Evolutionary Dynamism of Manufacturing Sector in Punjab 2...
Transcript of Evolutionary Dynamism of Manufacturing Sector in Punjab 2...
Chapter 2 Evolutionary Dynamism of
Manufacturing Sector in Punjab
2.1 Introduction
This chapter serves as a background to the study. It traces the evolutionary dynamism of manufacturing sector in Punjab - a state, which, since the colonial
period, being agriculturally advanced, had been engaged in the commercial cultivation of crops like wheat, cotton, sugarcane, oil seeds etc. on large tracts of irrigated land. There was no serious famine-like situation and the overall eco
nomic condition of the peasantry had been better than that in the rest of India. 1
Under such situation, based on the theoretical literature emphasising the interdependence between agriculture and industry, one may conjecture the evolution
of a dynamic manufacturing sector in the state. But, how did it happen? What had been its nature? Following the rude shock of partition in 1947, how the
industrial economy of the state could recover and attain dynamism in the post
independence period? and, What were those key factors that facilitated the state to attain growth dynamism in the sphere of small-scale industrial development?
By way of addressing these questions, we understand the evolution of dynamic manufacturing sector in Punjab in the follOwing sections. After deriving
insights from the theoretical perspectives on the relation between agriculture
and industry (in section two), we begin with the situation under the British rule
and thereby discuss about public investment and commercialisation of agricul
ture in the state during this period (in section three). This discussion is further
supplemented with an elaboration of the nature of capital accumulation and the
magnitude of manufacturing activity during this period (in section four). Hav-
IMukheIjee (1985) pOints out that the spread of benefits of'commercialization "was probably wider. at least in the agriculturally more advanced areas of the province. than in regions such as Bengal. Also. a larger portion of the profits from commercialization. whether through mortgage debt or sale of agricultural produce. was accumulated and retained within the agricultural sector in the hands of rural classes such as well-to-do peasants and landlords. It was not drained away from the agricultural sector through the usury trading network. as is supposed to have happened in Bengal" (p.65).
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ing understood the initial (British-time) situation, we examine the evolution and
growth dynamism of state's manufacturing sector during the post-independence
period (in section five). Following which, we highlight the prime role of state
support, entrepreneurial capability and artisans hip in attaining the growth dynamism (in section six). We also discuss the structure of industrial labour mar
ket along with its operational dynamics (in section seven). The final section sums
up the focus of this chapter.
2.2 Theoretical Perspectives on The Relation Between Agriculture and Industry
We generally observe that there exists much inter-dependence between agricul
ture and the industrial sector. This inter-dependence between the two is so much
significant that one is often held crucial to the growth of the other and vice-versa.
The agriculture sector assumes significance for the growth of a sound indus
trial sector as it helps (1) in manufacturing by supplying various raw materials,
(2) by releasing surplus labour for the industrial sector, (3) in maintaining low
wage rates by providing food items (to industrial workforce), (4) in procuring im
ported machinery by providing earnings from agricultural exports, and so on.
Similarly, the industrial sector supports agriculture by (1) supplying inputs (like
fertilizers, insecticides, agricultural tools etc.), (2) generating adequate infras
tructure for agricultural development, (3) providing market for the farm produce,
and so on.
This relation between agriculture and industry was recognised in economic
theory since its early beginnings in classical political economy. Bharadwaj (1987)
pOints out, "In Petty's time when different sorts of activities were carried on
within the same enterprise, neither social nor intra-enterprise division of labour
had progressed much so that the producers, mostly in possession of their own
means of production, employing also family labour, catered to a variety of their
own needs, the distinction between 'agriculture' and 'industry' did not emerge
sharply. It was in the works of the Physiocrats that such a sectoral separation
emerges Significantly, although 'industry' was perceived more as an appendage
to agriculture, and constituted predominantly artisan households" (p. AN-I5).
In Physiocrats' model of the economy, the agriculture sector dominated as a
sector generating not only major production but also surplus. They conceived
agriculture as the only productive sector and the rent (appropriated by landed
proprietors) as the only form of surplus generated. Since the artisan (manufac
ture) sector was believed not to produce any surplus, the demand for the prod
ucts of artisans emanated mainly from the rental revenues of the proprietors
(Bharadwaj, 1987, p. AN-I6). In spite of considering industry as appendage
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and sterile not generating any surplus, the Physiocrats' first macro-modelling of the economy facilitated thinking over the relationship between agriculture and industry.
As with the advancement of capital relations in agriculture and industry, there took place transformation in their inter-relation, Adam Smith, in contrast to Quesnay, recognised manufacturing sector contributing to 'net product' of the economy. In Smith's analysis, though the agriculture sector retained its particular significance as an important provider of subsistence (food items), it was also observed that the industrial sector can provide relatively more advantages to the economy by allowing greater division of labour, which may lead to further sub-divisions and expansions in industrial employment along with the achievement of higher productivity through the invention of superior machinery. Smith was of the opinion that in comparison to an economy without a substantial in
dustrial sector, an economy, which develops its industry substantially, can enjoy relatively better terms of trade between agricultural produce and manufactures. Smith viewed the relation between agriculture and industry as the symbiotic re
lation between the 'country' and the 'town' as he emphasised that the country supplies the town with the necessary subsistence and the materials of manufactures. The town repays this supply by sending back a part of the manufactured produce for the inhabitants of the country and thus, in any civilised society, the great commerce is carried on between the inhabitants of the country and the town (Eltis, 1988).
Thus, in its primitive form, industry had remained an appendage to agri
culture. In such a situation, there had not arisen much possibility for interlinkages. But, with growing speCialisation and increasing division of labour,
there took place a spatial and organisational separation of industry from agricul
ture. The simultaneous progress in technology and product diversification in in
put and output markets had resulted in the emergence of inter-linkages between industry and agriculture which became stronger over the period of time (Eapen, 2003). Hirschman (1958) has been the first to consider 'production linkages' as inducement mechanisms for stimulating economic activities through backward
and forward linkages. He considers backward linkages as those related with in
put provision and the forward linkages as those related with the utilisation of
output.
Based on the idea of 'linked progress', Nurkse (1961) has advocated that the
sectors of farming and manufactUring must move forward together, though their
equilibrium rates of growth between the two may be different and vary over time.
Kuznets (1968) too opines that the industrialisation facilitates agricultural trans
formation as a coincident revolution in agricultural productivity releases human
resources to industry and therefore, technological advancement must support
both.
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..
Kalecki (1960) too observes that the rapid development of industry requires
investment and technological advances in agriculture. Consequently. the basic
prerequisite for rapid industrialisation of an underdeveloped economy is a revolutionary upsurge in agricultural production.
In theoretical models like Hymer & Resnick (1969) and Ranis & Stewart
(1993), the interaction between agriculture and industry has gained attention.
However. the pioneering attempt to specifY. empirically and quantitatively. the
linkages between these two sectors has been made by Harriss (l987b.a). Har
riss conceptualises the linkage of small industries with agriculture in two ways:
first, by exploring the nature of their linkage in terms of forward. backward or
consumption links beSides exploring whether these links are direct or indirect;
second. by interpreting the linkages in terms of (three types of) flows. viz. com
modity flows. flows of finance (private investment capital, wages. interest. state
revenue and expenditure) and labour (location, migration and wages). In this
line, the macro-economic models have examined the impact of growth in the agricultural sector on the industrial segment.2
Thus. after gaining theoretical insights on the inter-dependence between agri
culture and industry. we now turn to the case of Punjab. which have been an
agriculturally advanced state. To begin with. we discuss its state (both agricul
tural and industrial) under the 'British Rule' in the subsequent sections.
2.3 Public Investment and the Commercialisation of Agriculture in British Punjab
In 1849, the British annexed the Punjab. However. the ruling groups were not
replaced but confirmed as useful intermediaries between the state and the peo
ple and this partnership got further consolidated with their vital support to the
British for suppressing the first war of independence in 1857. This cooperation
continued with Punjab's contribution of manpower and logistic support to help
British subdue and police territories both in south Asia and overseas. Over half
of the British Indian army was recruited from the Punjab and the people of this
province was called (by the British) the 'Martial Races' of India (Ali, 1988).
By the early 1860s. the British desired the extension of cultivation to hitherto
barren interfluvial tracts. or doabs of western Punjab. This region was sparsely
populated by semi-nomadic pastoralists and was much under-developed. By
mid-1880s. these barren lands got irrigation by way of tapping the water re
sources of western rivers with perennial canals. their branches and distribu-
2The emplncal studies, for example In the case of India, have found that one percent growth in the agncultural output increases industnal output by 0.5 percent and national income by 0.7 percent (Rangarajan, 1982).
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Table 2.1: Financial Record of the Productive Irrigation Canals of the Punjab in 1926-27
Particulars Total Capital Outlay at the end of 1926-27 Total Accumulated Surplus Revenues Total Area Irrtgated and Assessed to Water Rates Direct Revenue Assessed During the Year 1926-27 Indirect Receipts Total Assessed Receipts Working Expenses for the Year 1926-27 Net Assessed Revenue for the Year 1926-27 Percentage Earned over Total Capital Outlay in the Year 1926-27
Source: Paustian (1930. p.145).
Rs. 291,548.419 582.701,089 10.466.574 40.001.726 19.237.637 59.239.363 17.316.353 41,923.010
14.38%
taries. The canalisation of this region was done at such high pace that by 1947,
there had emerged one of the largest irrigation systems of the world. A total of
nine projects were accomplished. The largest irrigation system was of the Lower Chenab whose irrigated land was over 2,000,000 acres. The irrigation system
of Lower Bari Doab and Nili Bar irrigated over 1,000,000 acres each. Other ir
rigation systems were Lower Jhelum (450,000 acres), Sidhnai(250,000 acres),
Chunian (100,000 acres), Sohag Para (90,000 acres), Upper Doab (80,000 acres)
and Upper Jhelum(40,000 acres) colonies3 (Ali, 1987, footnote 9, p. 114).
It is revealed out by table 2.1 that the investment in irrigation remained much
profitable for the British. By 1926-27, the total accumulated surplus revenues of
the canals were approximately twice as large a sum as the total capital cost of the
productive irrigation canals combined. For the year 1926-27 alone, these canals
earned a net surplus equivalent to 14.38 percent of the total capital investment
in these canals. With the completion of various works in the later years, the
net revenue as percentage of total capital invested got increased further to 16.3
percent for the period 1937-46 (Islam, 1997).
Table 2.2: Chronology of Railway Expansion in British Punjab Period Details of Railway Expansion
By IB61. the tirst railway line was opened between Karachi and Kotri 1861-70 By 1862. Lahore was connected to Amritsar
By 1870. This line was extended to Ghaziabad(in east) & Multan(in south). 1871-80 By 1873. line from Lahore to Jhelum was constructed
By 1878. a line from Kotri to Lodhran and Multan was opened. 1881-90 By 1883, line from Lahore to Peshawar was constructed.
By 1891. Delhi-Ambala-Kalka railway line was opened 1891-00 By 1896. the canal colOnies were linked by extending railway line to Lyallpur
Between 1895-1900. the Wazirabad-SanglaHill-KhanewalLine was opened By 1897. Delhi-Bhatinda-Samasata line was opened and then brought to Lahore.
1901- 10 By 1903. Malakwal-Shorkot Road line was opened By 1907. Shahdara was linked to Sangla Hill.
1911-20 By 1911. Line from Shorkot Road to Chichoki Mallian was opened Source: Calvert (1936. p. 107 -108).
3A large chunk of this canal-irrtgated area came to the share of Pakistan at the time of India's independence in 1947.
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Another major p\lblic investment was made in an extension of transport facilities, especially railways. Table 2.2 gives the chronology of railway expansion in British Punjab. The railway mileage, which was 410 in 1872-73 increased to 5,500 in 1932-33 - a more than 13 times increase. By 1936, when Calvert wrote his Wealth and Welfare oJ the Punjab, the railway network was so well-developed that there were "very few places more than 25 miles from a line. The 660 stations serve on the average 50 villages apiece" (p.109).
The canal irrigation made possible the reclamation of large tracts of waste land and the railways gave an added impetus. The improvements in general communication system stimulated the cultivation of various crops like wheat, cotton, other cash crops, cereals & pulses etc. (Table 2.3).
Table 2.3: Decennial Acreage Under Different Crops ('000 Acres) Crops 1906 - 15 1916 - 26 1927 - 36 1937 - 46
Acres % Acres % Acres % Acres % Cereals & Pulses 7.214 25.70 8.024 27.13 8.656 27.61 10.031 30.70 Wheat 4.446 15.84 4.912 16.61 5.183 16.53 5.843 17.88 Minor Cereals 1.940 6.91 1.917 6.48 2.059 6.57 2.638 8.07 Cash Crops 1.739 6.20 2.549 8.62 3.180 10.14 3.350 10.25 Cotton 1.035 3.69 1.588 5.37 2.163 6.90 2.458 7.52 Fodder 1.614 5.75 2.289 7.74 2.794 8.91 3.483 10.66 Others 10.083 35.92 8.299 28.06 7.321 23.35 4.875 14.92 Total Sown Area 28.071 100.00 29.578 100.00 31.356 100.00 32.678 100.00
Source: Based on Islam (1997. p.69).
There took place an increase in the acreage of all the crops. The cereals &
pulses retained a major share of the cultivated area. The wheat occupied the second place as it was cultivated over more than one-sixth of the total culti
vated area. It was mostly grown in canal colonies and was exported to different European markets, particularly after the opening up of the Suez Canal in 1869.
The cultivation of cash crops also gained significance over time. The decennial acreage under cash crops became almost twice in 1937-46 period than that in 1906-15 period. BeSides other cash crops, it was cotton that gained significance
during this period. Its acreage became more than double. It is learned that
various economic incentives along with the availability of canal irrigation and
transport and communication facilities contributed significantly to the increased
cultivation of various crops in the province.4
Nonetheless, the state failed to provide a determined developmental stimu
lus and as a consequence, Punjab remained an underdeveloped region. It is
noteworthy that under the colonisation policy of the state, thC? land distribu
tion by the state was governed by the need of the British to consolidate their
political position to fulfill military requirements and to maintain an extractive
system to finance their administration. The studies like Ali (1988) have found no
evidence about the state's utilisation of Significant proportion of its surplus on
4BaneIjee (1982. p. 47-76) provides a detailed account of the growth of commerCial agriculture in Punjab during the British rule.
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developmental activities in the province. 5 A major part of the revenue from canal
colonies was sent to the centre where it was utilised for military expenditure and for the maintenance of imperialist political and administrative superstructure
and the rest was used for administrative expenses within the province, largely on irrigation, revenue and police departments.
However, after gaining insights about public investment and commerCialisa
tion of agriculture, we discuss below the nature of capital accumulation and the
state of the manufacturing sector during the British rule so as to understand its evolution since the pre-independence times.
2.4 Nature of Capital Accumulation and the State of Manufacturing Sector in British Punjab
The agriculture sector generated economic surplus - a large part of which was
appropriated by the state in the form of land revenue. The land revenues were
based on initial assessment and were to remain in effect for some years. Mter-wards, these were revised (generally upwards). Such mechanism was generally
inelastic to economic fluctuations and bad harvests. Consequently, there re
mained very little possibilities for capital accumulation by the peasantry: rather
the farmers had to approach sahukars for meeting their land revenue obligations
and other crop and non-crop related expenses. These sahukars were largely en
gaged in the profession of money-lending and the interests charged were gener
ally usurious.
As far as the rights over land were concerned, the British conferred the oc
cupancy rights of land in canal colonies to the cultivating classes, mostly Jats. These rights were to be converted automatically into the proprietary rights af
ter ten years of cultivation. Such a provision provided an easy (and profitable)
collateral against which the money-lenders provided credit to the peasantry.6
The widespread indebtedness led to the displacement of zamindars' ancestral
holdings to the money-lenders at a large scale. Having observed such massive
mortgages and being alarmed by the impending political and economic crisis, the
field officer Thorburn published his monograph Musalmans and Money-Lenders in the Punjab in 1886.7 This attracted the attention of the British authorities and
subsequently, the state passed the Punjab Alienation of Land Act in 1901. Under
this act, the alienation of land among the members of agricultural tribes was
5Similar has been the observation made by MukheIjee (1985. p. 65) as she points out "Yet in spite of all these 'advantages'. there is no evidence of a progressive transformation of agriculture along capitalist lines. either by the index of a rapid increase in productivity through investment of capital in agricultural production, or by that of a growth of capitalist relations in agriculture."
6Such a choice by the moneylenders was also guided by the fact that they were not granted any rights over the land.
7 An Indian reprint of this monograph got published in 1983. see, Thorburn (1983).
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permitted but the sales by agriculturists to persons not belonging to the agri
cultural tribes were prohibited. It also prohibited village artisans and menials (dalits) to possess lands.
A consequence of this Act had been the fact that the position of the agricultur
ist money-lender got strengthened with the elimination of sahukars from the land
market. But. this Act did not result in the virtual withdrawal of the sahukars from the rural economy as they continued to extend credit to the zamindars. But
they took care in making advances by keeping in mind the circumstances and
position of the client. Besides this. they also learned to manipulate the law. They devised a new type of benami mortgage by which they used to get rich agricul
turists to buy land and then transfer the property (informally) to them. Thus. the
overall accumulation of agrarian surplus remained confined to the land market.
Moreover. the non-cultivating classes. in response to this act. had to seek other alternatives for investing their surplus money. There was a diversion of
capital from money-lending to trade and commerce. It marked a new chapter
in the rural economy of the Punjab. The industry being the lucrative option in the presence of inbuilt talents of the artisans (like Ramgarhias) facilitated the
growth of numerous cottage and small scale industries in the subsequent years.
Various manufacturing activities in these industries were pursued in both rural
and urban areas and the people were skilled in various crafts not only in cloth
weaving. utensil making and basket weaving but also in works like iVory carving.
wood carving. metal inlay work etc. (Latifi. 1911).
The Khaddar industry was the most important industry of Punjab. Owing to
the climate of Punjab being somewhat cold. the people required coarse clothing.
Khaddar was well suited to the needs of the people. The raw material was ob
tained locally and the industry was pursued as a home industry. Similarly. the
mill yarn hand-loom weaving was also dominant and the most important cen
tres were Hoshiarpur. Jalandhar. Ludhiana. Amritsar. Gurdaspur and Sialkot
districts (Chitra. 1948. p.155). A number of Momins or Julahas were engaged
in this industry and a variety of cloth articles like dhoties. sarees. chaddars.
coatings. shirtings. towel. lungis. shawls and carpets were available.
Woollen industry was another important industry of Punjab. Ludhiana. Dera
Gazi Khan. Bhera. Amritsar. Panipat and Dhariwal were famous woollen weav
ing centres. Most of the wool was produced locally and the finest material was
coming from Hissar. The products of this industry were rugs. shawls. namdas
(coloured felts), hosiery goods. serges and pile carpets. The pile carpets of Amrit
sar and Multan were famous. Similarly. the silk looms used to employ thousands
workers at chief centres like Amritsar. Lahore. Multan and Jalandhar. Earlier the
raw material was used to be imported from China but with passage of time. it was
produced locally. This industry produced articles such as turbans. waist bands.
sarees. fringes. tassels and pyjama strings. The embroidery industry emerged as
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of workers (Table 2.4). There was a spurt in the evolution of registered factories during the war years of 1941 to 1944. The number of registered factories during this period had increased considerably. In 1946, the total number of existing factories recorded an increase of 68 percent over those of 1937 while the workers employed were more than double the number of 1937.
2.5 Evolution of Manufacturing Independence Punjab (India)
Sector in Post-
It is noteworthy that at the eve of independence, the Punjab was a wellbalanced economic region possessing economic resources in such a way that
every sub-region was vital for the prosperity of the other. Nonetheless, there had been marked disparities in the development of various sub-regions within the province. Industrially, the East Punjab got little attention and there was a high concentration of industrial activity in Western districts. 10
2.5.1 Event of Partition and the Shattering of Punjab's Industrial Economy
As soon as the British rule in India came to an end by 1947, there took place the
formation of another nation, called Pakistan. The Greater Punjab was bifurcated
and the Pakistani side came to be known as West Puryab and the Indian side was called East Puryab. Following the partition, there was a large scale migration and
displacement of non-Muslims and Muslims from West and East Punjab respec
tively. It could not be a peaceful resettlement of the population; rather there took place widespread communal disturbances and massive blood-shed on both sides of the border. As far as the industrial economy is concerned, it is learned that the partition had disturbed the raw material sources, markets and finance me~hanisms. The East Punjab emerged as the great loser as it used to depend
more on West Punjab not only for its supplies of raw materials like wheat. cotton, lime, coal, gypsum, salt and wool, etc. but also for its markets. 11 Moreover, the
wealth and development resources that came to the share of East Punjab were considerably small. 12
A large number of factories at important city centres such as Lahore, Multan,
Lyallpur, Gujranwala, Sialkot and Wazirabad which had flourished on account
IOAnwar (l953) pOints out that at the eve of independence. 40 percent of the industry of the Punjab was located in Lahore alone.
iiFor example. 30 percent of the output of the hosiery Industry was readily consumed In the markets of West Punjab.
12In the agricultural sector. the refugees In East Punjab had to bear the net loss of about 20 lakh acres of land besides their compromise with the land quality. Moreover. the East Punjab got only three million canal irrigated acres out of a total of over fourteen million acres.
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of generations-long sunk capital and finance of the non-Muslims, were left to the share of Pakistan. The industrial centres of Rawalpindi, Sialkot. Lahore,
Wazirabad and Gujranwala were built largely by the non-Muslims and in these industrial centres, about 400 industrial establishments, valued at nearly Rs. 40
crores, belonged to non-Muslims (Rai, 1965, p.137). The Muslims in East Punjab
left about 1000 establishments which were of very poor nature. Similarly, a
number of famous industrial institutions were lost in West Punjab. 13 Out of
the total number of factOries in the Punjab, East Punjab received 415 factories (employing 43,024 workers) whereas West Punjab got 602 factOries (employing 1,09,471 workers) (Table 2.5).
Table 2.5: Status of Industry in East and West Punjab at Time of Independence East Punjab West Punjab
Industry No. of No. of No. of No. of Type Factories Workers Factories Workers Textiles 106 14.071 16 20.074 Engineering 79 6,437 154 24.135 Minerals and Metals 67 3,691 75 7.666 Food. Drink and Tobacco 40 3.562 39 4.295 Chemicals. Dyes. etc. 18 1.548 36 2.816 Paper and Printing 8 1.733 42 3.899 Wood. Stone and Glass 14 1.067 38 7.789 Tanneries 2 106 3 1.954 Gins and Presses 72 4.155 178 14.843 Miscellaneous 9 6.654 21 22.000 Total 415 43,024 602 1,09,471
Source: Vakil (1950. p.151).
The exodus of Muslim skilled labour from East Punjab crippled the industries
like hOSiery, metal works. tanning and leather and lac industry in which the
Muslims formed a majority of skilled and semi-skilled labour.14 Being already
backward in industrial development. the East Punjab suffered much on this
account. Most of the factories and workshops were closed. The carpet and
basket weaving. foundry and engineering industries which were mostly in the
hands of Muslims suffered a serious setback. A survey conducted by the East Puryab Board oj Economic Inquiry had revealed that in the border districts of
Amritsar. Jalandhar. Gurdaspur. Firozpur and Ludhiana. most of the industries
had to remain understaffed due to the migration of Muslims which formed 54
percent of the total number of workers. The shortage oflabour resulted in sharp
rise in wage rates which rose from Rs. 48 per month in 1946-47 to Rs. 63 per
month in 1947-48. The total gross value of industrial output also fell from Rs.
12.5 crores in 1946-47 to Rs. 10 crores in 1947-48 (Vakil. 1950. p.146-147).
The industries like textile and hosiery industry suffered due to the shortage
of raw materials and markets. The woollen industry which was one of the best
13Prime among them had been the Craik Technical Institute. the Dyeing and Calico Printing Institute. the Weaving Demonstration Factory, the Central Pottery Agency etc.
14As many as 18.54.188 MuslimS belonging to 22 different tribes of artisans and menials migrated to Pakistan. They constituted 38.6 percent of the total Muslim population of the Punjab (GoP. 1950. p. 159).
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organised industries in East Punjab was considerably dislocated. Earlier. it used
to get a good supply of its long staple wool from Pakistan but now. the inadequacy
of this raw material affected its output significantly. Similarly. a majority of the
skilled workers employed by the industry in Amritsar. Dhariwal and Panipat were Muslims. Their migration to Pakistan resulted in the scarcity of skilled
workmen. As this industry depends. to a large extent. on skilled workers. its
value of products manufactured and the value added by manufacture declined significantly in comparison to the all-India level. 15 Similar had been the plight of
hosiery industry. which was mainly concentrated in Ludhiana (East Punjab).
There had been a loss of business confidence as well. There took place a flight
of capital from East Punjab. The banking facilities also got dislocated. The fear
and panic of the partition did not allow individuals to invest in industry. Avail
ability of adequate capital for the industry became a major problem. Moreover.
the locational disadvantage of the state having a border along a hostile country could not attract capital from other states.
2.5.2 Rebuilding From the Wrecks of Partition and the Industrial Growth Dynamism During Pre-Green Revolution Period
After partition. the East Punjab was left as industrially backward region and the
damage done by the partition had been so wide and rampant that it was not pos
sible to rehabilitate the dislodged industrial economy without strenuous effort
of the state. The state government too lost no time and with the help of central
government took immediate steps by providing liberal financial assistance. raw
materials. new sites for industrial establishments and the training facilities in
different lines to the displaced persons and others.
A significant proportion of the migrated Hindus and Sikhs had a greater ur
ban element. They were not used to rural life and agricultural occupation. More
over. there was also little scope for accommodating them in the agricultural sec
tor. So. the state made schemes for the establishment of new townships and
industrial areas near the principal cities. There have been very few who could
bring their wealth with them. After losing their hoards. the erstwhile rich had to
make a fresh start in their struggle for existence. The state aptly modified the
State Aid to Industries Act. 1935 to help the small industrialists. 16
Table 2.6 provides the figures on the financial help provided by the state to
the industrialists during the 1948-49 to 1950-51 period. This liberal financial
15Vakil (1950) pOints out that for India. the value of products manufactured got increased from Rs. 6.9 crore in 1946 to Rs. 8.2 crore in 1947 but for East Punjab. it has fallen from .Rs. 2.2 crore in 1946 to Rs. 1.4 crore in 1947. Similarly. the value added by Manufacture in East Punjab decreased from Rs. 86lakhs in 1946 to Rs. 59 lakhs in 1947.
16Earlier the loans advanced under this Act needed some immovable property as security but after partition. it provided loans up to Rs. 2000 merely on two good personal securities without their having to pledge any property for the purpose.
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Table 2.6: Financial Help (in Rs.) Provided by State to Industrialists, 1948-49 to 1950-51
Loans Subsidies Grants-in-Aid Total
Source: GoP (1952).
1948-49 3.72.500 1.24.246
4.96.746
1949-50 4.26.450 83.561 8.000
5.18.011
1950-51 2.99.200 33.300 1.000
3.33.500
assistance had gone a long way towards inspiring confidence among the wornout industrialists.
Owing to the persisting problem of accommodating a large number of refugees
and the simultaneous demand for skilled labour. the state drew up schemes to provide short-term training courses to the displaced persons. The state provided
the staff and the students with accommodation, raw materials etc. A total of 17 demonstration parties were shifted to the refugee camps to impart short-term training in various crafts to the displaced persons. Up to the end of 1949-50. they
had trained 1.570 persons. In order to encourage training, the state awarded a number of scholarships and stipends. 17
Nonetheless. their effort remained inadequate. So. the Industries Department undertook the task of establishing various vocational training centres to provide short-term courses with intensive training in various small scale industries. Through these centres, training in carpentry, smithy, foundry, moulding
and welding. oil pressing, manufacture of surgical instruments, utensil making, hosiery, leather goods, cycle repairs etc. was provided in almost every important city of Punjab. Moreover, the state also arranged special training programmes
for the widows living in widow homes. The state also opened up Cotton and Wool Spinning and Weaving Centres at several places. These centres provided work to 14,000 spinners and 1,400 weavers. Moreover, in 1949, the state stopped giving
free rations to the displaced persons in refugee camps so as to force them for
work. In this line, many of the centres were closed and the important refugee
camps were turned into 'Work Centres' for providing training facilities and the gainful employment. 18 By the end of 1950. there were 15 work centres 19 left with
a total capacity of 1400 workmen. '\
17Significant among these have been 29 Gandhi Memorial Scholarships for students specialising in various crafts. Five of these scholarships valued £300 each for training abroad. The rest carried Rs. 100 per month each for training within the country.
18Initially. the state started forty two such centres to teach a number of crafts. The state also paid. for the first three months. stipends to facilitate them during the initial training period but thereafter. the trainees were paid standard daily wages.
19These work centres operated at Jalandhar. Ludhiana. Abdullapur. Panipat. Sonepat. Rohtak and Hissar.
37
All this gave a fillip to the revival of some industries in the state. Soon came the era of planned economic development. Although the First Five Year Plan laid special emphasis on agriculture, the efforts of the state government were also directed towards industrial development in the state. During this plan period, the vacuum created by the migration of skilled labour was filled up and most of the uprooted small scale industries were rehabilitated. Six industrial areas at Jalandhar, Ludhiana, Jagadhari, Panipat, Sonepat and Bahadurgarh (covering a total area of 1.576 acres) were established to settle the industrialists. Jalandhar
and Batala became the home of the sports good industry: Ludhiana started gaining Significance for cycles and sewing machine parts industry: Jagadhari started producing high class plywood and Sonepat also started manufacturing cycles.
Similarly, the textile industries of Amritsar had started working to their full capacity and the manufacturing of machine tools and agricultural implements in Ludhiana had become known throughout the country.
An Industrial Finance Corporation was set up. It provided liberal loans to various industries. By the end of 1964-65, it provided cumulative loans worth
Rs. 71,588 since its inception in 1953-54 (GoP. 1966. 1968). A vigorous drive was also carried out for integrating the various small scale industries on coop
erative lines for increasing their efficiency and economic functioning. Moreover.
the state made the provision for marketing facilities and raw materials, quality marketing for industrial goods, testing, finishing, heat treatment and other common facility services.
lt was also thought that there should be a diversification of current indus
trial nature and thereby a move for the establishment of some large and medium industries like the newsprint mill. a cement factory, a large factory for the production of steel and structural machine tools was made but these initiatives
could not be implemented due to the Chinese aggression on India's borders in
1962 which resulted in the state economy being switched to meet the defence
needs. But. there was another set back of Indo-Pak conflict in 1965 to Punjab's
industrial economy. which caused a flight of capital from the state.
Nonetheless, the state set up industrial estates at Ludhiana, Malerkotla,
Batala. Nilokheri and Sonepat at a total cost of Rs. 74.97 Lakhs and consequently. by the end of 3rd Five Year Plan, there were 13 urban and 34 rural
industrial estates. On the whole, as a result of the efforts in the first three Five
Year Plans, the state of Punjab had achieved some progress. notably in the field
of small scale industries. The contribution from the industries to the total state
income has increased progressively over the years and rose from 10.2 percent
in 1952-53 to 11.2 percent in 1955-56, 13.7 percent in 1960-61 and 16.4 percent in 1964-65. By 1964. the number of registered working factories alone had
witnessed an increase of 111.7 percent over 1956 and the number of workers
engaged in the factories increased by 84.8 percent over the same period.
38
But, this period also witnessed a series of agitations by the Hindus and the Sikhs to assert their demand for a separate state - as a consequence of which, there took place Punjab's reorganisation on a linguistic basis. But, it gave shock
to the industrial economy that had just started to recover. All the registered paper and glass factories had gone to Haryana, another newly formed state after reorganisation in 1966. Similarly, the developing industrial complex around Delhi came to the share of Haryana and whatever mineral and forest resources were available had gone to either Haryana or Himachal Pradesh, another neighbouring state of Punjab.
As a result of this state reorganisation, the new state of Punjab was left with
8 urban and 20 rural estates. There were only 4,069 factories registered under the Factories Act in 1965. Out of them, 3,544 were actually working and were employing 1,03,654 workers. Only seven of these factories employed 1,000 or
more workers and none exceeded 5,000 workers. There were 14,589 units registered with the Industries Department for the purpose of getting loans and the supply of scarce raw material, etc. These units provided employment to 1,26,058 workers.
Thus, at the eve of Green Revolution, Punjab was once again a less important state in terms of its industrial development. It remained primarily an agricultural
state with more than 70 percent of its population dependent on agriculture with all sorts of problems related to seasonal, chronic and disguised unemployment.
2.5.3 Industrial Evolution During Post-Green Revolution Period
Owing to the adoption of Borlaug seed-fertilizer technology during the mid-1960s, the state of Punjab made remarkable achievement in the production of
food grains. Such an advent has been aptly known as the Green Revolution (Wolf, 1969). The agriculture sector became more productive. The rapid growth of agri
culture had a large impact on the entire economy.
As far as the industrial sector is concerned, the increasing use of new agricul
tural technology stimulated the demand for intermediate inputs like fertilizers,
pesticides, power, diesel, capital goods (like electric motors, diesel engines, trac
tors, threshers, etc.) and other consumption goods. In response to this newly
emerging demand, there emerged vibrant engineering and hand-tool industries.
There also emerged industries processing agricultural products. Similarly, in
creasing per capita income levels of large rural population provided a push to
all sorts of consumption goods industries. The food processing industries like
dairying, grain mills, edible oil manufacturing, breweries and beverage industry recorded rapid expansion. Similarly, a big spurt had taken place in the pro
duction of textiles and durable consumer goods like sewing machines, radios,
bicycles, television sets etc. (Bhalla, 1995).
39
This period also witnessed a significant urbanization of Punjab in response to agricultural marketing cum trading activities. The urban population grew by
44.5 percent during the 1971-81 period, which has been very high than the 25
percent growth during the previous decade. As a consequence of growing ur
banisation and agricultural prosperity, there emerged a clustering of numerous
large and small-scale industries in large cities. Much of this clustering took
place in those cities which were situated on the 'Grand Trunk' road from Delhi to Amritsar.
If we consider the 1980-81 to 1990-91 period, we observe that this had been
a period of high growth in terms of both output and employment. The overall an
nual growth in industrial output and employment had been 16.73 percent and
5.25 percent respectively. The highest growth had been recorded by repair services. Some of the fastest growing industries, in terms of output, had been wood
products, non-metallic products, basic metal products, non-petroleum products and the transport eqUipment industry. The industries like metal products, cot
ton textiles, non-electrical machinery, leather products etc. could not register
significant growth (Table 2.7). Similarly, in terms of employment, some of the
best performing industries were wood products, leather products, non-metallic
products, food products and beverages whereas the industries like cotton tex
tiles, non-cotton textiles, non-electrical machinery, basic metal products and
transport equipments could not perform better. Consequently, the employment elasticity of output showed varying pattern across the industries. The leather
products industry emerged as the best performer followed by wood products,
food products and beverages, electrical machinery and non-metallic products (Table 2.7).
Table 2.7: Growth Profile and Employment Elasticity Across Various Industries, 1980-81 to 2000-01
Industry 1980-81- to 1990-91- 1990-91- to 2000-01-Type Gr[Y) R Gr(Ll R 1) R Gr[Y) R Gr(Ll R 1) R Food Products/Beverages 16.39 9 9.52 5 0.58 4 13.29 9 2.85 6 0.21 3 Cotton Textiles 10.97 13 -0.72 14 -0.07 14 18.70 2 3.94 2 0.21 4 Non-Cotton Textiles 14.01 10 2.53 13 0.18 11 16.21 5 0.93 13 0.06 13 Wood Products 22.15 3 15.33 2 0.69 3 10.89 13 -0.03 14 0.01 14 Leather Products 13.26 11 11.54 3 0.87 1 10.03 14 1.36 12 0.14 10 Non-Petroleum Products 19.71 6 4.43 8 0.22 9 12.68 10 2.63 7 0.21 5 Non-metallic Products 21.96 4 9.78 4 0.45 6 19.31 1 3.13 5 0.16 9 BaSic Metal Products 20.39 5 2.66 11 0.13 13 12.63 11 3.37 3 0.27 2 Metal Products 8.56 14 3.47 9 0.41 7 14.22 7 1.37 11 0.10 12 Non-Electrical Machinery 12.96 12 2.55 12 0.20 10 18.49 3 3.27 4 0.18 7 Electrical Machinery 18.03 8 8.09 7 0.45 5 13.51 8 2.52 8 0.19 6 Transport Equlpments 18.73 7 3.30 10 0.18 12 16.71 4 2.27. 9 0.14 11 Other Industries 25.14 2 9.20 6 0.37 8 15.51 6 4.84 1 0.31 1 Repair Services 41.18 1 31.55 1 0.77 2 11.84 12 2.00 10 0.17 8 All Industries 16.73 5.25 0.31 14.73 2.45 0.17
Note 1: '" over years 1980-81, 1990-91 and 2000-01 lmpltes that these years represent the average oJthe initial three years oJthat decade. It has been done to check the yearlyjluctuations in the data. Note 2: Y - Output: L - Labour: R - Rank in descending order. Note 3: Gr implies average growth rate and 1] reJers to the 'employment elasticity oj output'. It is estimated as the ratio oj the growth rate oj employment and output. Source: GoP (1979, 1986, 1996, 2004c, 2006).
40
Table 2.8: Significance of Various Industries in the Post-Green Revolution Period industry 1980-81· 1990-91· 2000-01· Type y R L R Y R L R Y R L R Food oauc,s
23.40 and Beverages I 8.76 5 22.73 I 13.03 2 20.02 I 13.53 2
Cotton Textiles 13.08 2 14.44 2 7.88 6 8.05 5 11.07 5 9.30 4 Non-Cotton Textiles 11.03 3 21.08 I 8.71 5 16.23 I 9.90 6 13.97 I Wood Products 0.57 13 1.47 13 0.89 14 3.66 11 0.64 14 2.86 14 Leather Products 1.62 11 2.15 11 1.20 II 3.84 10 0.79 13 3.45 10 Non-Petroleum Products 10.99 4 3.65 9 14.14 2 3.38 12 11.81 3 3.44 II Non-metallic Products 0.64 12 1.81 12 1.00 13 2.75 14 1.47 11 2.94 12 Basic Metal Products 10.06 5 7.16 7 13.70 3 5.58 9 11.38 4 6.10 9 Metal Products 7.54 7 11.68 3 3.65 9 9.85 3 3.49 9 8.86 6 Non-Electrical Machinery 5.48 8 8.17 6 3.94 8 6.30 8 5.45 8 6.82 8 Electrical Machlnary 3.01 10 2.21 10 3.36 10 2.89 13 3.02 10 2.91 13 Transport Equipments 8.81 6 11.57 4 10.44 4 9.60 4 12.37 2 9.43 3 Other Industries 3.59 9 5.04 8 7.20 7 7.28 7 7.70 7 9.16 5 Repair Services 0.17 14 0.81 14 1.17 12 7.56 6 0.91 12 7.23 7 All Industries lOO.OO 100.00 lOO.OO 100.00 100.00 lOO.OO
Note 1. Note 2 and Source: Same as Table 2.7.
During the decade of 1990s, the highest output growth has been recorded by
the industries like non-metallic products, cotton textiles, non-electrical machin
ery, transport equipment and non-cotton textiles. The industries like leather
products, wood products, basic metal products and non-petroleum products
could not record much growth in their output. Similarly, in terms of employ
ment, the cotton textiles emerged as the best performer followed by basic metals,
non-electrical machinery, non-metallic products and food products and bever
ages. The industries like wood products, non-cotton textiles, leather products
and metal products could not record Significant growth. Consequently, the em
ployment elasticity of output went in favour of industries like basic metals, food
products and beverages, cotton textiles and non-petroleum products (Table 2.7).
2.5.4 Current State of Manufacturing in Punjab
At present, the manufacturing sector account for about 14 percent share in
state's net domestic product. This share has increased over the period of time.
It was below 6 percent in 1966-67 and since then, it has grown by 2.41 times
(Table A.9). It needs to be noted that the current state of Punjab's manufacturing
sector represents a pyramidical structure containing three layers (fig. 2.1).
MediulTI & Large
Industries
St"all-Scule Industries
Ovvn-Account Enterprises & Village Industries
Figure 2.1: Structure of Punjab's Manufacturing Sector
41
Figure 2.2 Punjab's SSI's Exports (Rs. Lakh) vis-a-vis Medium/Large Industry
--SS) - - MediulT)/Large Industry
Source: RaHilly & Nanda (2007).
small scale sector in total exports decreased to 52.6 percent in 1998-99.
B. Existence in the Form of Clusters
Punjab's small-scale manufacturing sector has emerged in the form of clusters. As per the data provided by the Third All-India Census of Small-Scale Indus-tries. it has been observed that there are as many as 67 clusters of registered small-scale enterprises in the state out of a total of 1223 clusters spread all-over
India. Similarly. the Census pOints out the existence of 12 clusters of unorganised enterprises in the state.
It has been already pOinted out by studies like Mohan (2002) that there is a
heavy concentration of industrial clusters in the districts of Ludhiana. Jalandhar
and Amritsar. One may attribute the industrial development of these districts to
regional inequality in the industrial development pattern of the state. This is true to some extent as we observe that the industrial development in the state has not
been uniform across all the districts. Obviously. it cannot be so due to a variety of factors. The sheer absence of any cluster in the districts of Mansa. Fatehgarh
Sahib and Nawanshahar adds some weight to the inequality argument.
But. at the same time. we too observe that the clusters in Punjab are recognised as the Natural clusters. whiclf emerged on their own in response to the
local conditions favouring a specific type of industrial activity. If it is so then
the clusters in districts like Bathinda and Muktsar have been agro-based mainly
due to their geographical character of being in the cotton belt of the state. Like
wise. the emergence of sports good cluster in Jalandhar is very much associated
with the settlement of refugee artisans who migrated from Sialkot at times of
partition. Amritsar has remained an important centre of industrial activity and
trade even during the pre-independence times (GoP. 1914. 1947). Similarly. the
43
emergence of machine tool cluster in Ludhiana district is due to the remarkable achievement of this district during the Green Revolution period (Suri, 1970).
C. Preponderance of Unorganised Segment
There is the preponderance of un organised activity in Punjab's small-scale manufacturing sector. A majority of the enterprises, no matter whether registered or unregistered, meet the criteria of being unorganised i.e. they employ less than ten workers and thereby, as per the Indian Factories Act, 1948 cannot be considered as the organised concerns. Such an inference has been derived by
the analysis of raw data belonging to the Third Census of Small Scale Industries. In this Census, the small-scale industries were asked about their registration status and then, specifically about their registration under the Indian Factories Act, 1948. By analysing this information, we have found that there are very few units registered under this Act; rather they are known to be 'registered' due
to their registration with the industries department for getting certain benefits. Consequently, we find that in terms of the number of enterprises, there is an overall domination of the unorganised segment (Table 2.10).
Table 2.10: Share of Unorganised Industry (%) in Punjab's Small-Scale Manufacturing Sector
Industry Number of Fixed Total Gross Total Type Units Assets Workers Output Exports 1<'ood PrOducts
99.03 85.42 93.37 76.15 55.19 and Beverages Textiles 97.58 59.65 86.27 74.69 87.04 Wearing Apparel 99.88 92.34 99.14 93.54 87.41 Leather Products 96.13 52.01 78.64 33.34 14.32 Wood Products 99.00 92.46 97.08 85.58 100.00 Publishing, Printing 98.45 91.68 92.91 80.24 97.04 Chemical Products 95.84 79.27 84.90 77.31 100.00 Rubber Products 96.26 73.53 80.30 64.07 41.72 Basic Metal Products 88.50 61.87 68.71 51.08 47.64 Fabricated Metal Products 95.78 74.62 81.33 60.19 31.15 Machine Tools 96.80 81.03 88.36 82.59 37.13 Transport Equlpments 91.05 47.84 72.42 58.16 41.05 Other Manufacturing 99.28 80.44 95.65 64.94 15.41 Repair Services 99.66 94.17 98.93 88.09 100.00 Other Industries 98.90 87.71 90.57 72.16 88.93 All Industries 98.63 78.72 90.56 70.30 72.50
Note: the fixed assets are as on 31 st March, 2002 and the gross output and exports are valued during 2001-02. Source: Based on Gol (2004).
These enterprises employ 90.5 percent of the total workforce - 29.5 percent
in rural areas and 61 percent in urban areas. Similarly, their shares in the gross output and exports are as high as 70.3 and 72.5 percent respectively.
They also account for 78.7 percent of fixed assets. Such a predominance of the
unorganised activity is found across all the industries.
In fact, Punjab's unorganised enterprises make the highest contribution
(14.29 percent) to the total exports made by the unorganised segment to In
dia's small-scale industries' export pool. Such significant contribution places
44
Table 2.11' Unorganised Industry's Export Performance Across States Unorganised State's Contribution to
Exports (in Rs. Cr.) Industry's Share Indian SSI Exports Organised Unorganised Total in State's SSI Total Unorganlsed
State SSI SSI SSI Exports SSI Industry Punjab 768.68 2026.08 2794.76 72.50 19.71 14.29 Maharashtra 576.46 728.62 1.305.08 55.83 9.20 5.14 Haryana 844.84 583.86 1,428.70 40.87 10.07 4.12 Gujarat 6.31 13.58 19.88 68.28 0.14 0.10 Tamil Nadu 1.381.43 841.87 2.223.30 37.87 15.68 5.94 Karnataka 283.35 235.91 519.26 45.43 3.66 1.66 Himachal Pradesh 11.58 2.25 13.83 16.26 0.10 0.02 Kerala 435.97 304.17 740.14 41.10 5.22 2.14 Andhra Pradesh 199.26 268.26 467.51 57.38 3.30 1.89 West Bengal 126.77 445.82 572.59 77.86 4.04 3.14 Rajasthan 211.42 378.84 590.27 64.18 4.16 2.67 Madhya Pradesh 116.14 87.30 203.44 42.91 1.43 0.62 Assam 1.30 13.76 15.06 91.36 0.11 0.10 Uttar Pradesh 388.62 1.070.85 1,459.47 73.37 10.29 7.55 Orissa 77.01 214.98 291.99 73.63 2.06 1.52 Bihar 15.69 15.93 31.62 50.38 0.22 0.11 Other States 928.15 576.96 1.505.11 38.33 10.61 4.07 India 6.372.97 7.809.03 14.182.00 55.06 100.00 55.06
Note1: the term Orgamsed refers to those enterpnses which are regLStered under section 2(m)(i) and 2(m)(ii) of the Indian Factories Act. 1948 and the 'Unorganised' refers to aU others. Note 2: SSI stands for 'Small-Scale Industry'. Source: Same as table 2.10.
Punjab's unorganised enterprises quite distinctively amidst their counterparts in other Indian states as the share of other states is much lower. e.g. Uttar Pradesh contributes the second highest (7.55 percent) followed by Tamil Nadu (5.94 percent), Maharashtra (5.14 percent) and so on (Table 2.11).
2.6 Prime Role of State & Entrepreneurship in Shaping Growth Dynamism of Punjab's Manufacturing Sector
2.6.1 Stimulating Role of the State
As we have discussed above that the state played a key role in facilitating the
rebuilding of Punjab's industrial economy from the wrecks of partition. The state
role attained pertinence due to the locational disadvantage of the state. Punjab is far away from the sources of basic raw materials such as coal, pig iron and
petroleum products. The market for many of the industrial products too lies
outside the state. Moreover. Punjab being the border state had to provide special
incentives to the entrepreneurs for attracting capital.
In its earlier industrial poliCies. the state introduced various incentives for setting up and promoting industries. It made the provision for (1) infrastruc
tural facilities. (2) various incentives to new industries. (3) incentives for locating
industries in backward districts. (4) assistance to small industries and (5) the
establishment of promotional. financial and research institutions.
45
For providing infrastructural support to the industries, the state had estab
lished various focal pOints and industrial estates in different parts of the state.
These focal points and industrial estates were provided with power, roads and
communication facilities. In a few selected cases, the state had also set up research and training institutes. Besides these, the state also provided a substan
tialland subsidy to the prospective entrepreneurs.
In terms of state's effort to provide various incentives to the new en
trepreneurs and industries, it provided a variety of tax incentives, which included
exemption from octroi duty, electricity duty and various other tax concessions. It
also provided a depreciation allowance and a capital investment subsidy. More
over, the state also provided interest-free loans and interest subsidies for certain
periods depending upon the degree of backwardness of the industrial location.
Similarly, the state, in its effort to assist small industries, has introduced
several promotional measures, incentives and training programmes at both the
national and state level. These measures were aimed, in initial stages, to protect
the small industries from competition with the large units. The reservation policy
adopted by the Government of India must be seen in this context. 20 Besides
these, the state introduced other protective measures like the exemption from
excise duty up to a certain limit, controlled price for scarce raw materials etc.
Similarly, various other promotional programmes were also in operation like
the refinanCing facilities through the Industrial Development Bank of India (IDBI) and the National Bank for Agricultural and Rural Development (NABARD). the
provision of credit for working capital from commercial banks and investment
capital from State Financial Corporations on a priority basis.
Moreover, the state had also provided technical assistance and common ser
vice facilities. It has provided industrial development-cum-service centres, test
ing and tool room facilities, research and development facilities for all types of
industries. It had established institutes like the Hand Tool Design Institute at Ja
landhar, Machine Tool Design and Development Centre at Batala, Research and
Development Centre for Bicycles at Ludhiana and the Sewing Machine Develop
ment Centre at Ludhiana. Similarly, for the expedition of the implementation of
the programs for small scale industries and to reduce the delays, the state had
established the district industrial centres. With the help of these centres, all the
services had become available at a single office.
20The reservation policy was adopted in 1967 with the reservation of 47 items. This list went up to 873 in 1984. But, following the recommendations of the Abid Hussain Committee (Gol, 1997). a process of de-reservation was started to make this segment of industry competitive.
46
capital to start big industrial establishments but they were well-endowed with considerable skills and technical expertise.
The Ramgarhias have a long history of serving the state as carpenters and blacksmiths. These people are "credited for having pioneered the manufacture of
Persian wheel. bullock drawn flour mills and hosiery machinery in the undivided Punjab" (Kalra, 1975). Their services were greatly acknowledged and utilised by the British in building canal colonies, construction and furniture work at their summer capital (Shimla) (Saberwal, 1976).
Owing to their long continuation in their works involving considerable skill, they have developed a 'natural' bent of mind towards technology. They are very fast in learning new skills and in a way, one may say that they are good imita
tors who can build any thing once they have some model to copy. The education level of the Ramgarhias is low. But, due to their technical bent of mind, they have proved themselves as skilled workmen, who even without any formal qualification, are competent enough to produce new, durable and cheap models of various types of machinery and machine tools.
The remarkable success of engineering industry during the Green Revolution
period goes to the credit of Ramgarhias. The fast growth of engineering industry in the Ludhiana district, where Ramgarhias are concentrated, is due to the en
terprise of these artisans (Pandit, 1985). They have made numerous innovations of machinery not only in the agricultural sector (like mechanical harvesters, iron ploughs, seed sowing machines, trolleys etc.) but also in various other industries like steel re-rolling.21
2.7 Industrial Labour Market Structure and Its Opera-tional Dynamism
The dynamism of the labour market in Punjab has been very much favourable
to the growth of small-scale manufacturing sector from its very beginning. It is
learned that since independence, a variety off actors have facilitated the availabil
ity of adequate labour for (intensive and extensive) utilisation by the manufac
turing sector - India's partition being the one of them (as discussed above), Green
Revolution being the other22 , heavy flow of migrant workers from the neighbour
ing poor states the other, small-size and consequent (statutory) relaxation from labour laws, corrupt bureaucracy and thereby the possibilities of maintaining
21Kundu & Bhatia (2003, p. 256) reveals that about fifty percent of the small-scale steel rerolling units are owned and managed by the 'Ramgarhia' mistries.
22 As the mechanisation of agriculture released surplus (local) labour for ready employment in the industry. sharp difference between the agricultural and the industrial wage also attracted the local labour (from neighbouring villages) to seek regular employments in industry.
48
wrong labour records23 and so on. We discuss below the structure of labour
market and its operational dynamism.
2.7.1 Three-tier Structure of Industrial Labour Market
The industrial labour market in Punjab has emerged, over the period of time,
in the form of three major segments. The first segment is constituted by the
entrepreneurial class who are the employers of workforce and are generally Bun-niahs, Marwaris or the skilled Ramgarhias. The second segment is constituted
largely by those who themselves are the workers but at the same time possess
little bit capital and skill so that they can run their small businesses either alone
or with the help of a few wage workers. A large number of self-employed work
ers and the owners of small establishments (who themselves are the workers)
come under this segment. And, the third segment is represented by a vast num
ber of workers who have nothing but their labour. These workers are generally
the migrants or locals (mostly from low socio-economic background). They are
generally unorganised and are not able to pursue some strong collective action
in contrast to other trade union that are somewhat strong but not that much
effective in influencing the state (as we'll see in seventh chapter, section 7.4.2).
As there is no effective system of imparting off-the-job skills to the workers
and a large majority of the workers acqUire skills while working on their specific
jobs and activities. It involves a lot of time in acquiring a certain kind of skill. In
such a situation, whoever makes the early start is placed at the higher rungs of
the occupational hierarchy. Similar has been the experience of most of the local
labour whose early entry into the industrial sector have enabled them to acquire
the ranks of skilled workers whereas the migrant workers, a large number of
them are the beginners, have to contend with relatively inferior jobs. Such a
pattern reveals a certain kind of occupational segregation in Punjab's industrial
labour market where the better occupations or activities are performed by the
native workers and those involving risk or exposed to hazardous conditions of
work are left for the migrant workers. Similarly, the women and children can be
found performing the Simpleton tasks whereas the men are involved in full-time
better occupations.24
23 As in the case of steel re-rolling mills in Mandi Gobindgarh. it is revealed by Kundu & Bhatia (2003) that the "entrepreneurs do not show most of the labourers engaged in their units in the register. even as daily wagers" (p.260) to avoid their statutory obligations under labour laws.
24As discussed in the next chapter. section 3.5.2.
49
2.8 Summing-Up
Thus. a central purpose of this chapter has been to decipher the evolution of manufacturing sector in Punjab so as to gauge the relative significance of unorganised segment in it. In light of the fact of Punjab being an agriculturally
advanced state. the theoretical insights on the inter-relation between agriculture and industry have led us to explore the evolution of a dynamic industrial sector. We have explored the state of industrial sector since the British times by
examining the conditions of commercialisation of agriculture and the accumulation of capital. We have also observed how the rude shock of partition shattered the industrial economy of the state. Similarly. we have also learned how the
state could recover and rebuild its industrial profile and since then. how it attained growth dynamism during the post-Green Revolution period. We have also deciphered the significant role of the state and entrepreneurship and artisanship in shaping the growth dynamism of the manufactUring sector in the state.
Similarly. we have also understood the structure of Punjab's industrial labour market and the operational dynamics of the labour market in three vital aspects of (1) recruitment and retaining of labour. (2) utilisation of labour and working conditions. and (3) the remuneration of labour.
It needs to be mentioned that an upshot of such operational dynamics of industriallabour market in Punjab seems to be the fact that the workforce may be
largely exposed to a range of vulnerabilities. Their working and living conditions
may be pathetic. Surprisingly, we have not observed much concern about this undeSirable outcome, at least in academic research.25
This provides sound basis for having a thorough study on the dynamics of
insecurity in Punjab's unorganised manufactUring sector. We do the same in
the subsequent chapters by way of examining both the secondary as well as the first-hand information that we have collected through our detailed primary
survey.
25A few of the studies by Manjit Singh (Singh. 1990b. 1991a. 2002) have raised the issue but it has not got attention for wider research.
51