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MGNET Fifth Edition

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Mangesh Gole
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9 views

MGNET Fifth Edition

Uploaded by

Mangesh Gole
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Economists and others often make a distinction between the organised or

formal and unorganised or informal sector. There is a debate over how to define
these sectors. According to one definition, the organised sector consists of all
units employing ten or more people throughout the year. These have to be
registered with the government to ensure that their employees get proper salaries
or wages, pension and other benefits. In India, over 90% of the work, whether it
is in agriculture, industry or services is in the unorganised or informal sector.
What are the social implications of this small size of the organised sector?
First, it means that very few people have the experience of employment in
large firms where they get to meet people from other regions and backgrounds.
Urban settings do provide some corrective to this – your neighbours in a city
may be from a different place – but by and large, work for most Indians is still in
smallscale workplaces. Here personal relationships determine many aspects of
work. If the employer likes you, you may get a salary raise, and if you have a
fight with him or her, you may lose your job. This is different from a largeorganisation with well-defined
rules, where recruitment is more transparent and
there are mechanisms for complaints and redressal if you disagree with your
immediate superior. Second, very few Indians have access to secure jobs with
benefits. Of those who do, two-thirds work for the government. This is why
government jobs are so popular. The rest are forced to depend on their children in
their old age. Government employment in India has played a major role in
overcoming boundaries of caste, religion and region. One sociologist has argued
that the reason why there have never been communal riots in a place like Bhilai is
because the public sector Bhilai Steel Plant employs people from all over India
who work together. Others may question this. Third, since very few people are
members of unions, a feature of the organised sector, they do not have the experience
of collectively fighting for proper wages and safe working conditions. The government
has laws to monitor conditions in the unorganised sector, but in practice they are
left to the whims and fancies of the employer or contractor.
INDUSTRIALISATION IN THE EARLY YEARS OF INDIAN INDEPENDENCE
The first modern industries in India were cotton, jute, coal mines and railways.
After independence, the government took over the ‘commanding heights of the
economy.’ This involved defence, transport and communication, power, mining
and other projects which only government had the power to do, and which was
also necessary for private industry to flourish. In India’s mixed economy policy,
some sectors were reserved for government, while others were open to the private
sector. But within that, the government tried to ensure, through its licensing
policy, that industries were spread over different regions. Before independence,
industries were located mainly in the port cities like Madras, Bombay, Calcutta
(now, Chennai, Mumbai and Kolkata, respectively). But since then, we see that
places like Baroda, Coimbatore, Bengaluru, Pune, Faridabad and Rajkot have
become important industrial centres. The government also tried to encourage
the small-scale sector through special incentives and assistance. Many items
like paper and wood products, stationery, glass and ceramics were reserved for
the small-scale sector. In 1991, large-scale industry employed only 28 per cent
of the total workforce engaged in manufacture, while the small-scale and
traditional industry employed 72 per cent (Roy 2001:11).
GLOBALISATION, LIBERALISATION AND CHANGES IN INDIAN INDUSTRY
Since the 1990s, however, the government has followed a policy of liberalisation.
Private companies, especially foreign firms, are encouraged to invest in sectors
earlier reserved for the government, including telecom, civil aviation, power etc.
Licenses are no longer required to open industries. Foreign products are now easily
available in Indian shops. As a result of liberalisation, many Indian companies
have been bought over by multinationals. At the same time some Indian companies
are becoming multinational companies. An instance of the first is when, Parle drinks
was bought by Coca Cola. Parle’s annual turnover was Rs. 250 crores, while
Coca Cola’s advertising budget alone was Rs. 400 crores. This level of advertising

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