regulation can sometimes stifle innovation and productivity, which can lead to slower industrial growth.

Question 2

Which of the following is a characteristic of the early stages of industrial growth?

(A) A focus on heavy industry
(B) A focus on light industry
(C) A focus on agriculture
(D) A focus on services

Answer
(A) A focus on heavy industry

Explanation
In the early stages of industrial growth, countries tend to focus on developing their heavy industries, such as steel, coal, and oil. These industries are essential for the production of other goods and services, and they can help to create a strong foundation for economic growth.

Question 3

Which of the following is a characteristic of the later stages of industrial growth?

(A) A focus on heavy industry
(B) A focus on light industry
(C) A focus on agriculture
(D) A focus on services

Answer
(D) A focus on services

Explanation
In the later stages of industrial growth, countries tend to focus on developing their service industries, such as finance, insurance, and tourism. These industries are less capital-intensive than heavy industries, and they can help to create a more diversified economy.

Question 4

Which of the following is a factor that has contributed to the decline of manufacturing in developed countries?

(A) Increased automation
(B) Increased Outsourcing to developing countries
(C) Increased competition from developing countries
(D) All of the above

Answer
(D) All of the above

Explanation
All of the factors listed have contributed to the decline of manufacturing in developed countries. Increased automation has led to the loss of jobs in manufacturing, as machines have replaced workers in many tasks. Increased outsourcing to developing countries has also led to job losses, as companies have moved their manufacturing operations to countries where labor costs are lower. Finally, increased competition from developing countries has made it more difficult for companies in developed countries to compete in the global marketplace.

Question 5

Which of the following is a characteristic of the “new economy”?

(A) A focus on information technology
(B) A focus on services
(C) A focus on knowledge-based industries
(D) All of the above

Answer
(D) All of the above

Explanation
The “new economy” is characterized by a focus on information technology, services, and knowledge-based industries. These industries are less capital-intensive than traditional industries, and they are more knowledge-intensive. They also tend to be more globalized, as companies in these industries can operate in multiple countries.