CHAPTER -7

BALANCED REGIONAL INDUSTRIAL DEVELOPMENT-

STRATEGIES AND MEASURES

A scrutiny of the preceding chapters clearly indicates the need to give

adequate importance to a balance in regional development. It was one of the
important themes of the Ninth Five Year Plan of India.

Balanced regional development can be achieved through a maximum

utilisation of available natural and human resources in the region and by
developing industries in the region. Regional industrial development leads
to the dispersal of industrial employment in different regions and reduction
of great differences in per capita income. Balanced regional industrial
development would mean not only the levelling down of inequalities of
income and wealth but also avoidance of emigration of labour to different
industrial centres. It would also avoid the agglomeration of industries in a
few centres or cities, resulting in housing problems, creation of slums,
pollution, moral degradation and environmental degradation. There is thus a
sound case for balanced regional industrial development in any region;
Karnataka is no exception to this.

For long, Karnataka presented a picture of extremely imbalanced

industrial development. On one hand, one finds a large cluster and on the
other completely neglected regions where there is not even proper
development of small scale industries. Many of the manufacturing industries
are concentrated only in some select regions or in a few districts like,
Bangalore urban, Dharwad, Mysore and Dakshina Kannada districts. As these
areas enjoy all the advantages they have become industrially more developed
as compared to many other districts in Karnataka which have remained
without the development of any industry, major or medium, inspite of
availability of resources.

For the purpose of formulating a development strategy and suggesting

developmental measures, seventeen districts in the state have been identified
as 'backward districts'. These are Koppal, Bagalkot, Raichur, Bijapur,
Chitradurga, Davangere, Kolar, Gadag, Haveri, Uttara Kannada, Bellary,
Bidar, Gulbarga, Udupi, Hassan, Kodagu and Mandya. For the districts of this
category the present plan strategies are not only inadequate but need a totally
new orientation. These districts not only need to be recognised as priority
districts in the industrial development of the schemes of the state but also
given special attention.

There are various strategies and measures that can be adopted for the
development of industrially backward regions and balanced regional
industrial development.

1) Resource Development:

For a balanced regional industrial development a resource

development plan should be given top priority. Planning for the development
of resources is a difficult task because they are not uniformly distributed in
the state. The resource utilisation and the development potential of each
backward district have to be carefully analyzed while drawing up
programmes under a special plan. In the third chapter 'Resource Base for
Industrial Development', the availability of resources in different districts in
Karnataka has already been analyzed.

The development of agricultural resources play an important role in

Industrial development. A majority of industries in Karnataka are agro-based.
For the development of agro-based industries in backward districts the
strategy of improving agricultural resources will go a long way. It should
focus on improving the infrastructural and institutional facilities for the
development of agricultural resources.

It must be admitted that mineral resources have not been exploited to

the best advantage of the state. Even today, after 50 years of independence,
huge quantities of minerals continue to be exported in their raw state without
any processing whatsoever. Enough attention has not been given to resource
utilization, which is as important as resource identification. As such,
increasing attention has to be paid to the utilization of resources to meet our
needs.

Karnataka has relatively smaller area under forest cover as compared

to the national average. The area under forests in the state constitutes 16.16
per cent of the total geographical area. But only 11 per cent is well wooded
and the remaining is degraded. Hence, the Government should give
protection to the forest resources, their conservation and their systematic
utilisation with the establishment of sanctuaries and blocks in the state.
Forest based industries can be developed in districts like Uttara Kannada,
Kodagu, Udupi and Chickamagalur.

The table no 3.5, in Chapter-Ill, gives the livestock statistics in various

districts. The major bottleneck in developing the live stock resources and
industries based on them is the availability of necessary veterinary services.
Development of live stock resources requires veterinary hospitals and a good
set of veterinary colleges in the state, in addition to making arrangements for
feed and process the products. With this, development of the dairying and
v

poultry sector is possible in these 'backward districts'.

The work force and availability of skilled labour is described in the

third chapter. The basic strategy of industrial development of 'backward
districts' should aim at the development of human resources. It is necessary to
fine-tune the professional skills in these areas. Bridge courses for imparting
latest technological skills and making the professionals to focus on
application-orientation are likely to help in a big way, in high skill
employment opportunities in the state. New vocational training programmes
based on the skills needed in the entertainment industry, fashion technology,
specialisation in services across the board, should receive immediate
attention. Setting up of high quality professional institutions like the Indian
Institute of Technology in North Karnataka would open new vistas in higher
technical education, which is helpful for industrial development in 'backward
areas'.

2) Infrastructure Development:

Industrial development in North Karnataka has suffered due to the

lack of infrastructural facilities. In the fourth chapter 'Infrastructure Facilities
for Industrial Development' the imbalances in infrastructure facilities is
analyzed in great detail and an attempt has been made to show the broad
directions in which district infrastructure has to be developed for industrial
development in the state. It is necessary to improve the infrastructure facilities
like roads, and railways, communication, power and financial institutions
towards industrialising a 'backward region'. Along with these infrastructure
facilities it is also essential to improve the basic amenities and facilities like
dwelling conditions, drinking water, health services, educational and
technical training facilities which would be needed by the industrialists,
labourers and their families. Before migrating to any area investors and
labourers specially skilled labourers do look for the amenities and facilities
available in the place of work. Without infrastructural development and
amenities and facilities, industrialisation process cannot be accelerated. Any
policy advocating for direct industrial investment in a backward region,
cannot achieve its full objectives without planning for the basic necessities of
industrialisation. Therefore after identification of industrially backward
regions, the region lacking infrastructural facilities should be grouped
together for the purpose of first stage of industrialisation.

In the fourth chapter, to understand development of infrastructure

facilities across various districts in the state and to study the correlation
between the infrastructure development and industrial development across
various districts in Karnataka, infrastructure development index was
constructed. This shows the districts that have low infrastructure
development are performing low in industrial development. The need for
strengthening infrastructure in order to attain industrial development comes
out clearly from these results.

3) Private Sector Participation:

Bringing 'backward districts' into the main stream of development is

not a task or responsibility of the government alone. The private sector can
bring more of capital for investment in the 'backward districts' taking
advantage of the government measures for improving infrastructure and also
the special incentives offered under the new industrial policy, new IT policy
and the like. However the social responsibility has also been widely accepted
by entrepreneurs and captains of industry resulting in their being involved in
a big way for making up of the backlog in literacy and primary education.
However, in the development of infrastructure like air transport the
'backward districts' are at a disadvantage. Government may try developing
areas that may be considered suitable for construction of the airport either by
the private sector or as a joint venture of the government and the private
sector. Major incentives like offering a guarantee of a minimum return on
investment made has to be an integral part of the strategy of development so
as to attract the private sector to own and operate small aircraft linking the
state headquarters with all the district headquarters, particularly those
covering Gulburga, Bidar, Raichur, Bellary, Hubli-Dharwad, Coorg, Mysore
and Hassan.
4) Industrial Dispersal Policy:

An industrial dispersal policy, which encourages growth of industries

in the 'backward areas' and discourages or prevents further industrialisation
of developed areas is an important measure taken in many countries to
achieve the objective of regional balance.

Bangalore urban district has the pride of being categorised as

extremely developed district of the state. It leaves all districts far behind in
industrial development. In this district we find many types of industries. The
present level of plan efforts are more than adequate to maintain rate of
growth in future. What is needed is dispersal of industries from this urban
agglomeration to other parts of the state.

There are four common methods to effect or influence the desired

pattern of industrial location, viz., direct regulation, direct investment,
licensing policies, various incentives and attractions to the private
entrepreneurs and disincentives in the 'backward districts'.

i) Direct Regulation:

Under direct regulation, the government may impose a ban on

the location of industries or certain industries in certain areas. For
example, it may place a ban on the location of new units within and
near large cities with a view to preventing further concentration. Such
a regulation would compel industrialists to look for alternative
locations. Direct regulation may also take the form of requiring the
existing units to change their location, the establishment of separate
zones for different types of activities etc.

ii) Direct investment:

It relates to the direct investment by a higher level government

in an industrially backward region. Government can locate important
projects in backward areas. They may adopt specific programme
 specially suited for such regions. Formulation of such programmes can
be at national level but it can be implemented at any regional level.

iii) Licensing Policies and Various Incentives and Attractions to the

Private Entrepreneurs

In order to develop industrially backward regions, it is

important to attract private entrepreneurs to the backward regions.
Mere public sector investment is not sufficient. Therefore, government
can resort to such a licensing policy which may discourage the private
entrepreneurs to invest in already developed and congested areas and
encourage investment in the backward regions. Private capital will
flow to backward regions, not by force but by incentives. Mere
licensing policy cannot influence the decision of a private entrepreneur.
Attraction and incentives like tax concessions, subsidies, grants and
easy loan, industrial estates, etc., can attract private capital into
backward regions. One of the important reasons for a private investor
to shun from investing in a backward region is the heavy initial cost of
production and difficulties faced by him due to non-availability of
infrastructure. In order to overcome these difficulties, providing
financial concessions along with providing infrastructural facilities
would help to encourage private investors to move to 'backward
regions'.

iv) Disincentives:

In contrast to the incentives which may be regarded as a positive

approach, the disincentives may be regarded as a negative approach.
The disincentives are meant to discourage industries in certain areas
like large cities or areas which are comparatively, industrially well
developed. Such disincentives may include a location tax, higher tariff
 for power and other infrastructure. Further, incentives for industries in
other areas also mean disincentives in the developed areas.

5) Policies of Specialised Financial Institutions:

To channelise financial resources towards the 'backward regions' the

policies of various financial institutions like commercial banks, co-operative
societies, life insurance corporation, industrial development banks, IFC and so
on can be framed to channelise. Different rate of interest, differential period of
repayment of loans and various other credit policies favouring the
industrially backward regions can be adopted in order to reduce the regional
imbalance.

6) Application of Science and Technology

Given the significant inter relationship between technological progress

and human development, carrying Science and Technologies based activities
to 'backward districts' is one of the important strategies for balanced regional
industrial development.

Thus, after identifying the districts according to the levels of industrial

development and their typology of development, different strategies of
development should be perused in order to develop the 'backward districts'
at a faster rate of growth and to bring down the regional imbalances in
industrial development.

Regional imbalances are, however, bound to remain, even in the most

efficient country, but the extent of such imbalances should be brought down
by increasing the levels of development of the backward districts and not by
bringing down the levels of developed districts or regions. Thus, the proper
balanced regional industrial development strategy should aim at increasing
the rate of growth of all the regions so that state averages keep on moving
towards higher and higher levels of development and each individual region
also keeps moving towards higher level and at the same time the gap between
the highest and lowest ranked districts come closer and closer.

The plan should aim at taking a region to that stage, where it becomes
self sufficient, can generate savings, attract others from outside and
automatically start growing. When all the regions reach that stage, in spite of
regional imbalances in the levels of industrial development, the state would
be in a position to achieve political, economic and socio-cultural harmony and
stability and can achieve a very high level of development for the state as a
whole.

SUGGESTED MEASURES:

On the basis of the analysis carried out, the following measures have
been suggested.

1) There is need to promote agro-based industries such as sugar, textiles,

food processing and horticulture based ones in 'backward districts'.

• Both sugar and textiles are the traditional employment oriented

industries of Karnataka. The industrially 'backward districts' of
Bagalkot, Mandya, Davangere and Gulbarga are suitable for
sugar production. There are opportunities to establish some
more sugar industries in these districts.

• Textile and garment industries can be established in the

'backward districts' of Koppal, Bagalkot, Raichur, Bijapur,
Davangere and Haveri since these districts are important
producers of cotton and much of cotton is being exported to
other States.

• Food processing industries should be established in the

backward districts like Hassan (maize and coconut processing),
Haveri (maize and chilli processing), Chitradurga (coconut and
 arecanut) and Kolar, Shimoga, Koppal, Raichur and Bidar (fruit
processing and agro-based units).

• Horticulture should be developed as an export industry and

special training be given. The districts having the potential of
this sector are (lime, grapes and pomogranade), Kolar (mango
and onion), Kodagu and Chikmagalur (cocoa and spices,
mushroom), Haveri (floriculture), Chitradurga (pomogranade)
and Udupi, Uttar Kannada (cashewnut).

2) There is vast scope for developing mineral based industries in

'backward districts'.

• Lime stone deposits occur in Bijapur, Chitradurga, Gulbarga,

Gadag, Haveri Raichur and Koppal. The manufacture of cement
and allied industries like ceramics should be established
determining the location of units in places where there is high
concentration.

• High temperature fire bricks units can be established in the

'backward districts' like Bijapur, Uttrara Kannada and
Davanagere which have plenty of dolomite reserves.

• The mini iron and steel plants can be established in industrially

'backward districts' like Chitradurg, Bellary and Uttara kannada
which have good reserves of iron ore. Efforts should be made to
revive the sick iron manufacturing unit at Sandur.

• Ornamental stones used in the construction and other

decorative items are reported to be available in the 'backward
districts' of Bijapur, Koppal, Raichur, Gulbarga and Bidar. These
hold out the prospects of export of ornamental stones.
 • The mineral exploration should be carried out in the districts,
which are industrially backward. The state should invite
international mineral explorers to explore the availability of
minerals in these districts and assess the quantity available so
that they can all be harnessed for the industrial development.

3) Cottage and Forest based industries be started in 'backward districts'.

• It should be established in Uttara Kannada, Kodagu, Udupi and

Chikmagalore. The paper unit at Madikeri, cottage unit at
Virajpet and Kushalnagar, silk and timber based units at Hassan
and bidi units atUdupi should be established.

4) The co-operative dairy units should be established in 'backward

districts'

• The districts of Bagalkot, Bijapur, Gadag, Haveri, Bidar and

Gulbarga are ideal centres for diary units since these districts
have plenty of livestock resources. The dairy and poultry
activities can bring many changes in the development of these
backward districts.

5) Proper infrastructure facilities like transport, power, communication,

financial institutions and other facilities must be provided to
'backward districts'.

• Enabling faster industrial growth also requires development of

food transport facilities. The major ones such as direct trains
connecting Gulbarga with Bangalore, new Railway link between
Bidar and Gulbarga, Raichur and Gadag, Mysore and Madikeri,
Hassan and Chikmangalore are the priorities now.

• Surfaced roads should be provided for 'backward districts'. The

present road length is unsatisfactory in these districts.
Efforts should be made to link the 'backward districts' with
Bangalore and other cities by air service. There is need for
establishing the state level airport in Hubli for connecting the
North Karnataka with other parts of the country.

There is need for the development of minor ports like Tadadi,

Karwar and Bhatkal for industrial development in the
hinterland areas.

The communication network is poor in 'backwad districts' like

Koppal, Bagalkot, Raichur, Bijapur, Chitradurga, Gadag, Haveri
and Gulbarga. STD/ISD, Cell phone connections have to be
improved in these districts.

Assured electricity supply in all 'backward districts' is a must

for improving industrial development. Some of power
v f

generated may be reserved for these backward districts.

A thermal power plant with a capacity of 100C Mw should be

established in one of the 'backward disricts' of North Kanataka
which will ensure continuous supply of power to these districts.

In districts like Chitradurga and Chikmagalore there is great

scope for non-conventional energy development. The non-
conventional energy development corporation should take up
solar energy and wind energy development in these districts.

A separate industrial finance and development corporation for

the 'backward district' should be created. KSFC and KSIIDC
should be strengthened in finances for proper investment in
'backward districts'. There is need to attract FDI (Foreign Direct
Investment) into the state in a big way specifically to 'backward
districts'.
 • There is need to set up more entrepreneurial training centres
such as CEDOK in Shimoga and Belgaum. There is also need to
set up automobile training institute at Dharwad.

• The industrial training centres should be established in Haveri,

Bellary, Gulbarga and Koppal districts which do not have
enough training centres.

• Major private sector industries such as Hindustan Lever, Kissan

be encouraged to come to North Karnataka areas for processing
various agro and horticultural products .

• Apart from the Growth centres located at Dharwad, Raichur and

Hassan and proposed mini growth centres at Bijapur, Bellary,
Malur, Nippani, Gadag, Chikmagalore and Chitradurga, it is
necessary to establish mini growth centres in rest of the Head
Quarters of the districts which are industrially backward.

• Efforts should be made to establish Agro parks, Software

Technology parks, Special Economic Zones, Export Promotion
Industrial parks in 'backward districts'.

6) For the balanced industrial development a policy of industrial

dispersal should be effectively carried out.

• There is need for shifting some industries from Bangalore to

North Karnataka and setting up of SIDBI and NSIC centres in
'backward districts'.

• It is high time that a high level committee makes a

comprehensive review of the policy and suggest measures for
the proper dispersal of industries.
 7) The private sector should be attracted to establish industries in the
backward regions of the state.

• Licensing policies should be simplified and various incentives

be given to private entrepreneurs of 'backward districts'.

• The public sector under takings of both state and centre should
be established preferably in the 'backward districts'.

• The State should disinvest its share in majority of loss making

public sector undertakings and create a special fund for
industrial development in 'backward districts' from those
proceedings.

Balanced industrial development has multi-dimensional aspects and

requires multi-dimensional measures for its redressal. The measures
suggested above may go a long way in realizing the balanced development of
industrial activities. Various remedial measures must be experimented and
re-experimented and based on the failures and successes the measures have to
be re-oriented.

Industrialization of 'backward regions' in Karnataka cannot be

achieved "in a day"; it is a long and arduous process, which involves not just
economic and technical considerations, but also various socio-cultural factors,
which if neglected, might outweigh purely economic and technological
factors. Industrialization of Back ward regions in a state like Karnataka is a
part of general backwardness of the state. The attack, therefore, will have to
be on all fronts simultaneously and with vision and commitmentment. What
is needed is the preparation of the sectoral plans on the basis of regional
perspective. Thus the aggregate as well as the sectoral planning should suit
the clearly identified regional needs, potentials and priorities. Such a plan
based on regional requirements directly benefits the local people, and
stimulates local participation.