Steps for development of small-scale and cottage industries were initiated immediately after Independence. That the Government has attracted great importance to the development of the small-scale sector in the successive five-year plans can be had from glancing at the plan outlays for the small sector. In the first five year Plan, Rs. 48 crores ( Constituting 47.8% of total plan expenditure on the industry) was spent in small sector alone. By the end of the first plan, there were a total of six boards, i.e., All Indian handloom board, All India handicrafts board, All India Khadi and village industries board, established, thus covering the entire field of small-scale and cottage industries.
Following the recommendations of Karve committee, the second five-year plan focused on dispersal of industries. Accordingly, as many as 60 industrial estates were established for providing basic facilities like power, water, transport, etc., at one place. Certain items were reserved for exclusive production in small-scale industries. The total plan outlay of the second plan reached Rs. 187 cores.
The third plan especially stressed on the extension of the coverage of small-scale industries. As against a total plan outlay of Rs. 24 crores for the development of small-scale and cottage industries, only Rs. 240. 7 crores were actually incurred in the third plan. The programs adopted in the first three plans were extended in the fourth plan also.
As a result of various development programs, the small sector witnessed significant diversification and expansion during the fourth plan period. On the eve of the fourth plan, for example, as many as 346 industrial estates had been completed and the small industries units set up in these estates provided employment to about 82,700 persons. Their annual production was estimated at Rs. 99.25crores. Like the third plan, the fourth plan could use only Rs.250 crores out of the total allocated outlay of Rs. 293 crores.
The fifth plan outlay was kept Rs. 592 crores. The main thrust of the plan was to develop small-scale industries to remove poverty and inequality stalking the land. On account of massive development programs initiated for the development of promising small sector, the actual plan expenditure (Rs. 1945crores) surpassed the plan outlay of Rs. 1780crores in the Sixth Plan. Among the important programs of the sixth plan were.
i) Increase in the number of items reserved for exclusive production in small sector reaching 836.
ii) Reservation of 409 items for exclusive purchase from small-scale industries.
iii) provision of consultancy services in technical, managerial and marketing through SIDO.
iv) Established of the council for Advancement of rural technology (CART) in October 1982 for providing necessary technical input to rural industries.
By the end of the sixth plan, production from small and cottage industries increased to Rs. 65,730crores. Export touched to Rs. 4,557.4 crores and employment reached to 315lakh persons by the end of the sixth plan 1984-85. This accounted for 80 percent of the total indusial employment which comes after agriculture as the biggest purveyor of employment.
The main thrust of the seventh plan was the upgradation of technology to increase the competitiveness of the small sector. The new watch ward, therefore, was ” competition” and “not reservation” Like the sixth plan, the actual expenditure of Rs. 3,249crores was well above the plan outlay of Rs. 2,752.74 crores in the seventh plan. On account of various development programs, the small sector witnessed from significant development in all fronts. To quote, the number of small-scale units increased from 13.56 lakh persons 18.27 lakh person during the Eight plan period. The value of production increased from Rs. 57,100 crores to Rs. 91,681crores during the same period. Employment also increased substantially from 96lakh persons to 1119.6 lakh persons during the seventh plan period.
The main advocating of the eight plan has been employment generation as the motive force for economic growth. In order to fulfill this objective, small and village industries have been assigned an extremely important role. The important plan proposals include.
1. The plan has reiterated that timely and adequate availability of credit is of more importance than concessional credit. From this point of view, with the establishment of SIDBI, certain new initiatives like sanction of composite loans under, single window concept, concessional loans yo State Corporations for infrastructure development and provision of factoring services have been introduced.
2. In order to upgrade technology, the Eighth plan proposes to establish appropriate tool rooms and training institutes.
3. The Growth center approach has been accepted as a suitable measure for industrial dispersal and is under implementation l. During the Eighth Plan, Establishment of functional industrial estates with substantial agricultural vegetables and horticulture products was also proposed.
4. Like Growth centers, the Eighth plan also envisaged to set up integrated infrastructure development centers, for tiny units. For this, the centers, the state Government industry associations were to be involved.