IMPACT OF INDUSTRILIZATION ON

REGIONAL AND COMMUNITY

WELFARE IN THE 21st CENTURY.
BALLB 2nd year (IV semester)

Shailvi Gupta 1914207 LWBLI19015

The Impact of Industrialization on Regional and Community
Welfare in the 21st Century.

Industrial sector has an important role and position for long-term economic
development in many countries. Industrialization expected to be the primary
solutions to accommodate the increasing population in the agricultural
sector and the beneficial stimulant to increase activities in other areas of
community life which is expected to increase production and national
income in general, either directly or indirectly. Higher national income can
increase the propensity to support and provide the availability of funds that
necessary for further investment.

The degree of industrialization in a country is reflected by the level of

development, not only from the primary industry, but also in other
secondary industry of the countries. The level of industrial development is
not only measured by the percentage of growth in output or a share of its
output to GDP and its contribution to total export value, but also by the
level of diversification of products or variations of goods made, according to
the type of user (consumer goods, capital, semi-finished materials, the
means of production or raw materials are processed), or by technological
content (low, medium or high). However, even if a country has a large
primary industry (many product variations), but weak in the secondary
industry, it cannot be said that the level of industrialization in the country is
high. In fact, in a lot of literature on industrialization, more attention is
given to the manufacturing industry.

Why Industrialisation? What are the ultimate objectives of economic

development?

Different governments may have different objectives in mind. Generally,

however, they will include a faster growth of national income, alleviation of
poverty, and reduction of income inequalities. But how is industrialisation
expected to contribute to these goals? The experience of industrial
economies shows a close association between development and industrial
expansion. But industry is also thought to provide certain spill overs which
would benefit other activities: enhancement of skills, training of managers,
dispersion of technology, etc. Moreover, pessimism about the prospects of
food and raw materials made the substitution of domestic for imported
manufactured goods seem the most promising route to development for
many countries. Industrialisation and foreign trade Economists and
policymakers in the developing countries have long agreed on the role of
government in providing infrastructure and maintaining stable
macroeconomic policies. But they have disagreed on policies toward trade
and industry.

The form of government intervention in this area is the distinguishing

feature of alternative development strategies. A convenient and instructive
way to approach the complex issues of appropriate trade policies for
development is to set these specific policies in the context of a broader 2 of
13 Less Developed Countries strategy of looking outward or inward.
Outward-looking development policies encourage not only free trade but also
the free movement of capital, workers, enterprises, the multinational
enterprise, and an open system of communications

Industrialisation since Independence

India’s first Prime Minister, Jawaharlal Nehru, Premier from 1947 to 1964,
saw industrialisation as the key to alleviating poverty. Industrialisation not
only promised self-sufficiency for his nation that had just regained political
sovereignty, but also offered external economies accruing from technical
progress. Believing the potential of agriculture and exports to be limited,
Indian governments taxed agriculture by skewing the terms of trade against
it and emphasising import substitution, thus giving priority to heavy
industry.

Indian state intervention in industrial development has been extensive.

Unlike many East Asian countries, which used state intervention to build
strong private sector industries, India opted for state control over key
industries.
The government expanded antipoverty schemes, especially rural
employment schemes, but only a small fraction of the rising subsidies
actually reached the poor. Competition between political parties drove
subsidies up at every election. The resulting fiscal deficits (8.4% of GDP in
1985) contributed to a rising current account deficit. India’s foreign
exchange reserves were virtually exhausted by mid-1991 when a new
government headed by Narasimha Rao came to power. In July 1991, India
launched a second major economic reform program. The government
committed itself to promoting a competitive economy that would be open to
trade and foreign investment.

Measures were introduced to reduce the government’s influence in

corporate investment decisions. Much of the industrial-licensing system was
dismantled, and areas once closed to the private sector were opened up.
These included electricity generation, areas of the oil industry, heavy
industry, air transport, roads and some telecommunications. Foreign
investment was suddenly welcomed. Greater global integration was
encouraged with a significant reduction in the use of import licenses and
tariffs (down to 150% from 400%), an elimination of subsidies for exports,
and the introduction of a foreign-exchange market. Since April 1992, there
has been no need to obtain any license or permit to carry out import-export
trade. As of April 1, 1993, trade is completely free, barring only a small list
of imports and exports that are either regulated or banned. The WTO
estimated an average import tariff of 71% in 1993 which has been reduced
to 40% in 1995. With successive additional monetary reforms, the rupee,
since 1995, can nearly be considered a fully convertible currency at market
rates. India now has a much more open economy.

Evaluation of Industrialisation in India

The indicators named above will be used to evaluate the success of Indian
industrialisation policies. A distinction will be made between the period from
Independence until 1980, characterised by inward-looking policies such as
IS, and the period from 1980 until today, characterised by reforms and the
opening up of the Indian economy. The following analysis with indicators
compares the achievements of these two periods only. Absolute statements
of Indian achievements follow later on.

It must be emphasised that the analysed data conceals sharp disparities

within India between development-oriented states and laggards, between
women and men, between adults and children, and between city and
countryside. Different states have progressed at differing paces and, even
within states, different regions have achieved markedly varied results. Even
more noticeable than geographic differences in poverty reduction are the
inequalities that persist across gender, caste and ethnic groups. Social
indicators for women – literacy, for example – are distinctly lower than for
men, and the level of scheduled castes and tribes in both economic and
social achievements is still well below the national average.

Growth of national income

Growth of national income in GNP per capita in India was about 1.4% in the
years from 1960 to 1980. The effects of the reforms of the 1980s are
reflected in growth figures: the average GNP per capita growth increased to
3.25%. And with further opening up in the 1990s, the GNP per capita
reaches new heights with 3.8% average growth in the period from 1987 to
1997.

Alleviation of poverty

in the early 1950s, about half of India’s population was living in poverty.
Since then, poverty has been declining slowly. The poverty reduction was
given new impetus by the reforms: falling from around 55% in 1974 to just
under 35% in 1994 by a headcount index. In the 1980s and 1990s, poverty
reached historically low levels. Still, because of India’s rapid population
growth rate, the relative reduction of poverty has not been sufficient to
reduce the absolute number of poor which increased from about 164 million
in 1951 to 312 million in 1993-94.
Reduction of income inequalities

The reduction of income inequalities has only made slight advances. The
biggest 7 of 13 advances were made mostly before the reforms. On the other
hand, one of the biggest increases in inequality happened in the late 1970s,
and the developments for the late 1980s / early 1990s in Figure 1 look
promising. Compared to other low-income economies, the inequality is
relatively low.

Education

From 1960 to 1977 the reduction of illiteracy was only 11%. From 1978 to
1995, it was 25%, thus much higher. Of course, there are also long-term
developments involved here, so that the higher reduction in the second
period might be partially due to actions taken in the first period.

Health

Life expectancy, used as an indicator of health, has increased constantly

since independence. During the period from 1960 to 1980, it increased from
43 years to 52 years, which is an increase of 21% in 20 years. From 1980 to
1995 it grew to 62 years, which is a 19% increase in only 15 years. This
means that the growth of this indicator has increased by a rate of 24%
compared to the previous period. Even clearer is the improvement in the
reduction of infant mortality. This was reduced by 25% in the period 1960 to
1995 and a further reduction of 45% took place from 1980 to 1995. This is
partially due to better education of mothers, as well as to an improved
economic situation of parents.

Some important sectors of the Indian economies is given below:

1. Cotton and Textile Industry: Indian cotton industry is the broad-based

industry which accounts for about 12% of industrial production, 4% of GDP,
and employment to 35 million of skilled and semi-skilled workers and 12%
of total export earnings. The first modern cotton mill was established at
Kolkata in 1818.
Textile industry is labour intensive industry. It provides employment to 45
million peoples. It has major presence in unorganized sector in India. India
produced 48194 million kgs of cloth every year in 2014-15.

2. Iron and Steel Industry: This industry took birth in India in 1870 when
Bengal iron Works Company established its plant in West Bengal. In 1974,
The Steel Authority of India Limited (SAIL) was established and made
responsible for the development of the steel industry in the country. Indian
ranked at the 4th position in the production of crude steel (85 million tonnes)
in the world during 2014 after China, Japan and USA.

3. Fertilizer Industry: India today is the 3rd largest producer of nitrogenous

fertilizers in the world only behind china and USA. India is meeting 80% of
its urea requirement through indigenous production but is largely import
dependent for meeting the phosphorous and potassium requirement. Total
domestic production is given in the picture below: -

Welfare Programmes by the Government of India

4. Cement Industry: The production of cement was started in 1904 at the

madras but the foundation of stable Indian cement industry was laid in
1914 when Indian Cement Company limited started production in Gujarat.
As on March 2015 there are 185 big cement plant of installed capacity of
325 million tonnes are operating in the country. In the year 2015-16, India
produced 289 million tonnes cement in the country.

5. Coal Industry: Credit to invent coal in India is given to two English men
‘Sambhar and Hatley’. They started mining coal in Raniganj district of west
Bengal in 1814. Coal accounts for 67% of the country’s commercial
requirements. As on 2014-15 Indian coal production was 486 million tones
and import were 138 million tonnes. India makes 58% electricity from coal.
6. Gems and Jewellery Industry: Gems and Jewellery sector contributing
about 12% of India’s total merchandise exports made it as the largest
cutting and polishing centre of diamonds in the world. India’s share in this
market is about 80% of the world market. Indian export of Gems and
Jewellery was around $31 billion in 2015-16.

7. Petroleum Industry: According to India 2015: there are 22 refineries, 17

in the public sector, 3 in private sector and 2 in joint venture. All these
refineries have refining capacity of 220 million tonnes per annum. As we
now that India imports 20% of its total consumption oil and gas constitute
around 45% of the total energy consumption of India.
8. Chemical Industry: Chemical industry is the one of the oldest industry
of India. It includes petrochemical, fertilizers, paints and varnishes, gases,
soap, perfumes, toiletries and pharmaceuticals. This industry covers more
than 70,000 commercial products. It contributes around 3% of Indian
GDP. The chemical and petrochemicals sector in India constitutes 14% of
the domestic industrial activity.

9. Automobile Industry: automobile industry was delicensed in 1991 after

the implementation of new economic policy. However, the passenger car was
delicensed in 1993. At present 100% FDI is permitted in this sector under
the automatic route. This industry given employment to 13 million peoples
roughly and gives 6% to the GDP of India.

10. Leather Industry: Leather and its products are top 10 export earners
for the country. It is one of the traditional products of India. The small scale,
cottage and artisan sector accounts for more than 75% of the leather
production in India. This sector provided employment to around 3 million
peoples out of which 30% are women.

11. Sugar Industry: It is very crucial agriculture-based industry. This

industry is the second largest industry after the textile & cotton based on
the agriculture. As on 2014, there were 680 installed sugar factories in the
country as against 138 in 1951-52. India is the largest consumer of sugar
and second largest producer of sugar with a share of 15% of the world
count. Total production of sugar was around 28 million tonnes in 2015-16
in the country.

IMPACT OF INDUSTRILIZATION

Industrialization increased material wealth, restructured society, and

created important new schools of philosophy. The social impact of
industrialization was profound. For the first time since the Neolithic
Revolution, people worked outside of the local environment of their homes.
They arose every morning and traveled to their place of employment. This
was most often in a workplace known as a factory. The new machinery of
the Industrial Revolution was very large and sometimes required acres of
floor space to hold the number of machines needed to keep up with
consumer demand.

As in all productive revolutions, skill greatly determined the quality of life.

The most important aspect of this new economic order was the fact that the
skills needed to succeed were in many ways different from those that had
been needed in the earlier economy. Artisans had the easiest time
transitioning to the new economic paradigm. The fact that they had highly
developed manual skills enabled them to adapt to the new machinery much
easier than their agricultural counterparts. This was also the case when it
came to dealing with the new, enclosed work environment and strict
schedules. The worker from the countryside had over the centuries
constructed a cycle of labor that followed the seasons. There were times,
especially during planting and harvesting, when he was expected to put in
long hours, usually from sunrise to sunset. The term "harvest moon," which
today is looked upon as a quaint metaphor for autumn celebrations, was in
preindustrial Europe a much-needed astronomical occurrence that allowed
the farmer extra time to harvest his crops. In turn, the long winter months
were a relatively easy time. The lack of electricity and central heating kept
most people in bed ten to twelve hours a day, affording them relief from the
busy periods of planting and harvesting.

The industrial economy had a new set of rules and time schedules for the
common laborer. The work environment not only moved indoors, but the
pace of the work changed drastically. Instead of driving a horse that pulled a
plow or wagon, the machines drove the worker. The seasons of the year were
no longer relevant to the time spent at work. Adult males were now expected
to labor twelve to fourteen hours a day, five-and-a-half days a week, all year
long. This was a very hard transition to make. A great many people who had
once been considered highly productive agricultural workers were unable to
hold jobs because of their inability to adjust to this new regime