Role of SSI in Economic Development and Advantages

ROLE OF SSI IN ECONOMIC DEVELOPMENT IN INDIA 

Explain the role of SSI in Economic Development . 

Ans. Economic development is defined in a number of ways; the commonest definition could be 'an increase in real per capita income of a person resulting in improvement in the levels of living'. The developments of small-scale industries contribute to the increase in per capita income. 

The role of SSI in economic development is given below: 

1. Employment: SSI use labour intensive techniques and therefore provide employment on a large scale, SSI accounts for 75% of the total employment in the industrial sector. SSI provides self-employment to artisans, technically qualified persons and professionals. These industries also offer employment to farmers when they are idle. 

2. Optimization of Capital: SSI requires less capital per unit of output and provides quick returns on investment due to shorter gestation period. Small scale units help to molatise small and scattered savings and channelise them into industrial activities.

3. Balanced Regional Development: SSI promotes decentralized development of industries. They help to remove regional disparities by industrializing rural and backward areas. They also help to improve the standard of living in suburban and rural areas. 

4. Mobilization of Local Resources: SSI helps to mobilize and utilize local resources like small saving, entrepreneurial talent etc. which might otherwise remain idle and unutilized. These industries facilitate the growth of local entrepreneurs and self-employed professionals in small towns and villages. 

5. Export Promotion: SSI helps in reducing pressure on the country's balance of payments in two ways. First they do not require imports of sophisticated machinery or raw materials. Secondly, SSI can earn valuable foreign exchange through exports. There has been a substantial increase in exports from the small scale sector. 

6. Consumer Surplus: SSI now produces a wide range of mass conception items. Over 5000 products are being manufactured in small scale sector. About one-half of the output of manufacturing sector in India comes from small scale industries. 

7. Feeder to Large Scale Industries: SSI plays a complementary role to large scale sector. They provide parts, components, accessories etc. to large scale industries. They serve as ancillary units. 

8. Social Advantages: Small scale sector contributes towards the development of a socialistic pattern of society by reducing concentration of income and wealth. They provide an honorable and independent living to people with limited resources. They facilitate wide participation of public in the process of development. 

9. Share in Industrial Production: SSI contributes more than one-half of the total industrial production in India. About 5000 products are manufactured in the small scale sector. 

10.Development of Entrepreneur ship : Small scale units have helped to develop a class of entrepreneur. These units facilitate self-employment and spirit of self-reliance in the society.  

ADVANTAGES OF SMALL SCALE INDUSTRIES 
What are the advantages of Small Scale Industries (SSI)? 

Ans. The various advantages of small scale industries are: 

1.Small scale enterprises can be started as per convenience of the owner in terms of space, finance, product and manpower. 

2. The setting up of the unit and starting of production requires a small gestation period of only 2 to 6 months and layout can be made as per convenience. 

3. Locally available skilled and semi-skilled people can be appointed at short notice and at a much lower wages compared to the medium and large industries. 

4. Wherever high technology involved the parent company executives will help. Alternatively, consultants can be hired to sort out technology related problems. 

5. It is one of the best forms of self-employment as well as giving employment opportunities to own kith and kin, friends and relatives etc. 

6. In case of rural sector the SSI units will be able to have cheaper labour especially in off seasons. 

7. In developing countries the SSI units are a necessity to assist bigger industries and new projects. Thus, they not only contribute to the economy of the nation but also create employment opportunities to people around the project sites. 

8. In case of SSI tunits started by experienced and talented executives, there is abundant scope to develop high technology components for MNCS and also to organize exports. 

9. Due to increase in population there has been increase in production of consumer goods and Fast Moving Consumer Goods (FMCG). In view of this there is a bigger role for small industries to take up components production and even manufacture the product itself. 

10. The small units are exempted from excise duty up to 75 lakhs per annum turnover. In case of industries in the backward districts, waiver or concession is given for various statutory taxes. Thus lot of paper work and formalities are avoided. 

11. Since employees are recruited based on contacts or relations there will be loyalty to the owner and hence there will be no trade union activity.