School of Public Policy and Governance Tata Institute of Social Sciences, Hyderabad WORKING PAPER SERIES NO. 1, December 2015
Industrialization In Small Cities, current status and factors affecting the growth of an Industrial Area :A case study of Satara Industrial Area in Satara District, Maharashtra, India
Milind Kamble
School of Public Policy and Governance Tata Institute of Social Sciences, Hyderabad Roda Mistry College of Social Work and Research Centre, Opposite Biodiversity Park, Gachibowli, Hyderabad, Telangana - 500008 Email : sppg-si@tiss.edu Website : http://goo.gl/mQGBpF
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About Student Working Paper Series The Student Working Paper Series, is an attempt by the School of Public Policy and Governance, at Tata Institute of Social Sciences, Hyderabad to assimilate papers being worked upon the topics that will help enrich the public discourses by improving upon the clarity, accuracy and sophistication of discussions on the nation's Public Policy. About School of Public Policy and Governance The School of Public Policy and Governance (SPPG) is a novel research based teaching and training space designed to equip young professionals to contribute to the policy area research. SPPG provides opportunities to its students to think beyond conventional models of growth and development, and encourages them to generate ideas for developing institutional frameworks for accountable governance and the establishment of a socially equitable society. Its programs and activities are designed to create an environment for the well-trained scholars to access and collect information about contemporary policies and activities surrounding them so that they can produce timely research and undertake analysis on key topics of Public Policy.
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Industrialization In Small Cities, current status and factors affecting the growth of an Industrial Area : A case study of Satara Industrial Area in Satara District, Maharashtra, India - Milind Kamble
Abstract Industrialization and development are interlinked terms. Without one, the other can’t be completed. They have a very deep relation. With the help of industrialization, development took place. Industrialization can be defined as the set up of more factories in one particular area so that the society will turn into an industrial based society. When industrialization takes place in a large scale in a region or country, it means the economy transfers from agriculture-based to manufacturing and other industries. The development of industries, which led to the Industrial Revolution, observed an improvement in arrangement of transportation, communication and banking. Industrial Revolution was a tool that aided the developed countries in their advancement.
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Introduction Industrialization and development are interlinked terms. Without one, the other can’t be completed. They have a very deep relation. With the help of industrialization, development took place. Industrialization can be defined as the set up of more factories in one particular area so that the society will turn into an industrial based society. When industrialization takes place in a
large scale in a region or country, it means the
economy transfers from agriculture-based to manufacturing and other industries. The development of industries, which led to the Industrial Revolution, observed an improvement in arrangement of transportation, communication and banking. Industrial Revolution was a tool that aided the developed countries in their advancement. Merits of Industrialization: Employment Generation: Industrialization creates employment. Industrialization requires huge human resources from various educational and skilled backgrounds. Industrialization can provide employment to anyone, irrespective of educational qualification. Quality transport facility: Due to industrialization, transport facility is automatically improved because of high income earnings. Good quality roads are made effectively and efficiently. Communication Facility: Industrialization is a major factor in bringing and improving communication facilities. Private players need communication services for their growth, so therefore improvements in communication facilities take place in such industrial areas. We have examples of Pune and Nashik cities. Standard of living: Due to regular and sufficient income, the standard of human life is improved and these changes take place in every aspect of
human life. People can improve their
lifestyles. Through industrialization, people get economic advantages and freedom of economic expenditure. Establishment of educational institutes: Industrialization requires skilled and unskilled labor, and skilled labor can be produced through educational institutes. Since there is a huge demand for skilled labor, educational institutes are established. Like in Pune and Mumbai, it was observed that
MBA and
engineering colleges were established to supply skilled labor to the market. Creation of
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Market: Industrialization creates market. When industrialization took place, the market formed at a large scale where all kinds of goods were available. Market generation is very necessary in any city’s development.
With the output of industrialization, markets
develop. Affordable pricing of goods can be made available because of industrialization. This is a people centric research, which will tell you the real condition of Satara Industrial area. In my research I tried to bring the actual conditions of such industrial areas. What are the factors that cause the decline in growth of Satara Industrial area? Satara Industrial area is near Pune and Mumbai, and was founded in the early 80’s. It showed a good performance in its initial years, but after a span of time it started declining. Despite providing good infrastructure support, there were other reasons due to which Satara Industrial area failed to develop. In the current development scenario, government and private players might fail to take care of such industrial areas. Detailed discussion on factors that affected the growth of Satara Industrial area were not held. If the government and private players start new investments in tier II and tier I with the establishment of new industrial setups, industrial hubs like Satara Industrial area that has the potential, can grow. In this research I tried to find out what is the opinion of MIDC ( Government), what is the perception of the government about Satara Industrial area. I tried to understand why the government is rejecting the fact of the declining growth of Satara Industrial area and the role of private players in Satara Industrial area. This research will elaborate on the history of Satara Industrial area. What happened there, and who is responsible for it? How it can be solved?, etc. This is people centric research will tell you the real condition of Satara Industrial area. Broad Objective: The Study aims to investigate/examine the current status of Satara Industrial area & find out what is the result. Specific objectives: 1) To critically evaluate growth and stagnation in Satara Industrial area.
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2. What are the operational problems faced by key stakeholders in Satara Industrial area? 3) What is the current status of Satara Industrial area in terms of economic growth? Research questions: 1) Is there slow growth or industrial stagnation in Satara Industrial area? 2) What are the major factors that lead to growth or slow growth of the industrial area? 3) What kind of reinvestment has followed the initial investment in Satara Industrial area and how has Satara industrial area fared as result of it? Maharashtra is called the ‘development state’ in India because of its huge industrialization. It is the most industrialized state in India.
Most industrialization took
place in big cities, so big cities emerged as industrial hubs. Smaller industrial cities failed to reach the mark of development that the big cities had achieved, as new investments were falling because many investments were moving to other big cities. So there arises a huge inequality in the State as some cities are developing and some cities are not developing. Here, in my research, I have taken a hypothesis of the slow growth of Satara Industrial area. Satara which is one of the districts of Maharashtra state, was seen as a high potential city for industrialization. It is on prime location from all sides. So MIDC set up industrial infrastructure there in 1971. From 1971 to 2000 it performed very well, but after that it has performed at a very slow rate or we can say that it has been declining whereas other industrial areas are developing. My case study is a people centric approach, focusing on factory owners, government officials, and MIDC workers. While doing research I exclusively tried to find out the factors affecting Industrialization. The Hypothesis was- Satara Industrial area is declining as time goes. When I entered the field I found that there is a conflict of information between MIDC officials and private players (including factory owner factory labor and some experts from Satara Industrial area). So what is the reason for conflict of information and perception about Satara Industrial area? The same issue happened in” Satara Industrial area” case, where the perception of the
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factory owners is
negative towards the government. According to them, the state is
passive about their problems or the state is not willing to take them into account. Satara Industrial has been facing many problems, but the state is either not aware about them, or is not willing to develop small industrial areas like the Satara Industrial area. According to factory owners there is stagnation in the industry. After 2001, Satara Industrial area‘s growth has been declining, but MIDC labors have a different opinion about it. According to them, both factory owners and MIDC officials are responsible for the declining growth of Satara Industrial area.
Local politicians and experts are of the
opinion that MIDC
officials should work for them and report to them, but MIDC is an autonomous agency and therefore political intersperse is not possible. But MIDC officials have a clear role that they can’t feed. Their responsibility is only to build infrastructure. The developmental responsibility is connected with the factory owners. Once the infrastructure is built their part is over. 1.2 Framework of the Dissertation 1) When private players fail in market or policy, state’s duty and role is very important. State should invoke positive affirmative action in order to take care of the private player. 2) State and private players should work horizontally. There is always a need for horizontal communication for the smooth and successful running of the market. 3) Without State support market will not run smoothly. State is the final authority for market intervention. 4) The neoliberal market needs the partnership of State and private players. 1.3 Review of literature In this section there is a focus and discussion on stagnation, through some case studies by different scholars who are experts in their respective fields. All case studies and arguments are in the Indian context. Basically, this section will discuss
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the short history of stagnation in India and how it has emerged. What are the major factors behind it? In the present neoliberal model of economy, are there any cases of pre-existing stagnation or chances of it creeping in? In my research work I will mainly focus on the availability of good infrastructural support, the labor force, market availability and good natural factors like rainfall, good supply of agricultural products and other raw material supplies. So what are the other possible factors that lead to stagnation or slow growth of industrial areas?. My research will try to fill in the gap of hidden factors that lead to slow growth and how they can be brought into focus so that it will help in improving industrial development. In my dissertation I have tried to show how any industrial area can face slow growth and stagnation if the state and private players don’t work together for a common goal. After 1991, India’s liberalisation and globalization policies were initiated and industrial growth took place. It was a rapid and promising growth. Cities like Hyderabad, Pune and Ahmedabad grew very well because of proper and planned industrialization. The main problems occurred with smaller cities like Satara and Sangali which are near big cities, but are unintentionally left out of the development purview of the government and private players. When the Government established infrastructure in every city, many new investments took place in such industrial areas. This industrialization didn’t perform better as compared to other cities.
The framework of my dissertation is that the government and private players
should work horizontally to sustain the market.
Through the case study of Satara
Industrial area, I tried to look at the industrialization in small cities. There is a need for it. In the near future “Make in India” concept is supposed to take place. This will create manufacturing units in every city.
Governments are trying to establish new industrial
areas, but government and private players are forgetting the existing industrial areas. My research might be worthwhile because it may be useful for: 1) Upcoming policies in industrial development 2) Some hidden problems of industrial areas in India
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3) Dependency of small industries on large industries (Market problem). Policy that can help to sustain small industrial sector. Government and small industrialists can get help from this research. 4) Role of private players and government in the development of cities
1.4 Methodology This study is conducted in the Satara Industrial Area. There are four types of respondents - Factory owners, factory labourers, MIDC officials, political representatives. Research was mainly conducted in Marathi and Hindi language. The data collection was done via a proper, authentic and well guided questionnaire which was administered by an expert in the field. The duration of data collection was November 5th 2014 to November 29th 2014. Qualitative Data: The questionnaire prepared to interact contains most questions as qualitative data. The data which was collected is mostly in a subjective form. The questionnaire was made for qualitative data purpose but there are some quantitative questions also included. No data was taken in an audio or video form because responses didn’t allow for it. Every respondent had his/her own story. And a story cannot be quantitative. Qualitative questions were framed to support the hypothesis and objectives of research. All data is collected in qualitative form. In this research study there were 7 research stations which are as follows: Factories of Satara Industrial area 1) MIDC Office ( Satara MIDC) 2) Zillah Udyog Kendra Old MIDC 3) MAS (Manufacturers Association Of Satara) 4) MIDC Area Office 5) Gram Panchayat- Kodali and Dhangarwadi. 6) Kodoli and Shrikrishna Colony ( For labourers data) 7) Satara MIDC police station.
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Respondent Name
MIDC Official
Interview type
Direct Interviews and
Sample
Sample size
size
collected
NA
5
reports Factory owners
Direct Interviews
45
37
Old worker
Direct Interviews
40
35
Representative of Satara
Direct Interviews
All
1
Direct Interviews
NA
2
constituency Other officials (Police officials)
Data analysis is done using pictures, newspaper cuttings, tables, and some graphical presentations through MS-EXCEL. There are limitations for data collection which I found such as the
Election period, during this data collection, the election of Maharashtra
state just happened, and most of the people were busy with elections duties and others work. So to get the appointment of factory owners and government officials was a hard task. Time constraint, as earlier mentioned, the survey was time consuming. Some respondents gave positive responses but some give very rigid responses. Because of long questionnaires, some respondents thought there may be monetary compensation for giving information. The most important hurdle was security guards at gate of every company not permitting entry into company premises. 1.5 Background information about Case study Short note on Satara District: General Characteristics of the District: Satara has a historical background. Most of the prevailing kingdoms in the North have their traces in the Satara district. Satara district has eleven talukas. Variation in the terrain is seen in the district. The district lies between 17.5 degrees and 18.11 degrees North latitude and between 73.33 degrees and 74.54 degrees East longitudes. The district is completely landlocked being surrounded by Ratnagiri district on the West, Sangli district on the south, Solapur on the west, Pune on the north and Raigad on the North West. It covers
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10,480 sq kms. Most of the central Satara district’s area falls in the basin of river Krishna a and limited area falls in the basin of river Bhima. Rivers: Krishna is the main river flowing in the district & its tributaries are Koyana, Urmodi, Tarali, Man, Venna, Kaudali, Vasana & Yerala. The major irrigation projects of Dhom & Kanher are situated on the rivers Krishna and Venna respectively Demography: As per the 2001 census the total population of the district is 27.97 lakhs with a density of 267 persons per sq. km. The male & female population is 14.02 lakhs & 13.95 lakhs respectively. The rural population & urban population are 23.99 lakhs (86%) & 3.98l lakhs (14%) respectively. The literacy rate in the district is 78.52% as against the state average of 76.2%. Male literacy is 88.45% and the female literacy is 68.71%. Occupational Structure: According to 2001 Census, the total working population in the district was 21.86 lakhs, which was 43.77% of total district population. Out of total working population, 50.88% are engaged in agriculture and allied activities, 1.60% are in Cottage industries and remaining 47.52% are in other manufacturing and service industries. . As per 2001 census there were 1707 revenue villages including 26 deserted villages & there are 1478 Gram Panchayats / Group Gram Panchayats. There are 11 towns in the district & eight Nagar Parishads viz. Satara, Wai, Mahabaleshwar, Panchgani, Phaltan, Karad, Rahimatpur & Mhaswad. 1.6 Short Note on MIDC (Maharashtra Industrial Development Corporation) After the formation of Maharashtra state in May 1st
1960, the State Government of
Maharashtra created a separate autonomous body for industrial development called the "Board of Industrial Development" (BID). It was headed by Mr. SG Barve, an ICS officer. After receiving various recommendations from experts and committee chaired by Mr. Borkar, the BID (Board of Industrial development was converted into the Maharashtra Industrial Development Corporation (A legal separate autonomous body of Maharashtra Government). For that purpose, the BID made a legislation in 1961 and it was launched before the state legislation and passed in the form of "Maharashtra Industrial Act 1961�. In 1962 Wagale estate (Thane District) first industrial setup was built.
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The MIDC has
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been declared as an agent of the state Government for carrying out various activities within the framework of the MID Act and the MID Rules. Its function is to build industrial areas, catalyze industrial growth by providing necessary infrastructure including natural gas, power, logistics support network and clean environment mechanisms. It has set up 229 industrial parks on 60,000 hectares of land; industrial sectors, including information Technology, Bio Technology, Special Economic Zones, Wine (Grape Processing) Park, Gems & Jewellery, Textile, Leather, Chemical Industry, Electronics, Food Processing, Floriculture etc These activities can be divided under following 3 broad categories. 1) Acquisition and disposal of land. 2) Provision of infrastructure facilities 3) Providing services. 1.7 Profile of Satara MIDC (Industrial Area) In 1971 the MIDC set up industrial infrastructure in Satara. The Satara Industrial area is located on the east side of the Pune-Bengaluru National highway number 4. It is situated between villages like KODOLI, DHANGARWADI, KALOSHI, NIGADI, and DEGAON. In 1971 the MIDC acquired land amounting to 151.54 hectares from these villages to set up an industrial area here. Initially only one industrial area was developed but later on an additional MIDC was developed because of high demand of market. The MIDC is divided in two parts 1) Old MIDC 2) Additional MIDC ( New MIDC) Current status of Satara MIDC
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Name
Area (in Hect.)
Of Area
No. of
No. of plots
plots
allotted
Industrial
Commercial
Rate per Sq. Rate per Sq.
developed
feet
feet
( In Rs)
(In Rs)
1
Satara
152.04
437
436
565/-
2
Addl.Satara
208.1
754
647
565/-
Details of the proposed Industrial Area: (At the level of acquisition of Land) Sr. No
Name of area
Proposed Area in Hectares
Satara Tappa( Phase) 3 1
Degaon
352.31
Type of industries in Satara MIDC The major big companies are- Cooper industries, Cyclo Transmissions Top gears, PMP Pvt ltd, VR Enterprises, Key Iron Company, Choghule industries, Alfa Laval, Crane, Paranjape Autocast, Mutha Foundry, and Dhanshri Ind. Type of industries in Satara MIDC Name of sector
Name of company
Manufacture of Food products
Ganesh Masale, Asuwara Masale
and Beverages Manufacture of Tobacco
Ibrahim Baba Jarda and Gutkha
products Manufacture of Textile
Vishal Garments
Manufacture of Wearing
Factory at Phateja road
Apparel
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Manufacture of Wood, Products Manufacture of Chemicals &
Okasa Pharma Pvt. Ltd. Nalini paints
Chemical Products
Parco foundry
Manufacture of Rubber &
Ajinkya Plastics, Maharashtra Rubber ,
Plastic Products
Samarth Rubber
Manufacture of Machinery &
Cyclo motors,
other Equipment Manufacture of Basic Metals
Utkur steel, Avadhoot Industries
Manufacture of Fabricated Metal, Products, Except Machinery & Equip Manufacture of Electrical,
Gpro drivers,
Machinery. Automobile
Maharashtra Scooters Deshpande , Vipul Packaging , Allienze
Paper and packaging
pack Prakash concrete, Sakhargad, Nalini
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Cement and tiles
Tiles
Government
Shaskiya Milk Yojana,
Manufacture of mechanical,
Beacon, Kavistu, Cyclo motors,
Machinery.
Cooper ,
Statistical information of Satara MIDC Table no: 1 Gross Area Particular
Land ( in hectares )
Area (in hectares)
359.64
Planned
359.64
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in Possession
359.64 13.7
Possession yet not received Developed land in Possession
359.64
Total area of MIDC is 359.64, the whole area is planned to develop, and all the plots are in ready position for possession. Only 13.7 plots have not yet received possession. All plots are selling as it is developed. Table No 2: Breakup of Plots Allotted Land Particular Engineering Chemicals
( hector ) 749 27
Textiles
5
Pharmaceuticals
5
Service industries Miscellaneous
176 49
Electronics
8
Residential
85
Total
1104
There are a total of 749 plots which are engineering plots, the number of chemical plots is 27, for textiles there are 5 plots, and for pharmaceuticals there are 5 plots. 176 are for service industry. The number of miscellaneous units are 49. Electronics plots are 8, Residential plots are 85. In percentages: Engineering Units are 68 %, chemical units are 2% then pharmaceutical also 2%, 16 % for service industries. 8% plots for residential purpose.
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Pie Chart: 2
1.9 Geographical locations of Satara Industrial area
In the above map, NH 4 is passing through the states of Tamil Nadu, Andhra Pradesh, Karnataka and Maharashtra. The length of the road is 1235 km. Satara is a station on it. The National Highway starts at Chennai and ends at Thane. This highway is known as Pune-Bangalore Highway. National Highway 4 provides good transport facility to Satara Industrial area. Major companies in Satara industrial Area SCHOOL OF PUBLIC POLICY AND GOVERNANCE TISS - HYDERABAD
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PMP Pvt Limited, Utkur Steel and Forges Pvt. Ltd., Sakhargad marbles, Ganesh Masale, Asuwara Masale, Strieber Precision Pvt. Ltd., Top Gear Transmissions, Transtech, Cyclo Instruments Pvt.Ltd, Vipul Packaging Pvt ltd. Mutha foundry, Cooper Foundry Pvt ltd, Srusti Engineering, GPRO Drives, Bartakke Electrofab Pvt Ltd, Pankaj Engg. Speciality Urethanes Pvt. Ltd., Automek Products, Vijay Engineering Works, Ajinkya Electro Systems, Kavitsu Group Of Industries, AR Engineering, Kavade Engineering Works, Manshu Comtel Pvt Ltd, Pratik Machineries Pvt Ltd, Veekay Engineering’s K Engineering Polymers, Shree Plast Industries, Katdare Food Products Private Limited, Mechanite Engineering Solutions. Industrial Area. (OLD MIDC)
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Satara Industrial Area (Additional MIDC)
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2. Discussion on Findings and facts Features of factory owners of Satara Industrial area 1) 70% of the factory owners belong to the age group of 45 to 70, 20% belong to the age
group of above 70 years and only 10 % belong to the below 45 age
group. 2)
Most of the factories belong to the Brahman Community, followed by the Marathas, Sindhi, Marawadi, and Boudha Communities.
3)
Most of the factory owners are graduates from the engineering stream, followed by commerce and art graduates, and below 12th standard pass outs.
4) 95% factory owners belong to Satara, the rest migrated from Pune, Kolhapur, and Sangli. Features of workers from Satara Industrial area 1) Most labors have migrated from within an area of 25 kms. It is temporary migration.
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2) 75% of Workers belong to the age group of 40 to 60, 15 % belong to the below40 age group, and 10 % are aged above 60. 3) Most workers belong to the Hindu religion, followed by Muslims and Boudhas.. 4) Most workers are skilled through on the job training in their initial period of job. 5) Welding Skilled workers are getting highest wages per day. 6) Average wages of Satara Industrial area 200 for male and for female 150. 7) Most workers don’t have any social security facilities provided for by employers. 8) Female workers are significant in the Satara Industrial area; most employers prefer to give employment to women, especially in the case of day working factories. Problems of factory owners of Satara industrial area Infrastructure:
The infrastructure responsibility of Satara Industrial area is concerned
with and connected to the Maharashtra Industrial Development Corporation. Satara Industrial area’s infrastructure was built in 1971. Roads and street lights; water facility, and so on are included. Infrastructure of Satara MIDC is now old. The main problem are the “road” facilities. Satara Industrial area has about 24 km of roads within MIDC. Only few roads are in good condition. Rest of the roads are in pathetic conditions. Due to pits in the road in the rainy season it is risky to drive there , there may be chances of big accidents which can cause the loss of human life and cost the business in terms of money. New investors are not willing to set up new factories here because of the bad roads. Roads of MIDC are completely the responsibility of MIDC, Gram Panchayat or local body can’t do anything towards their repair. Only the MIDC can repair it or create new roads. Another reason I found is that the road’s weight capacity has not been changed over time. When the roads were built, they were constructed according to the need of that time, meaning that roads carry beyond their capacity. So the current roads do not have the capacity of carrying more weight. Street lights and Drainage Systems: The MIDC has built street-lights across 30 mts, however once they were built there was no proper
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system to maintain it. According to rule there should be around 800 street lights. But very less number of street lights are currently there. The main merit of street lights is due to them, the factories can run 24x7.. If there are enough lights on road, it will benefit the workers as well as factory owners. There already exist
securities issues (which we will
discuss in later chapter) so street lights are very necessary. Drainage Systems: Drainage issues generally relate to standing or pending water, which is water that is not flowing away and forming puddles on the property. Other drainage issues can be the result of basement water or marshy soils. Or waste water from processes, bathroom and chemical waters.
it can also be from
Maharashtra Industrial Development Corporation
doesn’t provide drainage facility, in fact they have not built a drainage system in MIDC. So there are many companies which are based on chemical sector, notably managing their own drainage. So new investments are not willing to enter in Satara MIDC, as the cost of drainage system is very high for them. All drainage water from factories come on to the roads which make MIDC dirty and foul smelling. Security: The Satara Industrial area has been suffering from security issues for a long time. All factories are facing the problems of safety and security for plants, machinery, and labourers. After the 90s there was a high growth in crimes such as theft, robbery and beating of factory labourers at late hours. A major issue is robbery. The Police station is not capable enough to give protection.
After the fall of the Fateja Brother Company
there was significant increase in theft and dacoit issues. Fateja Brothers Company had huge iron machinery which was stolen and even the police was unable to do anything although they occasionally found thieves. After the increase in the number of planned thefts and dacoits, the Satara Police set up one outpost in the additional MIDC, with just 2 policemen. The additional MIDC needs at least 15 Police for protection. Due to the demerits of insufficient security in Satara Industrial area, new investors are not willing to set up their plants in MIDC: There are continuous incidents of thefts going on and the police have failed to control it. Every business needs security so that their operation will run smoothly. New investors who come from outside Satara City, are informed about the continuous incidents of thefts in Satara MIDC through newspapers. And it results in new
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investments not coming to Satara. Workers refusing duty in night shifts and existing factory owners failing to bear the cost of machinery or other assets are a problem as well.. Protection money:
Satara Industrial area is facing a new problem, that of protection
money. So called representatives from so called organizations were asking to keep their people as workers. In addition to that, factory owners are being threatened by them. To maintain peace in Satara Industrial area, they ask for protection money amounting to Rs 1,00,000 to Rs 2,00,000. After the migration of big companies from Satara MIDC, small plants are somehow active in Satara Industrial area. These small plants cannot bear this much money.
In the last 15 years big companies like Maharashtra scooters, Patheja
brothers, Aristocrat migrated from Satara Industrial area, after which small plants got shut down but from other side no new investments was created. “"उत्पादन खचर्, वाहतूक, शासनाचे िविवध कर, कामगारांचे पगार एवढं करून पुन्हा न काम करणार्या लोकांना मिहन्याला लाख- दोन लाख द्यायचे, अशाने व्यापार कसा चालणार. केवळ आमच्या उद्योगातील शांतता अबािधत ठे वा, यासाठी बाहेरच्या माणसाला पैसे दे ण्यापेक्षा दुसरीकडे उद्योग नेलेला बरा अशा मानिसकतेत अनेक जण आहेत.‘‘
- एक उद्योजक, सातारा औद्योिगक वसाहत
Workers security: In Satara industrial area workers are mainly from nearby villages such as Kodoli, Dhangarwadi, Mahuli, Mahagaon, Khavali, Koregaon. Sajjangad area. So at night, when they go back home, they are stopped and robbed. Especially their mobiles, petrol and some money. Workers are not safe in Satara Industrial area. After filing complaints against thieves, even the police were unable to find them and give them punishment. The female workers were assaulted many times but such issues were not coming out because of fear of defamation. Hence such cases were filed to police stations. Criminal got bolder and committed more such crimes. Big and new investment : As we already know, to grow and develop any industrial area or sector there is a need of big companies, through whose support small companies will run. It is called the“dependency theory”. Initially in Satara Industrial area there were very few companies like Maharashtra Scooters, Patheja Brothers, Aristocrat, Suitcase, Ajinkya
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Milk Dairy, Government dairy etc. With help of these companies in Satara MIDC, many small industries grew and developed. There are many engineering workshops, followed by powder coating, Thermocol, packaging material companies. After 2000, Maharashtra Scooters production stopped, then Aristocrat moved to another state, Patheja brothers shut down, so there was many dependent small units which also faced stagnation and their whole industry faced very low outcomes, vice versa unemployment has grown. In Satara Industrial area there are more than 400 engineering workshops working but they don’t have any fixed work to sustain themselves in the market. There was no political assistance to bring new investment in Satara Industrial area. Mr. Patangrao Kadam, while he was the minister for industries for the Maharashtra State, approved an IT park for Satara but due to many reason like no follow-up from political leaders, MIDC official and private players, the IT Park was moved to another city. Even the Food park also approved for Satara but it was moved to Malakapur Karad Satara. Following are the major reasons which are affecting new investments in Satara Industrial area 1) Security to companies 2) No large plots of land available 3) No Political support 4) No Quality, skilled and permanent labor class 5) No Export station facility Availability of skilled and quality permanent labourers: Big investors are not able to hire quality labourers here because most of the young workers are migrating to Pune, Mumbai, Hyderabad etc. Only the labor class of the age group of 40 and above is available, and generally this age group is assumed to be less effective and efficient as compared to the younger labor class.
There might be possibilities that for any
investment Satara could be the best option but MIDC was unconcerned for Satara which
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reflected in the resulting lack of new investment in Satara Industrial area. Satara is one of the best locations for industrial purposes, but investors didn’t find it suitable to set up new factory. Quality, skilled and permanent Workforce: For better productivity, every industry needs effective and efficient workers. Skilled labor is like oxygen for industries these days. In Satara Industrial area there is a problem of skilled permanent labor. It means Factories are not getting skilled labor that can stay with the company for a long time. Many factory owners experienced investing on labourers, who learn in the factory for one year, then leave the job and go to Pune or other city to work, because they get more salary. They already experienced the fact that a fresher engineer doesn’t know how to start a CNC machine or a lathe machine. So companies invest on them for a year, those labourers do not produce any outcomes and yet get high pays and then they leave the job. Therefore the company has to start the recruitment process again. This problem is created because of the hope labourers have of a “Job in the Metro city”. As compared to Pune and Mumbai, Satara industrial area is giving less salary, but with a marginal difference. Yet people want jobs only in Pune and Mumbai. This is not only the case with engineering graduates, as it is happening with commerce graduates and other labourers also. Satara Industrial area is a low developed industrial area, so many labourers don’t find permanent and bright careers there. So even they are migrate to other cities according to their rational decisions. The interesting fact is that these days, companies are hiring less educated and unskilled labourers. These labourers give many benefits to companies such as: 1) They are ready to work in low wages 2) Ready to perform any job ( No dignity issue) 3) No plan of changing jobs. 4) After training (On-the-job training) they can perform very effectively and efficiently.
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Land issue : In the Satara Industrial area there are more than 700 plots of land. All the plots are sold out. Many companies purchase plots and do not establish projects there. So new entrepreneurs are unable to get land for their companies. MIDC’s plot allocation system is correct but the MIDC checking system is wrong. MIDC checks whether plots are active by checking the water connection. So it is very easy to cheat this rule. Most of the land in question is already occupied by a diverse array of industrial and quasi industrial users. It was seen that many big plots were taken by only one company and they are not producing there. That land is product-less, if there is no factory. In the Satara Industrial area many big plants were acquired by big companies such as Cooper and other factories. New entrepreneurs unwillingly take plots on heavy rent, this is an extra cost for them. If there is no land available in industrial area then how will new companies enter the market? There is one more point, about the“Middleman and commission” system to get plots in the Industrial area. A high number of plots was taken by one single person on the name of another person. And if any new entrepreneur wanted a plot in MIDC he would have to pay a heavy commission. Another main issue is that there are many companies which have shut down in Satara Industrial area but no one cares about them. All plots are on lease for the period of 99 years from Maharashtra Industrial Development Corporation. So plot owners are selling plots without consent from MIDC. These days it is very hard to get new land in the village and set up a company, so new investments are coming to MIDC, but because of “Artificial shortage of Plots” they are not able to set up any industry in the Satara Industrial area. लोकांनी पूणर् प्लोट्स िवकत घेतले आहेत, काही कंपनी , यांनी पण तेच केला नव्या उद्योजकांना जमीनच नाहीये उपलब्ध , बंद पडलेल्या कंपनी च्या जागा हस्तांतिरत कराव्या . एक उद्योजक जुनी वसाहत Rule and regulations (licensing problems) :This is one of problems faced by many factory owners. When there is a new company setting up, no authority will object. Once the factory owners invest in it and build it. Then notices arrive alerting the owners about the breaking of certain rules and missing licenses etc. It is especially common in the case
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of the pollution department and fire safety departments. So any factory owner has to pay a fine. That is an extra cost for him. MIDC should provide an orientation for upcoming new companies. A total of 14 approvals by Maharashtra Industrial Development Corporation (MIDC) were required so far at the pre-commissioning stage Following is the documentation which is required to start a business in Maharashtra or MIDC 1.1 Algorithm for the Company Setting 1.2 Obtain a Permanent Account Number (PAN) for the director 1.3 Obtain Director Identification Number (DIN) 1.3.1 Director Identification Number 1(DIN1) 1.3.2 Director Identification Number 2(DIN2) 1.3.3 Director Identification Number 3(DIN3) 1.4 Obtain Digital Signature Certificate 1.5 New user Registration 1.6 Reserve the company name 1.7 Stamp the Company Documents 1.8 Get Certificate of Incorporation 1.8.1 Form – I: 1.8.2 Form –: 2 1.8.3 Form – 3 1.9 PAN application for the company 1.10 Registration under the Bombay Shop & Establishment act
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1.11 Registration of Trademark 1.12 Certificate of commencement of Business 1.13 Register for Medical Insurance at Employees State Insurance Corporation 1.14 Register with Employees Provident Fund Organization 2 Unit Registrations 2.1 Algorithm for Unit Registration 2.9 NOC under Locational Clearance- (IEM/SIA) 2.10 NOC under location Policy- (Small industries) 2.11 Letter of Permission for Export 3 Tax Related Approvals 3.1 Algorithm for getting tax approvals 3.2 Obtain a Tax Account Number (TAN) 3.3 Register for Profession Tax 3.4 Register for Value-added Tax (VAT) 3.5 Register for Sales Tax - under Section 7(1)/7(2) of the Central Sales Tax Act 3.6 Central Excise Registration 3.7 Register for Service Tax 4 Environmental Clearances 4.1 Algorithm for environmental Clearance 4.2 Clearance under Forest Conservation Act
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4.2.1 Application for Terms of Reference (TOR) for Environmental clearance for land outside MIDC area 4.2.2 Application Form for Environmental Impact Assessment (EIA) 4.3 Coastal Regulation Zone Clearance 5 Industry Setup-I 5.1 Industry Setup- I 5.2 Land Application-MIDC Estates 5.3 Pollution Control Board Clearance 5.3.1 Consolidated Consent & Approval Raw material issues: Satara industrial factory owners are facing raw material problems. Although it not a very serious issue, it should be mentioned here. Most of the factory owners import raw material from Chennai, Pune, Mumbai, Gujarat, Dadra and Nagar Haveli and Rajasthan, so it is very hard to get raw material on credit basis. Agriculture raw material is also an issue for agro based factories as the pricing of agricultural products is dependent upon government policies. Private players can’t change their pricing as per raw material pricing. For example, if there is a hike in onion prices, then “Chatani maker” companies like Ganesh Masale, Asuwara etc can’t raise their product’s price. On agricultural raw materials, the seasonal effect also matter as season affects the availability of raw material. Changes in Government policies also affect the cost of raw material. There is a policy on essential commodity stock according to which they can’t make stock, so oil companies can’t bear the cost of raw material like oil seeds. Taxation issue: Taxation is another major issue which should be tackled otherwise small industries will die. In Maharashtra taxations are very heavy, and on manufacturing product the taxation accrues double times. In Satara Industrial area most of the companies are
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engineering workshops. They are getting very less profit whereas workshops in other states are earning more profits. Aristocrat Company moved because they got a better offer from Uttarakhand Government through relief in taxation.
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Conclusion and recommendations Conclusion: Industrial development is very necessary in the development process. India is observing development through industrialization. Indian development model is development through smart cities. Which smart cities India is going to develop in the coming future will play a key role in industrialization. So before smart cities there is already a well built industrial infrastructure. The government wants to create a new industrial setup, but the government is not concerned about existing industrial areas. Even private players are not willing to invest in such industrial setups because of low profit and certain other reasons. In Satara Industrial area’s case study this has been the case from 1971 to 2001. Satara Industrial area was the most promising industrial area of Maharashtra. But due to easy migration and employment opportunities in metro cities it wasn’t able to reach its potential. Easy migration helped to provide good employment. The migration is a major factor which is responsible for government and private players not being concerned about such small industrial areas.
Government and private players keep investing in
big cities,
which ultimately affected the growth of small cities like Satara Sangali. The failure of Satara Industrial area is still not accepted by the government. According to them, the industrial area is developing and making growth very nicely. Private players are not happy with Satara Industrial area. The slow growth of industrialization, very less political support, local issues, in addition to the security issue, are all factors that have led to its failure. In Satara Industrial area, if private players and the government start combining efforts to develop it then it can develop. When the market fails, it’s not only the government’s duty to bear the cost and responsibility of it. In the present economic era it is very hard for the
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government to solve or tackle any market issue without help from private players. Specially in cases like Satara industrial area, which has a lot of potential to grow, but because of certain factors is lagging behind in industrial growth. So there is a requirement for market intervention by the combined efforts of government and private players. Satara can emerge as the best industrial area if the government and private players give inputs jointly. In the present scenario, this is the need of the hour. Recommendation for MIDC and Private Players in MIDC Satara 1) Recovery of old allotted plots: it has been observed during research that the basic problem of most of the factory owners is that they don’t own the plot of their factory. Because all the plots of MIDC were sold out, and after selling out no factory has started yet, some people just took it as an investment. Now they are giving these plots out on rent or selling it at very high prices. In the case of Satara Industrial area, most factory owners belong to the middle class and they start their business by taking some monetary help from friends’ networks as well as financial institutes like banks, patsanstha at a higher rate of interest. So they have to return their money. “Monthly rent” is very high for factory owners, but to survive in the market they are bearing this cost. In addition to that middleman’s commission is also very high. Either MIDC should authorize Middleman system or abolish it from the process. Although this is very hard, it can be controlled. The plot ownership issue is a very serious issue in Satara’s MIDC, due to Satara’s geographical location., because of which, it cannot be spread horizontally. The current model of checking the plot’s working system is very poor. So MIDC should actively work on this issue. Plot allotment should depend upon the price value of the project. It means that since Satara industrial area is a manufacturing area, if there is a big project MIDC can allot big plots, or otherwise issue small plots to all new investments. At present the model of checking plots is after the allotments of plots. According to MIDC rules, the factory should be started within a span of two years. And MIDC is failing to take a follow-up of it. SCHOOL OF PUBLIC POLICY AND GOVERNANCE TISS - HYDERABAD
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1) Plot allotment process should be very transparent and the list of plot owners should be revised after some specific period. 2) Plots should be allotted on sector basis like the food industry in one section of MIDC; likewise, for other sectors also it should be allotted on the same pattern. 3) With the help of private players, plots allotment should be done. Like industrial organization MAS (Manufactures Association of Satara) MIDC should take help from them. 4) There should be a limit for plot allotments to private players. 5) The middleman system should be removed. “RTO model of Maharashtra can be useful here. It is very easy to implement. If MIDC will work on the plots issue, then it will help to bring in new investments with new innovation and new technology in Satara Industrial area. The empty plots will give new space to current and new investors in a proper manner. Once the plots issue is solved, then the growth of Satara Industrial area will take place. Satara industrial area can grow and develop like other industrial areas like- Bhosari MIDC, Valunj MIDC( Pune) ( Aurangabad ). Control on Migration of Big investments: Satara Industrial area experienced a number of migration of big factories like Maharashtra scooters, Aristocrat, and other big factories which are very important in any industrial area. The merit of such industrial areas is because of these companies. Small companies can get some work through which they will sustain in the market. In Industrial areas like Satara which are very small, there is a need of big companies. If some company is migrating from the industrial area, it means the industrial area’s growth will definitely decline. Dependent companies will not get work. So how will they sustain? When big companies are migrating, MIDC should consult with local political representatives and the respective ministries.
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1) MIDC should provide special packages for some specific periods (Uttarakhand Tax model). 2) MIDC should continuously check the status of big factories. 3) Solving issues through meetings (Current protest against Bhimeshwari Steel), the government and political representatives should take affirmative action. If MIDC is concerned about small factories, then MIDC should be concerned about big companies as well. Ultimately it will help to sustain and develop the whole industrial area. Recreation/Redevelopment of Infrastructure Infrastructure is another major issue which is creating trouble, and is one of the major factors of declining growth of Satara Industrial area. For industrial development, infrastructure performs a key role. The same thing happened with the Satara Industrial area, the infrastructure was built in the early 80’s, and now there is need to recreate it. Or it needs to be redeveloped. During data collection and analysis it was found that Satara Industrial area is also suffering from infrastructure issues. 1) Roads of MIDC are in a very pathetic condition, so the roads should be rebuilt ( The cost of rebuilding roads will not be more than the cost of repairing of roads which the MIDC does every year) Roads should be of good quality. It should be able to carry more weight. And the material of roads should be of high quality. MIDC can ask every factory to take care of the road in front of their premises. So that ultimately it will help the Satara Industrial area with transport. Good roads are oxygen of development. 2) Drainage system and Street lights: Drainage is another infrastructure issue which is very important. If MIDC started a drainage system in the industrial area, then there will be a growth in the chemical sector and related sectors. Since the MIDC has
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empty land and space from all sides of every company, the MIDC can build a drainage system. 1) Drainage systems can be solved with the help of a model of private public partnership. Organizations like MAS (Manufacture’s Association of Satara) and every factory can contribute without any delay. Within a span of one year drainage system can be developed. The open drainage water is causing bad impression to new investors. 2) Street lights play a very important role in industrial development. Street lights are basically used for safe and secure transport. In addition to that it will help the security of all laborers, factory owners in late night’s time. For street lights, MIDC can bear the cost initially. After fixing all street lights, MIDC should give the responsibility of maintaining street lights to factories near the street lights. Since security guards are already there, they can keep watch on it. Police security is also important here. On Tuesdays when the MIDC is off, the police should take responsibility for it. Facility station Facility stations refer to places which can facilitate necessary functions between two industrial areas. It is different from the MIDC office. Facility stations should consist of factory owners, government officials and some experts from the field. Facility station can have following functions 1) Communication: With the help of communication private players can communicate with each other so that healthy relations will grow between factory owners of the two industrial areas. Different channels, like the Café coffee day model of Communication can be implemented to achieve this. 2) Transport: Facility stations can provide all the necessary details about the transport of goods. Nowadays transport is very costly and it is hard to find transport facilities (here it
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means vehicle facility) and necessary information about how to reach a destination, or if there are any possible ways of combining the delivery of two goods in the same area to increase efficiency and reduce costs. 3) Export-Import: Facility stations will provide a common platform to export and import goods. It has been observed that most of the small businessmen are not able to export and import quality goods. So an import and export facility will become very useful to grow the economy of the industrial area. Here especially good quality of raw material can be imported and the quality of output can be increased in terms of quality and quantity. 4) Orientation: In order to establish a factory the orientation is very necessary, otherwise it will be very difficult. During data collection it has been observed that many entrepreneurs don’t know how to establish a factory? What rules should followed, what are the criteria? What are the documents required? What permissions are required, what kind of NOC (Non objection certificates) and licenses are supposed to be fulfilled?,etc With the help of orientation, a new entrepreneur can build his factory in a better informed manner, so that in the future no issue will trouble him. Security to industrial area In the case of Satara industrial area, security is a major reason which led to to bringing in of new investment in MIDC. Since its establishment, Satara MIDC
has been victim to
countless cases of robbery, dacoity and beating up of the owners of the factory and other staff workers. Robbery is causing great losses to the factories. It can be measured in monetary terms and it is harder to bear those costs. Some helpful recommendations for security of Satara Industrial area are: 1) Need to identify
the people who are causing trouble through thievery and other
criminal issues ( it has already been identified). With help of an NGO or local political representatives, give them employment in Satara Industrial area. This gives them a source
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of livelihood, and slowly the people will stop their criminal activities. Police action and legal punishment can’t be a solution for such issues. 2) Police stations should be increased with number of police. 3) Private players can contribute in security issues. (Bhosari MIDC model can be implemented after some changes to it. (In Bhosari MIDC there were a number of robberies that were happening, so all the industrialists come together and sought the help of the main person of that area who had information about local criminal activities. According to him these crimes were committed by the local “Bhai” or “Dada”. This person was approached and asked to stop all these activities with the promise of monetary incentives, to which the Bhai agreed. Later on it was observed that the robbery issue has been declined significantly.) 4) Political representation can also play key role in it, if political representatives can interfere in such issues keeping aside votes and other issues. It will help to secure Satara industrial area. This will develop satara area simultaneously. Political help is essential for new investments.
In India it has been seen that most industrial areas which are
developed is because of local political help. In Baramati, the local Member of parliament Mr.Sharad Pawar brought many companies for investment opportunities in the area, and now Baramati is seen as one of the most developed industrial cities in Maharashtra. Satara has a lot of potential and it can grow very speedily because of its geographic location. Satara’s local political representation has lot of clout, and he can bring such investments in a very short time. Among all the members of parliaments only the former chief minister of Maharashtra helped to bring MIDC in satara. After him
Udayan Raje Bhosale
tried to bring new
companies and is still trying to bring new companies, otherwise all the other local MPs don’t work for the Satara Industrial area 1) Satara industrial area can be developed through agro food parks, Satara is a major food producer in Maharashtra of products like strawberry, Sugarcane and other
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agriculture products. So Food Parks can be brought here and this will help farmer get a market for their produce, as well as entrepreneurs will get new business opportunities. Satara can emerge as a FOOD INDUSTRY HUB OF INDIA. Pune, Mumbai, Kolhapur and Nashik have emerged as manufacturers of information technology and BPO and KPO centers, likewise, Satara can grow in Food industry 2) With the help of the government, and MAS (Manufactures Association of Satara), local political representatives can organize exhibitions, and through such exhibitions new investments will enter in Satara industrial area. (Need of Gujarat Model of development through exhibitions invitation to new investments).
 
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BIBLIOGRAPHY Ahiuwalia, I J., (1985): Industrial growth in India: Stagnation since the Mid Sixties, New Delhi, and Oxford University Press. Ahiuwalia, I J., (1991): Productivity and growth in Indian Manufacturing, New Delhi, and
Oxford University Press. Ahiuwalia, M.S., (2000): Economic Performance of the States in the Post Reform Period EPW Vol, 35, No 17 Alagh, Y.K, and et al., (1980): Structural Analysis of Gujarat, Punjab and Haryana Economies: An input output study, New Delhi, Allied publisher. Alice, A., (1990): Manufacturing sector in Kerala, EPW Vol. 25, and No 37. Awasthi, D.N., (1991): Regional Patterns of Industrial Growth in India, Concept publishing company Delhi. Awasthi, S.K., (1983): Economic development and planning in retrospect, Vikas educational books. Agarwala A.N and Singh, (1959): The economies of underdevelopment, Oxford. Annapuma, 5 (1990): Linkages of large scale, small scale and informal sector industries, EPW Feb 17-24. Arun, A.V, and Vinod Vyasalu, (1997): Industrialization in Orissa, EPW, May 31. Bhalla, A.S ed., (1975): Technology and Capita/in industry ITO Geneva. Bhatt, V.V, (1972): Structure of financial institutions, Vora & Co Bombay. Baidyanath and etal. (2000): Economic liberalization and regional disparities in India, A P H publishing corporation, New Delhi. Balakrishnan, P. and Pushpangadhan, (1994): Total factor productivity growth in manufacturing industry: A fresh look, EPW, Vol.29, No.31. Bharadwaj, K., (1982): Regional differentiation in India. A note, EPW, Vol. 17 and No 14 Boyce, J.K (1986): Kinked exponential models for growth rate estimation, Oxford Bulletin of economics and statistics, Vol. 48, No 4 Burange, L.G, (1999): Industrial Growth and Structure, EPW Feb 27
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Bagchi, A (1976): De industrialization in India in the nineteenth century: Some theoretical implications, in JDS, 12 (2) Banerjee, Amalesh and Biman Kar., (1999): Economic Planning and Development of North Eastern States, Kamiksha publishers, New Delhi. Bhattacharya, B.B, and S. Sakthivel, (2004): Regional growth and disparity in India, Comparison of pre- and post reform period, EPW, March 6 Chalcraborty D, (1982): CES productions function: A review of recent literature, Artha vijyana Vol 24 No 3. Chathurvedi D.N. (1980): Problems of estimation of Gross Fixed Capital Formation at State level, Journal of Income &Wealth Vol4 No 1 Jan Chandrasekhar, C.P (1988): Aspects of growth and structural change in Indian Industry, EPW Special No November. Dutta Roy Choudhari, U. (1977): Industrial breakdown of Capital Stock in India, The journal of income and wealth Vol1 No 2 April. Dholakia, R.H, (1989): Regional aspects of industrialization in India, Himalaya publishing house, New Delhi Goldar, B.N. And Seth V., (1995): Spatial variations in the rate of India, EPW, Vol.24, and No.22
industrial growth in
Goldar, B (2000): Employment Growth in Organized Manufacturing in India, EPW April.
Websites 1)
http://www.midcindia.org/
2)
All Maps from http://www.mapsofindia.com/
3)
http://dcmsme.gov.in/dips/satara%20ips.pdf sources: http://dcmsme.gov.in/
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Editorial Board Co-ordinator: Shreya Dixit Editors: Abhay Yadav, Abhishek Acharya, Akheela Ashraf, Ashwin Jangalapalli, Gopal Gajbhiye, Krishna Teja Inapudi, Rajasindhura Aravalli, Rajeev Agur, and Yeshwanth Kumar
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