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2021 | OriginalPaper | Buchkapitel

4. Regional Concentration of Industries in India: What Does the Recent Data Say and How to Understand the Implications? A Perspective

verfasst von : K. V. Ramaswamy

Erschienen in: India’s Economy and Society

Verlag: Springer Singapore

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Abstract

This paper presents an analysis of changes in regional concentration of manufacturing industries and the factors driving the change in recent years. Two key questions have been addressed. First, why the regional distribution of Indian industry continues to be dominated by Maharashtra, Gujarat and Tamil Nadu? Second, what are the sources of this uneven spread of industries? Past industrial policies (history) and contemporary factors are found to reinforce the regional concentration of industries. It makes a contribution to the literature by providing evidence on the net entry of new factories by state, the spatial distribution of large factories and the observed tendency of co-location of relatively larger plants in industrially advanced states in the post-reform period. It finds that top three industrialized states of Maharashtra, Gujarat and Tamil Nadu have attracted larger share of the new factories. Nearly 44% of the cohort of large factories with more than 100 workers which began operation in the years 1995–2014 was found to be in the top three states. The key driver of regional concentration is argued to be the agglomeration economies sought by firms to offset other cost disadvantages.

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Vorheriges Kapitel Supply Chain Management of Food Grains in India
Nächstes Kapitel Indian Electronics Industry’s FDI-Led GVC Engagement: Theoretical and Policy Insights from a Firm-Level Analysis
Fußnoten
1
Environmental pollution and other local use related restrictions was continued.
 
2
Lall and Chakravorty (2007).
 
3
The estimation of spatial inequality indexes for the 1970s is not undertaken by us. The estimates of HH index reported by Mohan (1993) are absolute HH indexes and are not comparable with ours by definition.
 
4
In another context, we had examined the manufacturing distribution in 21 states after including the recently carved out states. The top three states, namely Maharashtra, Gujarat and Tamil Nadu, are found to have a combined share of 44.5% in 2015–16, the latest year for which data for all the 21 states is available. The above-mentioned three states are observed to have dominated way back in the year 1993–94 (Ramaswamy, 2019).
 
5
GSDP in the manufacturing sector and the aggregate GSDP have been used to measure the respective variables.
 
6
See Ramaswamy (2019). In the year 2010–11, the number of factories has gone up sharply because of change in the method of recording codes for number of factories. See Pandey & Shetty (2014) for details. This should not affect our results because our focus here is with the distribution of factories across space.
 
7
The ASI covers the organized (or registered) manufacturing sector. It considers industrial units registered under the Sects. 2m(i) and 2 m(ii) of the Factories Act, 1948 and Bidi and Cigar establishment registered under the Bidi and Cigar Workers (Conditions of Employment) Act, 1966
 
8
We have used the absolute version because the relative concentration measure is affected by extreme values of small-sized subnational units (states in India).
 
9
In 2003, the Government of India introduced tax-incentive package in order to induce industrial investments and employment in the states of Uttarakhand and Himachal Pradesh that include 100% excise duty exemption among other things. See Ramaswamy (2019) for details.
 
10
The state of Haryana with 4339 factories can be classified as the median state in 2004–05.
 
11
States that maintained their employment shares have been Karnataka, Haryana, Uttar Pradesh and Uttarakhand. See Ramaswamy (2019).
 
12
This is based on the net entry of factories during 2009–10 and 2015–16 in three selected representative engineering industries (see Ramaswamy, 2019).
 
13
I have chosen to neglect OAEs as they are mostly household enterprises and dominant in the rural segment of the unorganized manufacturing.
 
14
This section draws much from Dasgupta (1998).
 
15
The estimates for the sample sector are those reported by Banerjee (1982).
 
16
The war with Pakistan in 1965 had led higher defence expenditures and the inflation due to droughts had imposed restrictive fiscal policies.
 
17
My estimate is based on Dasgupta (1998), Table 10, p. 3055.
 
18
The freight equalization scheme was in operation for pig iron, steel, cement, petroleum products and nitrogenous fertilizers (Planning Commission, 1978, p. 11). Our focus will be only on iron and steel.
 
19
A natural question that can be raised is whether the abolition of FES encourages iron and steel industries to move back to states with ISPS. The econometric result based on data covering the period 1990–2014 does seem to support this proposition. The question whether FES has led to irreversible agglomeration economies or not is a difficult empirical question not pertinent to our discussion here.
 
20
This is more akin to the view build infrastructure first and industries follow!
 
21
The discussion in this paragraph is based on Sekhar (1983), Marathe (1989) and Mohan (1993)
 
22
See Sekhar (1983) for an early discussion of these policies and Marathe (1989, Chap. 8) for an informative discussion.
 
23
A no-industry district is one in which there are no licensed or registered industrial units.
 
24
All the three are based on Marathe (1989), Chap. 8.
 
Literatur
Banerjee, D. (1982). Industrial stagnation in eastern India: A statistical investigation. Economic and Political Weekly, 17(8), 286–298.
Bhagwati, J., & Chakravarty, S. (1969). Contributions to Indian economic analysis: A survey. The American Economic Review, 59(4), (American Economic Association).
Bhagwati, J., & Desai, P. (1970). India: Planning for industrialisation. Oxford University Press.
Brülhart, M., & Sbergami, F. (2009). Agglomeration and growth: Cross-country evidence. Journal of Urban Economics, 65(1), 48–63.CrossRef
Dasgupta, S. (1998). West Bengal and industry: A regional perspective. Economic and Political Weekly, 33(47/48), 3049–3060.
Economic and Political Weekly Research Foundation (EPWRF). (2002). Annual survey of Indian industries 1973–74 to 2003–04. A database of the industrial sector in India.
Hu, C., XU, Z., & Yashiro, N. (2015). Agglomeration and productivity in China: firm level evidence. China Economic Review, 33(C), 50–66.
Joshi, V., & Little, I. (1987). Indian macro economic policies. Economic and Political Weekly, 22(9), 371–378.
Kochhar, K., Kumar, U., Rajan, R., & Subramanian, A. (2006). India’s pattern of development: What happened, what follows? Journal of Monetary Economics, 53(5), 981–1019.CrossRef
Kumar, R. (2000). Public investment and regional disparities. Economic and Political Weekly, 35(41), 3683–3687.
Lall, S., & Chakravorty, S. (2007). Made in India: The economic geography and political economy of industrialization. Oxford University Press.
Li, D., Yi, L., & Mingqin, W. (2012). Industrial agglomeration and firm size: Evidence from China. Regional Science and Urban Economics, 42(1–2), 135–143.CrossRef
Marathe, S. (1989). Regulation and development: India’s policy experience of controls over industry. SAGE Publications.
Mohan, R. (1993). Industrial location policies and their implications for India. Paper. No.9, Studies in Industrial development. Ministry of Industry.
Mukherjee, A. (2011). Regional inequality in Foreign direct investment flows to India: The problem and the prospects industry. Reserve Bank of India Occasional Papers, 32(2), 99–127.
Pandey, S., & Shetty, S. L. (2014). ASI results for 2011–12: A more positive view of the industrial scene. Economic and Political Weekly, 49(21), May 24:89–93.
Planning Commission. (1961). Third five year plan (1961–1966). Government of India.
Planning Commission. (1978). Report of the inter-ministerial group on freight equalization of commodities. Controller of Publications.
Pradhan, J. P., & Das, K. (2016). Manufacturing exports from Indian States: Determinants and policy imperatives. Springer.
Sekhar, U. (1983). Industrial location policy: The Indian experience. in World bank staff working paper No. 620. The World Bank.
Veeramani, C. (2011). Anatomy of India’s merchandise export growth, 1993/94 to 2010/11. Economic and Political Weekly, 47(1), 94–104.
Metadaten
Titel
Regional Concentration of Industries in India: What Does the Recent Data Say and How to Understand the Implications? A Perspective
verfasst von
K. V. Ramaswamy
Copyright-Jahr
2021
Verlag
Springer Singapore
Buch
India’s Economy and Society

Print ISBN: 978-981-16-0868-1

Electronic ISBN: 978-981-16-0869-8

Copyright-Jahr: 2021

DOI
https://doi.org/10.1007/978-981-16-0869-8_4

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