Discuss the importance of cottage and small scale industries in the Indian economy.

Ans. 

Introduction:

Cottage and small scale industries have an important place in the Indian economy. For balanced development of any country, along with large and heavy industries, the development of small and cottage industries is also very necessary. Even in industrial cities like Birmingham in England, half of the industrial establishments operate on a small scale. There are several reasons for the popularity of small industries. They require less capital. Their production techniques are simple, they provide more employment and remain in close contact with the market.  

Cottage and small scale industries have special importance in the Indian economy from the following points of view:

(1) From the viewpoint of full employment:

The problem of unemployment and under-employment is becoming more serious day by day in India. The development of large industries in the country has not solved this problem, because being capital intensive their ability to generate more employment is less. Small industries are labor intensive. With minimum capital investment they provide maximum employment. Thus, employment can be generated quickly and on a large scale through them.  

(2) Requirement of less capital: 

India faces shortage of capital and abundance of labor. A major feature of cottage and small scale industries is that very little capital is required to start them. Thus, cottage and small scale industries are more suitable for a poor country like India.

(3) Excessive population pressure on agriculture:

In India the pressure of population on agriculture is very high. As a result, Indian agriculture is in an extremely backward state. By establishing cottage and small scale industries, the unnecessary burden on agriculture can be reduced. This will increase agricultural production and income of the farmers.

(4) Economic equality:

With the spread of large industries, a major part of national wealth flows into the hands of a few people. This increases economic inequality in the country. The economic inequality in income and wealth distribution is continuously rising in India. Development of cottage and small scale industries will lead to decentralization of economic power and help reduce income and wealth inequalities. 

(5) Balanced development:

In India, large industries are concentrated only in some specific states. This has increased regional disparities between different parts of the country. Balanced development of the country can be achieved by establishing cottage and small scale industries.

(6) Strategic importance: 

Cottage and small scale industries are also important from the strategic point of view. Large industries concentrate in one location only. Thus, there is greater likelihood of destruction of such industrial centers in times of war. Cottage and small scale industries are scattered across different parts of the country. Therefore, they do not suffer any major damage during wars.

(7) Good relations between owners and workers:

In large industries, there are frequent disputes and conflicts between owners and workers. This impacts both workers and owners leading to economic losses. Industrial unrest also hinders production and reduces national income. In cottage and small scale industries, mostly family members or nearby individuals work. The number of workers is also less. As a result, a personal relationship develops between owners and workers in small industries leading to industrial peace. 

(8) Social importance:

From the social perspective too, cottage and small scale industries are very important. In large industries, the individual freedom of workers is curtailed and they become just a part of the machines. Accumulation of workers in industrial centers also pollutes the environment there. In contrast, in cottage and small scale industries, the personality and skills of workers develop and they remain free from the polluted and unhealthy environment of industrial centers.