Q-22= Explain role of small scale and cottage industries in an agrarian economy. What steps Government has taken to promote these industries.
ROLE OF COTTAGE AND SMALL SCALE INDUSTRIES
Small and Medium Enterprises (SMEs) is a new name given to cottage and small-scale industries. It is one and the same thing. Cottage industries are located in homes, operated by only family members and in which hand-made tools and equipment are used. Important cottage and small-scale industries of Pakistan are sports goods, surgical instruments, leather goods, handloom products, silver and gold ornaments, handicrafts, carpets, furniture making, embroidery and tailoring, bangles making etc. In rural areas the most important ones are poultry farming, sericulture, and bee keeping.
Small and Medium Enterprises (SMEs) constitute the bulk of Pakistan’s business landscape. Nothing portrays the reality of Pakistan business environment better than the nature and complexion of its SME sector. The Economic Census of Pakistan-2005 lists 3.2 million business enterprises and SMEs constitute over 99 percent of all. Their share in industrial employment is estimated at 78 percent, in value addition approximately 28 percent and in manufacturing exports earnings at 25 percent.Nearly 53% of all SME activities are in retail trade, wholesale, restaurants and hotel business, whereas industrial enterprises contributing and those involved in service provision is 20 percent and 22 percent respectively. Among the SMEs include wholesale,retails & restaurant business, 98 percent employer less than 5 people and 99 percent less than 10 people. Manufacturing and other fields follow similar patterns, which are 87% at least 5 people and less than 10% less than 98%. All in all tremendous room for further growth, rebalancing and productivity enhances exists in the SME sector.
IMPORTANCE OF COTTAGE AND SMALL-SCALE INDUSTRIES
1 Use of local machinery and local raw material
2 Employment opportunities
3 Increase in standard of living
4 Increase in export earnings
5 Act as by-product and subsidiary industries
6 Expansion in home market
7 Diversification in industrial products
1. USE OF LOCAL MACHINERY & LOCAL RAW MATERIAL Small industries can be set up easily because no technical and administrative expertise and training is required. Since in it local machinery and local raw material is used therefore no foreign exchange is required.
2. EMPLOYMENT OPPORTUNITIES These industries provide greater employment opportunities to the local people. The disguised unemployment is reduced and migration of people towards cities for search of jobs is reduced. Since unemployed person can easily get jobs in small industries, the rate of dependent persons is reduced.
3. INCREASE IN STANDARD OF LIVINGThese industries provide job opportunities, income of the people increases, which result in the increase in standard of living of the people. These also reduce income disparity between the rich and the poor.
4. INCREASE IN EXPORT EARNINGSForeigners heavily demand goods produced by small industries, which results in the increase in foreign exchange earnings of Pakistan. These enterprises increase name and fame of Pakistan in international market.
5. ACT AS BY-PRODUCT & SUBSIDIARY INDUSTRIES Small industries purchase wasted raw material of large industries to be used in their own production process, thus they increase income of large-scale industries. These industries manufacture nuts, bolts and spare parts required by large industries at a very low price, hence both of them are bene fited with each other.
6. EXPANSION IN HOME MARKET SMEs produce goods keeping in view needs and requirement of local market therefore home market is expanded. Increased supply of goods increases business activity and national income. With increase in output the prevailing high rate of inflation can be controlled.
7. DIVERSIFICATION IN INDUSTRIAL PRODUCTSGoods using different types of material, result in diversification of products. Different varieties of goods are produced according to the demand of different customers’ purchasing power.
STEPS OF GOVT. FOR DEVELOPMENT OF COTTAGE / SMALL INDUSTRIES
1 Establishment of Industrial Estates
2 Loan facility, Micro Finance Bank/ Khushali Bank
3 Small Industries Corporations
4 Small Industries Advisory Services
5 Carpet Training Development Centers
6 Handicrafts Shops
7 Handicrafts Development Centers
8 Displays in international exhibitions
9 Small and Medium Enterprises Development Authority
SMALL & MEDIUM ENTERPRISES DEVELOPMENT AUTHORITY SMEDA
which was established in 1998, is creating the sense of importance of SMEs within the Government for this crucial sector of economy which provides low cost employment opportunities and helps the economy in two valuable ways: One for boosting exports and two in poverty reduction. Also, a strong SME presence provides the resilience to economy from global economic fluctuations that large business enterprises are unable to respond quickly. SMEDA has embraced upon aggressive SME development strategy by focusing on 7 priority sectors. These sectors are gems and jewellery, dairy and agro-processing, fisheries, furniture, sports goods, light engineering, marble and granite. These sectors have been selected with the intention of developing sector strategies and proposing regulatory reforms to stimulate growth on the sole criterion of SME presence. The growth of SMEs has mainly been hampered by non-availability of credit in the past. Realizing this constraint government has opened two specialized non-credit banks namely, the SME Bank and Khushali Bank.
ROLE OF COTTAGE AND SMALL SCALE INDUSTRIES
Small and Medium Enterprises (SMEs) is a new name given to cottage and small-scale industries. It is one and the same thing. Cottage industries are located in homes, operated by only family members and in which hand-made tools and equipment are used. Important cottage and small-scale industries of Pakistan are sports goods, surgical instruments, leather goods, handloom products, silver and gold ornaments, handicrafts, carpets, furniture making, embroidery and tailoring, bangles making etc. In rural areas the most important ones are poultry farming, sericulture, and bee keeping.
Small and Medium Enterprises (SMEs) constitute the bulk of Pakistan’s business landscape. Nothing portrays the reality of Pakistan business environment better than the nature and complexion of its SME sector. The Economic Census of Pakistan-2005 lists 3.2 million business enterprises and SMEs constitute over 99 percent of all. Their share in industrial employment is estimated at 78 percent, in value addition approximately 28 percent and in manufacturing exports earnings at 25 percent.Nearly 53% of all SME activities are in retail trade, wholesale, restaurants and hotel business, whereas industrial enterprises contributing and those involved in service provision is 20 percent and 22 percent respectively. Among the SMEs include wholesale,retails & restaurant business, 98 percent employer less than 5 people and 99 percent less than 10 people. Manufacturing and other fields follow similar patterns, which are 87% at least 5 people and less than 10% less than 98%. All in all tremendous room for further growth, rebalancing and productivity enhances exists in the SME sector.
IMPORTANCE OF COTTAGE AND SMALL-SCALE INDUSTRIES
1 Use of local machinery and local raw material
2 Employment opportunities
3 Increase in standard of living
4 Increase in export earnings
5 Act as by-product and subsidiary industries
6 Expansion in home market
7 Diversification in industrial products
1. USE OF LOCAL MACHINERY & LOCAL RAW MATERIAL Small industries can be set up easily because no technical and administrative expertise and training is required. Since in it local machinery and local raw material is used therefore no foreign exchange is required.
2. EMPLOYMENT OPPORTUNITIES These industries provide greater employment opportunities to the local people. The disguised unemployment is reduced and migration of people towards cities for search of jobs is reduced. Since unemployed person can easily get jobs in small industries, the rate of dependent persons is reduced.
3. INCREASE IN STANDARD OF LIVINGThese industries provide job opportunities, income of the people increases, which result in the increase in standard of living of the people. These also reduce income disparity between the rich and the poor.
4. INCREASE IN EXPORT EARNINGSForeigners heavily demand goods produced by small industries, which results in the increase in foreign exchange earnings of Pakistan. These enterprises increase name and fame of Pakistan in international market.
5. ACT AS BY-PRODUCT & SUBSIDIARY INDUSTRIES Small industries purchase wasted raw material of large industries to be used in their own production process, thus they increase income of large-scale industries. These industries manufacture nuts, bolts and spare parts required by large industries at a very low price, hence both of them are bene fited with each other.
6. EXPANSION IN HOME MARKET SMEs produce goods keeping in view needs and requirement of local market therefore home market is expanded. Increased supply of goods increases business activity and national income. With increase in output the prevailing high rate of inflation can be controlled.
7. DIVERSIFICATION IN INDUSTRIAL PRODUCTSGoods using different types of material, result in diversification of products. Different varieties of goods are produced according to the demand of different customers’ purchasing power.
STEPS OF GOVT. FOR DEVELOPMENT OF COTTAGE / SMALL INDUSTRIES
1 Establishment of Industrial Estates
2 Loan facility, Micro Finance Bank/ Khushali Bank
3 Small Industries Corporations
4 Small Industries Advisory Services
5 Carpet Training Development Centers
6 Handicrafts Shops
7 Handicrafts Development Centers
8 Displays in international exhibitions
9 Small and Medium Enterprises Development Authority
SMALL & MEDIUM ENTERPRISES DEVELOPMENT AUTHORITY SMEDA
which was established in 1998, is creating the sense of importance of SMEs within the Government for this crucial sector of economy which provides low cost employment opportunities and helps the economy in two valuable ways: One for boosting exports and two in poverty reduction. Also, a strong SME presence provides the resilience to economy from global economic fluctuations that large business enterprises are unable to respond quickly. SMEDA has embraced upon aggressive SME development strategy by focusing on 7 priority sectors. These sectors are gems and jewellery, dairy and agro-processing, fisheries, furniture, sports goods, light engineering, marble and granite. These sectors have been selected with the intention of developing sector strategies and proposing regulatory reforms to stimulate growth on the sole criterion of SME presence. The growth of SMEs has mainly been hampered by non-availability of credit in the past. Realizing this constraint government has opened two specialized non-credit banks namely, the SME Bank and Khushali Bank.