Unit
– 2: Economic Environment of India
Economic
Environment and Its Elements
Introduction: Various environmental factors such as economic environment, socio-cultural environment, political,
technological, demographic and international, affect the business and its
working. Out of these factors economic
environment is the most important
factor.
Meaning
of Economic
Environment: Those Economic factors which have their affect on the working
of the business are known as economic environment. It includes system, policies
and nature of an economy, trade cycles, economic resources, level of income,
distribution of income and wealth etc. Economic environment is very dynamic and complex in nature.
It does not remain the same. It keeps on changing from time to time with the
changes in an economy like change in Govt. policies, political situations.
Elements
of Economic
Environment: - It has
mainly five main components:-
(a)
Economic Conditions
(b)
Economic System
(c)Economic
Policies
(d)
Economic Planning and
(e)
Regional Economic Group
(a)
Economic Conditions: The economic conditions of a nation refer to a set
of economic factors that have great influence on business organisations and
their operations. These include gross domestic product, per capita income,
markets for goods and services, availability of capital, foreign exchange
reserve, growth of foreign trade, strength of capital market etc. All these
help in improving the pace of economic growth.
(b)
Economic Policies: All business activities and operations are directly
influenced by the economic policies framed by the government from time to time.
Some of the important economic policies are:
(i)
Licensing policy
(ii)
Fiscal policy
(iii)
Monetary policy
(iv)
Foreign Trade policy
(v)
Price Policy
(vi)
Technology Policy
Since
the days of independence, India adopted licensing policy, which in effect made
the government control the growth of independence in accordance with the
national priorities. Till 1985, liberalization was never accepted as a part of
growth strategy. But after 1985, the situation slowly changed that
by 1991 India adopted a policy of liberalization. Consequently, the business scope and
prospects of the Indian business organization changed since 1991.
By
fiscal policy we mean, the government's tax efforts, public expenditure and
public borrowing. Through these the government can effectively encourage
consumption, investment and savings habits and also restrict them.
Monetary
policy refers to the set of policies determined and implemented by the central
bank of a country to control the economic condition. The central bank of a
country has the basic responsibility to maintain the price level and money
supply in a country. This is possible only when the central bank has certain
instruments. These instruments available with the central bank to control the
money supply and price level are called monetary policy instruments. They are
called Credit control policy.
The
foreign trade policy determines the scope for trade between countries. It would
directly affect the business prospects of the business organizations. A liberal
policy would extend the scope for exports and imports, while a restrictive
policy would narrow the scope. Similarly, if protectionism is favored, then the
business organizations will have lesser market threats from multinational
corporations.
This
refers to the controls that government has on the price in a country. This is
necessary, because, unless price is controlled, there is bound to be inflation
and then economic instability. Further in Indian context, nearly 35% of the
population is living below the poverty line. They do not have any permanent
employment. Especially the rural poverty is very serious. To overcome this
situation, the government resorts to price control policy.
One
of the most important economic policies is the technology policy. Improvement in technology is a condition for
growth and survival in any organization.
The
government keeps on changing these policies from time to time in view of the
developments taking place in the economic scenario, political expediency and
the changing requirement. Every business firm has to function strictly within
the policy framework and respond to the changes therein.
(c)
Economic System: The world economy is primarily governed by three types
of economic systems, viz.
i)
Capitalism economy;
ii) Socialist
economy; and
iii) Mixed
economy.
Capitalism
is an economic system based on the principle of free enterprise. Individual
ownership of resources is an important feature. With control and command over resources,
individuals can conduct any type of business. The object in such a system is to
maximize private gains. Any type of enterprise or production of any commodity
or service is permitted, so long it is wanted by the society. In such a system the market forces determine
the resource allocation and price.
In
a socialist country, government can adopt licensing system and other types of
regulations to prevent the emergence of monopolist and exploitative tendencies.
Maximization of Community welfare is the objective than profit maximization.
The resources are owned by the State or state owned institutions. Government
decides the type of productive efforts to be permitted.
In
a mixed economy, one will find the existence of both the private and public
sectors. In such a system, the government will undertake the responsibility to
build and develop certain sector activities and leave the other activities for
the private initiative.
(d)
Economic Planning: The management of national economy must begin with national level
economic planning within the framework provided by the general economic policy
of the government. An economic planning is a mechanism for allocation of
available resources and encourages efficient decision making process in an
economy to achieve pre determined objectives of plans like increasing growth
rate, reducing inflation, creating employment , obtaining self sufficiency etc.
A government plays an important role as it has the authority of drafting and
implementing financial plans keeping in mind the interest of various business
industries and social welfare.
(e)
Regional economic groups: They promote
cooperation and free trade among members by removing tariff and other
restrictions. They provide opportunities to member countries and threats to
non-member counties. Examples are: SA ARC: South Asian Association for Regional
Cooperation. ASIAN: Association of South East Asian Nations. EU: European Union.
Business
Cycle – Meaning, Phases and characteristics
The
business cycle is an alternate expansion and contraction in overall business
activity, as evidenced by fluctuations in aggregate economic activity such as
GNP, industrial production, employment and income.
According
to J. M. Keynes “A Business cycle is composed of periods of good trade
characterized by rising prices and low unemployment percentages, alternating
with periods of bad trade characterized by fall in prices and high unemployment
percentages.”
Phases
of a Business Cycle: A business cycle will have 5 different phases or stages.
They are
1) Depression
2) Recovery
3) Prosperity
or full employment
4) Boom or
overfull employment
5) Recession
(1)
Depression: During this period business activity in the country will be much
below normal level. It is characterized by a short fall in production, mass
unemployment, and fall in prices, low wages, and contraction of credit, a high
rate of business failures and an atmosphere of all round pessimism.
(2)
Recovery: During this period business activity increases. The industrial
production and volume of employment steadily increases. The prices and wages
increases. The recovery may take place due to the following reasons:
•New
government expenditure
•Exploitation
of new sources of energy
•Innovations
•Investment
in new areas
•Changes
in the techniques of production
(3)
Prosperity: This stage is characterized by high capital investment in basic
industries, expansion of bank credit, high prices, high profits, high rate of
formation of new business enterprises and the full employment.
(4) Boom: It is the stage of rapid expansion
in business activity resulting in high stocks and commodity prices, high
profits and over-full employment. A situation develops in which the no. of jobs
exceeds the no. of workers in the market. Such a situation is known as
over-full employment. Profits will further increase. This will lead to more
investment and in turn further rise in price level and inflation.
(5)
Recession: In this stage more business enterprises fail, prices collapse and
confidence is shaken. Building construction slows down and unemployment
increases. There is fall in income during recession.
Characteristics
of Business Cycle
A
business cycle must possess the following characteristics:
1.
Fluctuation of Aggregate Economic Activity: Business
cycles refer to the fluctuations in aggregate economic activity rather than as
fluctuations in a single specific economic variable such as GDP.
2.
Alteration of expansion and contraction in economic activity: A trade
cycle is characterized by alteration of expansion (Prosperity) and contraction
(Depression) in economic activity. They are repetitive and rhythmic. The period
of prosperity is followed by depression and which again is followed by a period
of prosperity. This indicates that the movement is wave like in character; it
is not an erratic fluctuation.
3.
Co-movement: Business cycles do not take place in just a
few sectors or in just a few economic variables. Instead, expansions or
contractions take place at the same time in a number of economic activities.
Thus, although some industries are more sensitive to the business cycle than
the rest, the level of output and employment in most industries tends to fall
in recessions and rise in expansions. Many other economic variables like
prices, productivity, investment and government purchases also have regular and
predictable patterns of behaviors over the course of the business cycle. The
tendency of many economic variables to move together in a predictable way over
the business cycle is called co-movement.
4.
Self- Reinforcing: A trade cycle is a self- reinforcing in
nature. It means that the process of expansion and contraction is a cumulative
self- reinforcing nature. Each upswing or downswing feeds on itself and
generates further movement (change) in the same direction until its direction
is reversed by external forces.
5.
The degree of regularity: A trade cycle has a degree of regularity. It
is possible that the upswing of a trade cycle is longer than the downswing or
vice versa, but it maintains regularity.
6.
The presence of crisis: A trade cycle is characterized by the presence
of a crisis, i.e. peak and the trough are not symmetrical. In the words, the
change from upward to downward may be more sudden and violent than is the
change from downward to upward movement. Consequently, the peak of the trade
cycle is pointed with steep bends on either side whereas trough has a gently
sloping swing of 16 – 22 years’ duration.
7.
International in character: When business fluctuations occur in
a country, it will be spread all over the countries.
Economic Growth and Factors
affecting it
Economic
growth is the increase in the amount of the goods and services produced by an
economy over time. It is conventionally measured as the percent rate of
increase in real gross domestic product, or real GDP. Growth is usually
calculated in real terms, i.e. inflation-adjusted terms, in order to net out
the effect of inflation on the price of the goods and services produced. In
economics, "economic growth" or "economic growth theory"
typically refers to growth of potential output, i.e., production at "full
employment," which is caused by growth in aggregate demand or observed
output.
As
an area of study, economic growth is generally distinguished from development
economics. The former is primarily the study of how countries can advance their
economies. The latter is the study of the economic aspects of the development
process in low-income countries. As economic growth is measured as the annual
percent change of gross domestic product (GDP), it has all the advantages and
drawbacks of that measure.
Factors
affecting economic growth in India
Following are the main factors affecting economic growth
India
1. Capital flows and
the stock market of India: This is important to note that
in spite of suffering depression, an economy can grow if the capital inflow is
constant or incessantly rising. In India even if the GDP rate is less, the
currency can still get overvalued due to great capital inflows made by the
FII’s in the Indian economy.
2. Natural resources:
The principal factor affecting the development of an economy
is the natural resources. For economic growth, the existence of natural
resources in abundance is essential. A country deficient in natural resources
may not be in position to develop rapidly.
3. Population growth: Labour supply comes from population growth. But the population growth
should be normal. A galloping rise in population retards economic progress.
Population growth is desirable only in an under-developed country. It is,
however, unwarranted in an overpopulated country like India.
4. Political factors:
Several other factors that influence the currency constancy
are some political factors like change in the government set up,
introduction of new export and import policies, tax rates and many more.
5.
Technological Factors: The technological changes
are most essential in the process of economic growth. Adam smith, the father of
political economy, pointed out the great importance of technological progress
in economic development. Ricardo visualized the development of capitalist
economies as a race between technological progress and growth of population.
6. Social and
psychological factors: Modern economic growth
process has been largely influenced by social and psychological factors. Social
factors include social attitudes, social values and social institutions which
change with expansion of education and transformation of culture from one
society to the other.
7. Education: It is now fairly recognised that education is the main
vehicle of development. Greater progress has been achieved in those countries,
where education is wide spread.
8.
Urbanisation: Another noneconomic factors promoting
development in the process of urbanisation. In poor agrarian economies, the
structural change must begin with the change in the size of population in rural
and urban sectors.
9. Religious
factors: Religious plays a great role in economic growth.
It may give rise to a peculiar sense of self-satisfaction.
10. Global factors:
a) Global currency
trends: Like many other money Indian rupee have also tied its knot with
some of the big economy of the world as well as the names of UK, US, Japan and
Canada. The depreciation or approval in the currency any of these, especially
in the US dollar, influences the valuation of the Indian currency in one way or
the other.
b) Oil factors: India is a major importer of oil and the valuation of Indian money
gets with no trouble exaggerated by the increase in the prices of the crude
oil. It can further result in spreading inflation in an economy
due to the over valuation of the Indian currency.
In short economic growth is the result of concerted efforts
of both economic and non-economic factors. However, the presence of one or more
or all of these factors may not ensure that the economy will be in position to
generate forces that bring about a fast economic growth.
Hindrances/Obstacles in Economic Growth
Some of the major problems in economic growth of India are
given below:
1. Misuse of
Resources due to Market Imperfections: Main reason
for the economic back wardens of the under developed countries is the misuse of
resources owing to market imperfections by the market imperfections we mean the
immobility of the factors of production , price rigidities, ignorance regarding
market , trends static social structure , lack of specialization etc. These
market imperfections are great obstacles in the way of economic growth. It is
due to market imperfections that productive efficiency in these countries is
low, the resources are either unutilized or underutilized and the resources are
misallocated. When the resources are perfectly mobile and there is perfect
competition among them, they can easily move from one sector to another in
search of a better return and in this way they make an optimum contribution to
the national output.
2. Low Rate of Saving
and investment: Another main reason of the poverty and under
development of the under – developed countries is that the rate of saving and
investment in these countries is very low. In these countries only5-8 percent
of the national income goes into savings, whereas the rate is 15-20 percent and
even more in the developed countries. When the rat of saving in a country is
low the rate of investment is bound to be low and the rate of capital formation
is low too. Since capital per man is low, the productivity is also low
productivity being low, the per capita income and the national income too are
low.
3.
Demonstration Effect: The under
development of the economically backward countries is also due to what has been
called the demonstration effect the demonstration effect increases
propensity to consume which reduces the rate of savings and investment . A very
important principle has been propounded regarding consumption. That an
individual’s consumption does not merely depend on individuals own income but
it is very much influenced by the standard of living or consumption of his
friends and relations. When a man sees that some of his friends and relatives
have refrigerator, scooter, radio or TV set. Thus , consumption does not depend
upon absolute real income but on relative level of real income the is
consumption expenditure does not depend on our own purchasing power but on what
in being spent by other son the purchase of luxury articles.
4. Rapidly Growing
Population: In the under – developed countries, especially
in the over populated countries of Asia, population increases very rapidly.
this has very adversely affected their rate of economic growth. In fact rapid
population growth is the greatest obstacle to economic growth. Whatever
increase takes place in the national output and income in such countries as a
result of development is devoured by the ever pouring torrent of babies.
It is like writing on the sand. That is why their standard of living and income
per capita cannot rise. For example the major part of increase in national
income that has accrued in India during the five year plans has been nullified
by the rapid population growth.
5. Social and
political obstacles to growth: There are
several other factors which have retarded the economic growth of under
developed countries, Among this we may mention the following in the under
developed countries like India agriculture has been carried on in a very
inefficient manner. Lack of adequate irrigation facilities and fertilizers,
primitive agricultural practices. Poverty of the peasant out molded systems of
tenure. The under developed countries are generally wanting in dynamic
entrepreneurship. No wonder trade and industry have been conducted at a very
low level and few new grounds have been broken. Economic development requires
an army of trained and skilled personnel who serve as instruments of economic progress
these the under- developed countries lack and consequently remain backward. Not
only have the economic factors handicapped economic progress of the under
developed countries but social factors too. Have played their part to keep them
economically backward. has divided the Indian society into ware tight compartments
and has rendered co operation in the economic sphere impossible. It has created
divergence between aptitude and the occupation actually pursued. By making
functions here dietary. It killed imitative and enterprise.
Untouchability has demolished millions of our propel striking
at the very root of dignity of labour.
6. Economic Factors
Impeding Growth: Most of the countries of
Asia and Africa, which are under developed, have been at one time or another
under an alien rule. The most important cause of poverty in India and it’s
under- development is its subjection to the British rule. The foreign rulers,
naturally, exploited the dependent countries and used their resources to
promote their own interest. These countries were made to supply raw material at
low prices. The foreign industrialist also made investments in primary
industries such as mining, drilling of oil wells, tea, coffee etc. Thus the
foreign masters used these countries as suppliers of raw materials to their
industries and markets for their manufactured goods. They did not take any
interest in their economic development.
Difference between Economic Growth and Economic Development
Basis
|
Economic Development
|
Economic Growth
|
Scope
|
Concerned
with structural changes in the economy.
|
Growth
is concerned with increases in the economy’s output.
|
Growth
|
Development
relates to growth of human capital indexes, a decrease in inequality figures,
and structural changes that improve the general population’s quality of life.
|
Growth
relates to a gradual increase in one of the components of Gross Domestic
Product: consumption, government spending, investment, net exports.
|
Implication
|
It
implies changes in income, saving and investment along with progressive
changes in socioeconomic structure of a country (institutional and
technological changes).
|
It
refers to an increase in the real output of goods and services in the country
like increase the income in savings, in investment etc.
|
Measurement
|
Qualitative,
HDI (Human Development Index), gender-Related index (GDI), Human poverty
index (HPI), infant mortality, literacy rate etc.
|
Quantitative
Increase in real GDP.
|
Effect
|
Brings
qualitative and quantitative changes in the economy.
|
Brings
quantitative changes in the economy.
|
Concept
|
Normative
concept.
|
Narrower
concept than economic development.
|
Relevance
|
Economic
development is more relevant to measure progress and quality of life in
developing nations.
|
Economic
growth is a more relevant metric for progress in developed countries. But
it’s widely used in all countries because growth is a necessary condition for
development.
|
Industrial Sickness – Meaning, Causes and Remedies
Industrial sickness is a universal phenomenon. It is a major
problem of all industries in the world whether it is developed or developing
countries. It is a serious matter of the countries.
Definition of a sick unit is given by Sick Industrial
companies act, 1985. According to the act “ The sick industrial company is a
company which has at the end of any financial year accumulated losses equal to
or excluding its entire net worth and has also suffered cash losses in that
financial year and in the financial year immediately preceding it.”
According to state bank of India,” A sick unit is that unit
which falls to generate internal surplus on a continuing basis and depends for
its survival on subsequent infusion of external funds”.
Industrial sickness especially in small-scale Industry has
been always a demerit for the Indian economy, because more and more industries
like – cotton, Jute, Sugar, and Textile small steel and engineering industries
are being affected by this sickness problem.
CAUSES OF
INDUSTRIAL SICKNESS
1) Internal
Cause for sickness: Internal causes are those
which are within the control of management. This sickness arises due to
internal disorder in the areas justified as following:
a) Lack of Finance: This including weak equity base,
poor utilization of assets, inefficient working capital management, absence of
costing & pricing, absence of planning and budgeting and inappropriate
utilization or diversion of funds.
b) Bad Production Policies : The another very
important reason for sickness is wrong selection of site which is related to
production, inappropriate plant & machinery, bad maintenance of Plant &
Machinery, lack of quality control, lack of standard research & development
and so on.
c) Marketing and Sickness: This is another part which always
affects the health of any sector as well as SSI. This including wrong
demand forecasting, selection of inappropriate product mix, absence of product
planning, wrong market research methods, and bad sales promotions.
d) Inappropriate Personnel Management: The another internal
reason for the sickness of SSIs is inappropriate personnel management policies
which includes bad wages and salary administration, bad labour relations, lack
of behavioural approach causes dissatisfaction among the employees and workers.
e) Ineffective Corporate Management: Another reason for
the sickness of SSIs is ineffective or bad corporate management which includes
improper corporate planning, lack of integrity in top management, lack of
coordination and control etc.
2) External
causes for sickness:
a) Personnel Constraint: The first for most important reason
for the sickness of small scale industries are non availability of skilled
labour or manpower wages disparity in similar industry and general labour
invested in the area.
b) Marketing Constraints: The second cause for the sickness
is related to marketing. The sickness arrives due to liberal licensing
policies, restrain of purchase by bulk purchasers, changes in global marketing
scenario, excessive tax policies by govt. and market recession.
c) Production Constraints: This is another reason for
the sickness which comes under external cause of sickness. This arises
due to shortage of raw material, shortage of power, fuel and high prices,
import-export restrictions.
d) Finance Constraints: The external cause for
the sickness of SSIs is lack of finance. This arises due to credit
restrains policy, delay in disbursement of loan by govt., unfavorable
investments, fear of nationalization.
Effect of sickness: Industrial Sickness contributes to high cost
economy. This in turn, will affect the competitiveness of the economy at home
and abroad. Dead investment is a burden on both banks and budgets and
ultimately consumers should pay the high cost. Money locked up in sick units
gives no returns and effects the availability of resources to the other viable
units
Remedies
Majority of sick units is retrievable in order to tackle the
problem of sickness from the two angles the role of three agencies assumes
significance: a) The government b) Financial institutions and c)
the industry associations
a) The Role of Government: If the number of units in the
country has increased some 10 times since independence and if we have
diversified industrial structure with wide spread entrepreneurship the credit
for this largely belongs to government.
Second area where the government can be helpful is Vis-Ã -vis
industrial licensing. The very existence of licensing and monopoly regulation
legislation implies that there is a stampede to “to get in” whenever licensing
is liberalized for an industry or an economy as a whole
b) The Role of Financial Institutions: The following are the
ways by which sickness can be prevented by financial institutions:
1. Continuous monitoring of unit
2. Careful project appraisal
3. Professional institutional response to unit’s problems
4. Required systems at client units
5. Incentives to units to remain healthy
c) The Role Of Industry Associations : A good practical
review by each industry association of installed and usable capacity in the
industry , capacity utilization , growth trends , problems etc should be useful
for the potential new entrants for deciding whether to enter the industry or
not. The industry can have some sort of 1st aid cell this could consist of
professionals who could go to the aid of a unit that is beginning to fall with
the offer of managerial and technical help also.
INDUSTRIAL
SICKNESS IN NORTH EAST REGION
The economy of North- East India has got its definite identity due
to its peculiar physical, economic and socio-cultural characteristics. This
region consists of eight states viz., Assam, Arunachal Pradesh, Manipur,
Meghalaya, Mizoram, Nagaland, Tripura and Sikkim. The NER of India covers an
area of 2.62 lakh sq.km. It accounts for 7.9% of total geographical area of the
country. With a total population of 39 million (2001), it accounts for 3.8% of
total population of India.
There are differences among the eight States in the North Eastern
region with respect to their resource endowments, level of industrialization as
well as infrastructural facilities. The industrial sector has mainly grown
around tea, petroleum (crude), natural gas etc. in Assam and mining, saw mills
and steel fabrication units in other parts of the region. The full potential of
the region is yet to be exploited and this has left the economy in a primarily
agrarian state.
Industrially, the NER continues to be the most backward region in
the country, and the states in the region hardly have any industrial base,
except perhaps Assam, because of its traditional tea, oil and wood based
industries .To some extent Meghalaya has made some headway in setting up of
small and medium industries. There are a number of factors contributing to the
lack of industrial growth in the region which is stated below:
1. Geographical isolation: Geographical
isolation is a characteristic feature of this region which always goes against
its development strategy. The difficult terrain of this region surrounded by
hills, rivers and dense forest leads to increase in the cost of administration
and cost of developmental projects, besides making mobilization resources
particularly difficult.
2. Poor transport and communication facilities: This
region is lacking a sound transport and communication system. Geographical
isolation, difficult terrain and lack of attention are some of the basic
factors which are responsible for poor development of transport and
communication facilities. Both the railway and road transport facilities in the
region are not adequate according to its need. Expansion works like preparation
of new railway lines, conversion meter gauge lines into broad gauge lines,
extension of national highways, construction of new bridges over Brahmaputra,
development of well connected transport facilities and sound communication
system etc. are not up to the mark. In the absence of all these above mentioned
facilities, a region cannot develop industrially. However, in recent years,
steps have been taken to improve the transport and communication system of the
State without which the development of the economy is impossible.
3. Wastage of Natural resources: In spite
of having huge amount of natural resources, the economy of this region still
remains largely under-developed and involves itself into the wastage of huge
quantity of natural resources. Investment in this region is mainly channelized
towards exploitation of rich resources viz. tea, jute and oil, which is
reflection of the continuation of old colonial pattern of investment. Assam has
28 percent of the total hydro power potential of the country, which remains
under-utilized. The vast coal resources have not been fully exploited (except
for traditional use of the Railway etc.) despite several possibilities for use
as fuel for production of power, for production of coal and as base for several
chemical industries. The forest resources in Assam are also under-utilized,
particularly in the matter of non-standard species. Thus insufficient
exploitation of natural resources in this region is responsible for this poor
industrial development of the State.
4. Lack of skilled personnel: This
region is also suffering from an acute shortage of skilled labour. Most of the
labours are unskilled. For higher skills, this region has to depend upon other
parts of India and foreign countries. Consequently payment of higher wage rates
for skilled labour affects cost of production. Besides, one has to import
technicians from outside on attractive rates of remuneration for installation
of capital goods industries and thus it raises the cost of the development
projects besides making the gestation period of these projects lengthy.
5. Poor credit facilities: Credit
facility, which is a part of infrastructure requires for development, is very
minimum. The credit deposit ration in Assam stood at 37.3 in 2012 as against
78.1 for all India. Thus the lending policy of the commercial banks is far from
generous to this region. Thus in the absence of large scale credit facilities,
industries in the private sector cannot grow satisfactorily.
6. Primitive technology: Technological
progress is the root of industrial growth. But North East is suffering from
lack of technological development due to poor scientific educational facilities
and vocational training. Farmers in North East region are still using Primitive
technologies in agricultural sector and thus agricultural production remains
stagnant whereas other State Punjab, Haryana, Gujarat, Uttar Pradesh have been
able to make sufficient progress in agriculture by applying modern
technologies. Small scale and cottage industries of this region are still
following old orthodox technologies and cannot stand in the competitive market.
Thus the industries of this region are still backward due to absence of
technology up gradation.
7. Power Shortage: Lack of
power supply is also effecting the production of the Industrial units in north
east. Power breakdown is the regular problem this region. Due to inadequate
power supply the industries have to suffer from under utilization, low
production and higher costs.
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