Development of the rural small manufacturing sector in Gujarat and West Bengal: a comparative study

ABSTRACT

Rural, small, unorganised, manufacturing enterprises have received relatively less attention in the existing literature. This article examines issues related to the development of rural small manufacturing sector in Gujarat (known for emphasising industrialisation) and West Bengal (known for emphasising land reform and decentralisation of power). It finds that West Bengal has a huge number of rural own account manufacturing enterprises (OAME) compared to urban, whereas the rural-urban differential is not as significant in Gujarat. In West Bengal, the presence of large number of rural small manufacturing enterprises over urban counterparts suggests that much of the rural labour force has been trying to find income-earning opportunities outside agriculture.

KEYWORDS:

• Labour and livelihoods – Economics
• South Asia

Acknowledgements

The author has benefited immensely from detailed comments of two anonymous reviewers and useful suggestions by Professor Madhusudan Datta of the University of Kalyani on an earlier draft. The author is also thankful to K.P. Satheesan of Sardar Patel Institute of Economic and Social Research (SPIESR) for his contribution in reproducing the map of India.

Disclosure statement

No potential conflict of interest was reported by the author.

Notes on contributor

Subrata Dutta is an Associate Professor at the Sardar Patel Institute of Economic and Social Research (SPIESR), Ahmedabad, India. His research focuses on various topics related to Development Studies. He holds a PhD in Social Sciences (Economics) from Wageningen University in the Netherlands and has published articles in Indian and international journals.

Notes

1 Some large manufacturing enterprises may be geographically located in rural areas, but have strong urban links because they generally create demand for urban-based skilled labour. This apart, large-scale industries, irrespective of their location, have received much attention in the existing literature.

2 During the terminal phase (2006–2011) of the Left Front rule, West Bengal had a severe setback to its new initiatives to boost the growth of the large industry sector, such as the chemical hub at Nandigram and Tata Group’s nano-car project at Singur, failed due to the government’s controversial land acquisition policy as well as its forcible implementation in fertile, cultivable, private land. Due to the fear of losing traditional/agrarian livelihoods and dissatisfaction with the compensation offered by the state government, the farming community at Singur, comprising a small section of landowners, large section of sharecroppers (both registered and unregistered) and most landless labourers, agitated (often violently) under the leadership of the opposition political parties against the forcible acquisition of land and finally succeeded in stopping the project.

3 Saha and Swaminathan (1994) included an index of rainfall (defined as actual rainfall as a percentage of normal rainfall) in the exponential growth equation. The growth estimates showed that weather elasticities were insignificant in all but four districts. The estimates of growth did not change substantially when adjustments for weather were made. Therefore, the growth performance of agriculture in the 1980s in West Bengal, as they claim, cannot be explained in terms of unusually good weather conditions.

4 The land reform programme ‘Operation Barga’ was launched in October 1978. “Quick recordings of the names of bargadars [sharecroppers] and granting [them] legal rights to cultivable land was a major incentive for the marginal and small peasants to raise production. Provisions were also made for institutional credit and subsidies to the sharecroppers and assignees of the vested land to remove their dependency on landlords or money lenders” (Sanyal et al. 1998, 2979).

5 Although small and marginal farmers have limited scope for adopting capital-intensive techniques, there is doubt that their farms can absorb additional labour either. While the share of agriculture in employment is still relatively high, we, however, observe a declining trend from 68.2% in 1982–1983 to 47.5% in 2012 (Ramaswamy 2015, 5).

6 The usual principal status is the status in which a person spent (either employed or unemployed) the majority of her/his time (i.e. 183 days or more) during the previous 365 days from the date of survey.

7 Let us give an example. There are various government schemes for the MSME sector in India. An exhaustive list has been compiled by the National Institute for Micro, Small and Medium Enterprises, Hyderabad (see http://msme.gov.in/WriteReadData/Whatsnew/Sch-vol1-151214.pdf-sri.pdf). It is difficult for an illiterate entrepreneur to access such important information independently.

8 Some states, such as Tamil Nadu, Maharashtra and Kerala, showed even higher advances-to-deposits ratios than Gujarat in 2011.

9 Haats are a type of village market/bazaar in India.

Additional information

Funding

This work was supported by the Indian Council of Social Science Research (ICSSR): [Grant number 2-026/2010-RP].