Policy on Modern Small Scale Industries: A Case of Government Failure
AbstractIn this paper, we address ourselves to an evaluation of government policy designed for the modern segment of the small scale manufacturing sector. We argue that the policy has been and continues to be supply-driven and paternalistic leading to dependency. In addition, the individual unit-centered atomistic approach of policy is dominated by continuous protective and discretionary promotional measures with perverse incentive effects for the healthy growth of this segment. We underline the need to move away from continued protection and bureaucratic discretion-based promotion and argue for a radical shift in this policy towards a demand-driven, group-oriented and collective effort-based (rather than atomistic) approach. We argue for the abolition of indiscriminate reservation of production lines for exclusive production in the small scale sector and introducing and strictly enforcing the time bound character of promotional concessions. It would induce this segment to get out of the syndrome of remaining small and inefficient. The suggested shift in policy is necessary in order to flexibly adjust to fast changing circumstances so as to better serve the longstanding and as yet unattained objective of developing a vibrant and self-reliant modern small scale industry.
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Bibliographic InfoArticle provided by Department of Economics, Delhi School of Economics in its journal Indian Economic Review.
Volume (Year): 32 (1997)
Issue (Month): 1 (January)
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Postal: University of Delhi, Delhi 110 007
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- H19 - Public Economics - - Structure and Scope of Government - - - Other
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
- P41 - Economic Systems - - Other Economic Systems - - - Planning, Coordination, and Reform
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- Nezih Guner & Gustavo Ventura & Xu Yi, 2008.
"Macroeconomic Implications of Size-Dependent Policies,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 11(4), pages 721-744, October.
- Xu Yi & Nezih Guner & Gustavo Ventura, 2005. "Macroeconomic Implications of Size Dependent Policies," 2005 Meeting Papers 530, Society for Economic Dynamics.
- Guner, Nezih & Ventura, Gustavo & Xu, Yi, 2007. "Macroeconomic Implications of Size-Dependent Policies," CEPR Discussion Papers 6138, C.E.P.R. Discussion Papers.
- Nezih Guner & Gustavo Ventura & Xu Yi, 2008. "Code for "Macroeconomic Implications of Size-Dependent Policies"," Computer Codes 07-73, Review of Economic Dynamics.
- T.A. Bhavani & Suresh D. Tendulkar, 2010. "Determinants of Firm-level Export Performance: A Case Study of Indian Textile Garments and Apparel Industry," Working Papers id:2964, eSocialSciences.
- T.A Bhavani & Suresh D. Tendulkar, 2000. "Determinants of Firm-level Export Performance: A Case Study of Indian Textile Garments and Apparel Industry," Working papers 81, Centre for Development Economics, Delhi School of Economics.
- T. A. Bhavani & Suresh Tendulkar, 2001. "Determinants of firm-level export performance: a case study of Indian textile garments and apparel industry," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(1), pages 65-92.
- Bhavani, T.A., 2002. "Impact of Technology on the Competitiveness of the Indian Small Manufacturing Sector: A Case Study of the Automotive Component Industry," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
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