chapter 5 problems of industries j -...

CHAPTER 5

PROBLEMS OF SMALL SCALE INDUSTRIES

J ^

Contents

5.1. Introduction 5.2. Problems of Sample SSI units 5.2.1 Infrastructure problems 5.2.2. Marketing problems 5.2.3. Problems of Raw Materials 5.2.4. Labour Problem 5.3. Entrepreneurship and Small Scale Industries 5.3.1. Entrepreneurial problem in Assam Hills 5.3.2. Entrepreneurial Development and different variables 5.4. Profde of Sample Entrepreneurs 5.4.1. Reasons for selecting Small Scale enterprises 5.4.2. Motivational factors 5.4.3. Performance of SSI units and other Variables 5.4.4. Previous experience 5.4.5. Unfavourable socio-economic environment

Page No

14%-I52 152-180

I8I-I86

187-197

5.1. INTRODUCTION

Inherent Problems of Industrial Development in the NE Region

The SSI sector in the North Eastern Region suffers from a number of

inherent handicaps-locational, infrastructural, financial and entrepreneurial

(Trivedi 1987). A study of HE on status of SSIs shows that although the rate of

growth in terms of numbers of units registered has been higher than the all India

average, the status of SSIs can be termed as unhealthy in terms of size, bank,

finance, market penetration, entrepreneurial quality, etc (HE, 2004). In Assam,

some big industries are there but development of small scale sector is not up to

the mark in comparison with other States like West Bengal, Maharastra etc.

(Sarma, 1987). In spite of having rich potential for the development of different

type resource based industries, the pace of development of industries in Assam

has not been satisfactory during the last five decades of national planning. The

factors which are mostly responsible for industrial backwardness include:

geographical isolation, lack of capital formation, lack of infrastructure, insecure

investment climate, lack of markets, lack of entrepreneurial motivation etc.

While there has been an appreciable and gratifying growth of small industries in

the country, a disconcerting feature was that the growth was uneven in the

relatively advanced States it was greater than in the backward areas (Vepa,

1988).

The problems of SSIs are multi dimensional in the liberalized

environment, which include delay in implementation of the project, inadequate

availability of finance and credit, expensive mode of communication, marketing

problems, cheap and low quality products, delay in payment, technological

obsolescence, imperfect knowledge of market condition, lack of infrastructure

facilities, deficient managerial and technical skills, etc. (Jain, 2004).

Industrialization, though it is necessary for faster growth of an economy, brings

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many problems in its wake. This is more so in the case of tribals who belong to

pre-industrial society. Rehabilitation consequent on displacement, psychological

and sociological adjustment, absorption in the new setup are some of the main

problems that are created by industrialization of the tribal areas (Lingaiah,

1998). Moreover, the investment environment in the State is considered to be

insecure considering the growing problem of insurgency, prevailing in the entire

Northeastern Region. The State is facing the problem of huge capital flight and

exodus of business firms out of Assam due to this burning problem. Such

insecure investment climate is always going against the interest of industrial

development in the State. International confidence on the State economy is yet

to be restored as the foreign investors did not show any active interest to

participate in any major industrial and infrastructural projects.

Small scale industries which owned and run by one or few individuals are

generally suffer from some instinctive deficiencies like weak capital base, lack

of proper technical know-how, weak bargaining power, poor marketing

capability etc (Deb, 1993). The factors that constraint the industrial growth at

the national level is equally applicable to the performance of this sector in the

State. Yet, given the constraints of the primary sector in accelerating the growth

of GDP/GSDP on a sustained basis, industrial development becomes all the

more vital in effecting sectoral shift in both income and employment.

5.1.1. Impact of Globalization on Small-Scale Sector

Small-scale sector is an important constituent of overall industrial sector

of the country. Indian industries whether big or small are facing challenge for

survival as a consequence of WTO agreement. Small enterprises have been

facing several challenges from liberalization, privatization and globalization. In

wake of removal of Quantitative Restrictions (QRs) and progressive reduction in

tariffs as part of India's commitment to WTO, SSI and other units were facing a

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lot of problems because of large-scale imports of various consumer products

including dumping by several countries. On account of the WTO agreement

several challenges emanate. The Small-Scale sector of Assam Hills as well as

the State is experiencing the impact of globalization by way of competition in

the domestic market. SSIs in the rural and semi-urban areas mainly cater to the

local needs and are based on local raw-materials and skills. In the light of

globalisation, liberalisation and privatisation free trade, industrial sector in

general and small scale sector in particular has been undergoing rapid

transition in India. The speed of transition in SSIs has increased due to

economic reforms by both Central and State governments and the WTO

agreements. As a result, now the stress is more on standards, quality and

efficiency as never before. Consequently, its major policy objectives are to

modernise and make SSIs internationally competitive (Krishna, 2004). The

sector currently faces threats from de-reservation, global competition, rising

labour costs, strict Intellectual Properties Rights regime and loss of control over

management (Pandian, 2003). As the Indian economy has been practicing open

market economy from the year 1991, India's market is integrated with world

market. Protection offered to the sector prior to liberalsation has been drastically

reduced through delicensing, reduction in excise and custom duty rates, etc.

The SSIs are unable to upgrade their technologies, improving product

standards in accordance with the international standards and securing foreign

collaboration, financial as well as technical, has led them to a disadvantageous

position while competing in the domestic market.

5.1.2. Specific Causes of Industrial Backwardness in Assam Hills

Assam Hills remains far away behind in industrial development than the

State as a whole which itself lies at a low level of industrial development. The

growth of industrial production in Assam was 2.6% as against All India growth

150

of 4.8% during the period 1971-1997 (Eco. survey of Assam 1998-99). The

reasons for the poor industrial structure in Assam Hills are relative isolation of

the region from the main centres of trade and industry, inadequate economic and

physical infrastructure, smallness of the market inside the region, lack of

entrepreneurs etc. Some specific causes that inhibit in the industrial

development of Assam Hills are that the region is very much rural in character

mostly inhabited by tribal people practicing Jhum. The level of real income and

capital per head of population is low as judged by the standards in other parts of

the State.

The Growth and Development of Small-Scale Sector in Karbi Anglong

and North Cachar Hills district is tardy and lopsided. 95% of the SSI units are in

the nature of tiny micro enterprises. Many of them are one man shows. Their

capital base is poor and do not have access to the economies of scale. Their

bargaining power is low and do not have access to information and modem

management practices. In spite of the persistent liberal attitude of the

Government to the development of the small-scale sector, it beset with

numerous problems, which have thrown the sector in a state of serious

uncertainty (Deb, 1993). In view of the fact that there are certain constraints in

the setting up of large and medium scale industries in Assam Hills, the role of

small-scale Industries has become more important. The Central Government as

well as the State Governments has taken many measures to promote and foster

their growth by offering number of incentive scheme and generous policies.

Lack of Infrastructure and Entrepreneurship are the two most serious

problems in Assam Hills, which are considered great impediments in proper

growth of this sector. Economic Infrastructure facilities consist of Transport,

Communications, Marketing, Finance, Power and Technology. Entrepreneurship

problem comprises of lack of Entrepreneurial class. Training to the

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entrepreneurs, skills, experience and management. Unless the infrastructure

facilities are improved entrepreneurship development is impossible and growth

of industrial sector cannot take place to the desired extent. These two key

problems that inhibit in the industrial growth in Assam Hills have been taken

into consideration for the present study.

5.2. PROBLEMS OF SAMPLE SMALL SCALE UNITS

The problems of industries whether in the small scale sector or in the

organized sector, are almost identical. It has been observed that small and tiny

industries of Assam Hills are suffering from both external and internal problems

that hinder in the promotion of this sector. The internal and external problems

reinforce each other in most of the industries and force the units into sickness.

The study observed that according to the size of investment most of the small

enterprises of Assam Hills fall under tiny category. They are generally artisan

oriented; use relatively little machinery and equipment, much of which is locally

made. These Tiny units continue to face serious problems, the most important

being small rural markets, low productivity, high costs and poor or stagnant

technology. Modernization is proving difficult due to the very small capital base

of these enterprises (Parameshwaran, 2000). The objective of this chapter is to

highlight the different problems faced by small scale and tiny industrial units of

Assam Hills. The researcher has attempted to throw light in the problems based

on the empirical studies. Moreover, efforts are made to analyze the reasons of

the problems that are identified so that the workable solutions could be evolved

for the same. It is observed that every unit is hit by some problems or the other

depending on its size and structure. In course of present study, most of the units

reported some common problems while some enumerated more than one and

many units reported only one problem. The following analysis will throw light

on the problem of Infrastructure and Entrepreneurship in Assam Hills.

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PART A

5.2.1. Infrastructure problems

Development and expansion of infrastructure facilities are essential pre

condition for industrial development of any region. Strictly speaking, industrial

development is the effect for which infrastructure is the cause (Khanka, 1994).

Inadequate infrastructure facility is one of the main reasons for poor growth of

industries in Assam and other North Eastern States. The development of the

most of the infrastructure items has not yet crossed the minimum threshold

especially in the hilly region of Assam, which is still today a great hindrance in

the development of industries. The agricultural potential of the Hills region has

not been systematically assessed. Full information of the availability of forest

resources is not available as the level of geographical desegregation and detail

that is required for planning. With regard to mineral resources also the region

has not been surveyed systematically so far. Thus, the inadequacy of

infrastructure facilities holds back the Hilly regions from taking benefits of

whatever advantages it has in terms of forests, minerals and other natural

resources.

1. Transport

An extensive and efficient system of transport is the basic support system

to industrial growth of any region. Geographical location and inadequate

transport system in the entire North Eastern Region have resulted in crippling

disincentives of excessive transportation cost, inordinate delay in movement of

materials and problems of marketing (Trivedi, 1987). In the present study it has

been observed that Assam Hills suffers from inadequate transport and

communication facilities, which is the major obstacle to the socio-economic

development of this region. Transport disadvantage discourages industry from

locating in Assam as well as Assam Hills. Only those industries that are based

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on special raw materials available in Assam are likely to locate here. To move a

. 9-ton truck from Guwahati to Kolkata, a distance of 1,100 km, today costs

around Rs 20,000. A truck going from Chennai to Kolkata, a distance of 1,600

km, costs only Rs. 16,000. This also reflects on the quality of road connecting

. the Northeast with the rest of the country (Assam Development Report). The

gravity of the situation in Assam Hills can be realized when transportation cost

is compared with the other parts of the State. For instance to move a loaded

truck of goods from Guwahati to Haflong, a distance of 310 kms, costs around

Rs. 10,000; while carrying cost for the same distance in the plains area around

Rs. 5,000 only. The net effect has been that people pay higher prices for goods

brought from the rest of the State. The manufacturing costs go up abnormally

and the entrepreneurs of Assam Hills cannot face the competitive price of the

products. An industrial unit has to incur extra cost ranging from 10-20% as

compared to similar units elsewhere in the country. Project cost for individual

projects goes up by 20-25% (Trivedi, 1987).

Many areas of the two hill districts are still inaccessible, and some have

only footpath and bridle path, which during the monsoon season become almost

unusable. Because of the hilly terrain many parts of this region still not linked

with the main centers of trade and commerce by roadways. Although Railways

has covered both the Hill districts by main lines many important places of

Assam Hills are not touched by it. The transport facilities available in Assam

Hills are given in the following table:

Districts K. Anglong N.C. Hills Total

Table 5.1 Transportat ion Facilities to SSI units in Assam Hi l ls No. of sample units

60 (54.5) 50 (45.5) 110(100)

Road 22 (20) 8 (7.3)

30 (27.3)

Both Road & Rail 38 (34.5) 42 (38.2) 80 (72.7)

Source- Field Survey (The figures in the parenthesis indicate percentage of total units)

154

The study observed that Roadways is the only means of transport for 27%

SSI units. Though, 73% units have both road and rail facilities, yet it cannot be

said satisfactory from the operational point of view. The problem of

transportation in N.C. Hills is severe as observed during the period of survey.

The above table shows that Road transport is available to only 7.3% units out of

total units surveyed (45.5%) in N.C. Hills. It indicates that Road transport is not

satisfactory in N.C. Hills. Most of the SSI units (72.7%) are located nearby

Railways. Road transport is not certain and safe which are frequently disrupted

during rainy season either by road blockage due to landslide or unfavouable

climatic condition. In N.C. Hills two important roads viz., Lanka-Umrangso and

Haflong-Silchar Road have been temporarily closed for movement of vehicles

due to deplorable condition. Procurement of raw materials and distribution of

finished products to markets possesses serious problem due to inadequate

transport facilities. The following table shows the transportation problem of

Assam Hills.

Districts K. Anglong N.C. Hills Total

Transportat No. of

sample units 60 50 110

Table 5.2 ion Problem to SSI units in .

Problem Serious 11(10)

37(33.6) 48(43.6)

Not serious 18(16.4) 10(9.1)

28(25.5)

(\ssani Hi l ls

Total 29(26.4) 47(42.7) 76(69.1)

No 31(28.2)

3(2.7) 34(30.9)

Source- Field Survey (The figures in the parenthesis indicate percentage of total units)

The above table shows that transportation is a problem for 69% units.

Among these, 44% units facing serious problem; while for 25% units the

problem is not serious. On the other hand, 31% units expressed that

transportation was not a problem for them. It is observed from the survey that

due to zigzag and deplorable road condition the transport owners are either not

agreed or most of them agree at higher freight to carry goods in the hilly areas.

They claim exorbitant charge for carriage of goods. Consequently, high

155

transportation cost enhances the total cost of production and ultimately the

products cannot compete in the local as well as in the distant market. Many a

times, the transport owners refuse to carry goods, as the operating cost of a truck

is always higher in the hilly areas and subject to heavy depreciation. Moreover,

it becomes risky when a vehicle is cracked in the mid way of the hills section.

Thus, Poor transport and communication system result in high cost in the flow

of goods to and from the Hill areas and is a deterrent factor to cause of slow

industrialization of Assam Hills. The industrial category wise transportation

problem of Assam Hills has been given in the following table:

Industrial Categ Types of SSIs

Agro Forest Mineral Engineering Electronics Electrical Textile Chemical Service Misc. Total

No. of K. Anglong

17 2 6 6 3 3 -2 12 9

60(54.5)

Table 5.3 ory-wise Transportat ion Problem in Assam Hills units surveyed N.C.Hilis

13 6 2 2 3 -3 2 13 6

50(45.5)

Total 30 8 8 8 6 3 3 4 25 15

110(100)

Problem Serious

14 3 3 1 3 -2 1 12 9

48(44)

Not serious 5 2 1 4 2 2 1 1 8 2

28(25)

Total 19(63) 5(63) 4(50) 5(50) 5(83) 2(67) 3(100) 2(50) 20(80) 11(73) 76(69)

No

11 3 4 3 1 1 -2 5 4

34(31) Source- Field Survey

(The figures in the parenthesis indicate the percentage of row total)

The above table shows that all categories of SSI units are suffering

transportation problem. The present survey covered highest number (i.e.30) of

agro-based units and among these 63% are suffering the transportation problem.

While out of 25 Service based units, 80% are suffering this problem. Out of 110

units surveyed 31%) reported that they are not facing any transportation problem.

The analysis of the data shows that most of the units of this category are belong

to Karbi Anglong district where transportation system is comparatively better

than N.C. Hills.

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Hypothesis 2 (Test 1)

The present survey has given an overview that transportation problem has

adversely affected in the industrialization in Assam Hills. While asked the

entrepreneurs about their performance, majority of the entrepreneurs said it as a

problem which hinders in the performance of their units. The performance level

of the SSI units has been given in the following table.

Table 5.4 Transportation Problem and Performance level

Problem-* Performance level "^ Satisfactory Not satisfactory

Total

Problem Serious 15(13.6) 33 (30)

48 (43.6)

Not serious 17(15.5)

11(10) 28 (25.5)

Total 32 (29.1) 44 (40)

76(69.1)

No

20(18.2) 14(12.7) 34 (30.9)

Total units

52 (47.3) 58 (52.7) 110(100)

Source- Field Survey (Figures in the parenthesis indicates percentage of totals units)

The above table shows that performances of 52.7% units are not

satisfactory and 40% units of them are facing transportation problem. Contrary

to this, performance of 47.3% of total units surveyed is satisfactory despite

29.1% units facing the transportation problem. Among these, problem is serious

for 13.6% units. Though 30.9% of surveyed units reported transportation as not

a problem at all; however, among them 12.7% units are not running

satisfactorily. Thus transportation problem affects the success of Small

enterprises; which ultimately impeded in the growth of Small scale sector in

Assam Hills. It has been further tested by the application of chi-square test. The

calculated value of x with 2df (9.529) is greater than the tabulated value at 5%

level (5.991) of significance; hence difference is significant {Appendix I, HP

2.1). Therefore, problem of transportation affects in the growth of industries in

Assam Hills.

2. Financial and Credit problem

Finance is considered as the prime factor and is the life blood of any

157

business enterprise. Small and tiny units generally depend on two kinds of

capital, viz., (a) Equity or own capital and (b) borrowed capital consisting of (i)

long term capital for its investment in equipment and other capital assets and (ii)

short term capital to meet current needs of the industry (Reddy, 1991). The flow

of institutional finance in Assam is still at very low ebb when compared with its

flow in many other States of the country (Bharali, 1987). For a SSI entrepreneur,

whose resources are very limited and also who has no access to the capital

market, the availability of institutional finances becomes a very crucial factor

(Tewari et. al. 1991). The economic and industrial development of a region

largely depends upon how efficiently funds are managed by its banks and

financial institutions. Efficacious management of banks and financial

institutions will not only improve their profitability but also enhance their

contribution to the industrial and economic development of a country vis-a-vis

entrepreneurial development (Anitha, 2003).

Taking the cue from Schumpeter's view that financial services promote

economic development in general and industrial development in particular, an

attempt is made in the present study to examine, in brief, the network of

financial institutions and role played by them in facilitating the industrial

development in Assam Hills. Availability of finance is foremost for the

entrepreneurs of Assam Hills; as more than 90% of the entrepreneurs are of the

first generation. But in Assam Hills, Small-scale enterprises because of their

poor financial structure the resources are very limited. For most of the

entrepreneurs in small-scale sector, shortage of finance or capital is considered

to be the rnost important factor responsible for a host of problems faced by

them. Business that starts with too little investment by owners has a greater

chance of failure than business with adequate investment by owner (Siropolis,

1998). The present survey reveal that in Assam Hills, capital inflow and

158

formation are at low level, credit facilities are limited and hence most of the

Small-scale enterprises are to manage their required capital from their own

resources, which are great impediments for industrialization in this region. The

SSI units are also facing the problems of working capital at affordable rate of

interest and insistence of collateral security by the lending banks. The following

table gives an overview of the achievements of banks in financing to the

industrial sector of Assam Hills.

Table 5.5 Financing by Banks to Industrial Sector in Assam Hills in 2000-01

Districts Target Rs. (in lakhs) Achievement Rs.(in ial<hs) PC K. Anglong 79.66 59.42 74.59 N.C. Hills 20.00 1.66 8.30 Assam Hills 99.66 61.08 61.29

Source: Lead Bank of K. Anglong & N.C. Hills

The above table shows the poor financing of banks to the industrial sector

in Assam Hills. In Karbi Anglong, the performance of banks is better than N.C.

Hills. The problem of finance is mainly due to weak credit worthiness of the

small units in Assam Hills. During the survey it observed that all the

entrepreneurs are not capable of financing themselves from their own resources.

Due to their weak economic base, the entrepreneurs find it difficult to take

financial assistance from the commercial banks and financial institutions. The

survey result as to the financing by Banks and other financial institutions to the

SSI sector of Assam Hills is given in the following table:

K. Anglong N.C. Hills Total

Table 5.6 Financing of SSI Sector in .

Capital Own 32 32

64(58)

Both 28 18

46(42)

4ssam Hills Financial Agency/ Bank

PSB 35 15

50(45)

RRB ---

AFC -4 4

Total 35 19

54 (49)

Purpose of Loan F 18 8

26 (48)

W 13 4

17 (32)

C 4 7

11(20)

Source- Field Survey The above table reveals that 58% units started with own funds while 42%

with both own and borrowed capital. The major purveyors of credit to the SSI

159

sector in Assam Hills have been Public Sector Banks (PSBs). The above table

reveals that 49% SSI units availed loan from financial institutions, of which 45%

obtained from PSBs and only 4% units from AFC. This shows the poor

financing by the PSBs and other financial agencies in both the Hill districts.

State Bank of India has been playing the key role. The above table shows that

out of 54 units which obtained loan from financial institutions, 48% and 32%

units procured loan for fixed and working capital requirements respectively,

while 20% units sanctioned .loan under composite scheme.

The findings of the present survey shows that most of the entrepreneurs of

Assam Hills are not aware of the various schemes of finance by Banks and

Financial Institutions for growth of Small scale sector. SIDBI provides direct

finance for new/expansion/diversification/modemization of SSI projects in many

parts of the country. But SIDBI has totally neglected the Northeastern region of

the country though that region has full potential for small-scale industries

development. In spite of the various policies of the government to promote

industries in the Northeastern region, it accounted for a miniscule 0.64% of

loans from SIDBI (Ahmed & Chowdhury, 2003). According to SIDBI Report, in

Assam, total amount sanctioned and disbursed was Rs. 13.31 and 13.07 crores

respectively in the year 1999-2000. The AFC sanctioned loans of Rs. 16.87

Lakhs to 28 SSI units of N.C. Hills during the period of 1985-1995. The loan

comprises of term loans, soft loans for technology up gradation and

modernization, rehabilitation of sick units. No respondents of Karbi Anglong

reported as to obtaining loan from AFC.

The SSI sector constitutes a priority sector for bank's lending both for the

Public as well as Private sector banks. But the Banks and Financial Institutions

are hesitant to provide loan to the entrepreneurs of Assam Hills due to its

peculiar land tenure system. Creation of security in Hill areas is, however.

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difficult in respect of land, because the land in the hill areas is held on the basis

of community ownership rather than individual ownership (Sikidar, 1987).

Under the existing land tenure system the Gaonbura is the custodian of the

village land under the overall control of the Autonomous Council. The Gaonbura

may allot a plot of land for jhuming but devoid of any ownership right on that

plot except for the period of cultivation. This system posses a big problem to the

banks as well as to the other financial institutions not only from the security

point of view but also from the view point of ascertaining the right of

applications to their land holdings. The financial problem of the different

categories of SSIs is given in the following table.

Table 5.7 Financial Problem in Assam Hills

Types of SSIs

Agra Forest Mineral Engineering Electronics Electrical Textile Chemical Service Misc. Total

No. of units surveyed

30 8 8 8 6 3 3 4 25 13

110(100)

Serious 14 7 6 5 5 1 3 1 11 4

57(51.8) Source- Fie

Problem Not serious

9 1 -2

2

2 9 5

30(27.3) d Survey

Total 23(78) 8(100) 6(75) 7(88) 5(83) 3(100) 3(100) 3(75)

20(80) 9(69)

87(79.1)

No

7 2 2 1 1 --1 5 4

23(20.9)

(The figures in the parenthesis indicate the percentage of row total)

The study observed that 79.1% SSI units suffering financial problem.

Among them 51.8% expressed it as serious; while 27.3% not serious. 20.9%

units reported that finance is not a problem at all for them. The study covered

highest nurnber of agro-based units and 78%) of them suffering financial

problem. The table reveals that even 100%) units of some categories of SSI units

are suffering financial problem. The following table gives the problems of

institutional finance confronted by the entrepreneurs.

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Table 5.8 Problem of obtaining loan f rom Financial Inst i tut ions in Assam Hi l ls

Districts

Karbi Anglong N.C. Hills Assam Hills (Total)

Total units obtained loan

39 15 54

Problems Security

13 6

19(35)

Undue time taking 4 5

9(17)

Refusal 3 0

3(5)

Total 20(51) 11(73) 31(57)

No

19(49) 4(27) 23(43)

Source- Field Survey

The above table shows that the Financial Institutions generally follow

security-oriented policy. Among the 54 entrepreneurs, who obtained loan from

banks and financial institutions, 43% expressed their views that they did not face

any problem from banks while sanctioned loan to them. While 35% discontented

and said that security was the main problem for bank loan. District-wise analysis

shows that 51% of Karbi Anglong 73% of N.C. Hills suffered problems from

banks in sanctioning loan. The banks insist on collateral securities rather than

personal securities. It is noteworthy that many entrepreneurs are not interested to

borrowed capital, either due to complex system of appraising of the loan

proposal or due to disproportionate time taking in the sanction of loans and

actual disbursement by the banks. As stated earlier, the entrepreneurs of Assam

Hills fail to provide adequate security due to existing land tenure system. 17%)

entrepreneurs complained that there was undue time taking in sanctioning and

disbursing loans by banks and/or financial institutions. 5% loan seekers told that

the banks refuse to sanction loan to them. The Credit Guarantee Scheme of the

Central Govt, would not prove to be an effective help to those who can not

arrange for the required security and guarantee.

In Assam Hills, the small entrepreneurs alleged that banks are more security

conscious, rather than development oriented. Banks provide credit to the existing

and successful units only rather than to new units. The relation between the

bankers and the small entrepreneurs has been found conflictual rather than co

operative. The reciprocal allegation has been paradoxical. The banker on the

162

other hand opine that the entrepreneurs can not come with the viable schemes

while the loan seekers paradoxically complain that the over insistence on

security stands in the way of flow of bank finance (Sikidar, 1987). Delay in

sanction of financial assistance resulting in implementation of project which

leads to cost overrun and time overrun (Mali, 1999). The entrepreneurs of

Assam Hills experience serious difficulties in securing working capital also.

They expressed resentment that delay also occurs in the realization of bills for

the goods supplied to Government. In some cases delays are unavoidable due to

non-availability of fund in case of purchasing department. But in many cases

delays are avoidable, when delay occurs due to lack of extension motivation of

the persons dealing with the matters relating to sanction and disbursement of

loans or payment of bills. The commercial banks often shy away and treat such

assistance as a risky proposition.


In the present study financial problem was found to be one of the major

problems which adversely affected in the industrialization in Assam Hills. While

asked the entrepreneurs about their performance in the industrial activities,

majority of the entrepreneurs said it as a problem which adversely affect on the

performance of their units. The performance level of the SSI units has been

given in the following table.

Table 5.9 Financial Problem and Performance level

Problem-^ Performance level "^ Satisfactory Not satisfactory

Total

Serious 22 (20)

35(31.8) 57(51.8)

Problem Not serious 20(18.2) 10(9.1)

30 (27.3)

Total 42(38.2) 45(40.9) 87(79.1)

No

10(9.1) 13(11.8) 23 (20.9)

Total

52 (47.3) 58 (52.7) 110(100)

Source- Field Survey (Figures in the parenthesis indicates percentage of total units)

It has been observed in the study that despite serious financial problem,

performances of 47.3% units are found satisfactory. The above table shows that

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79.1% units are facing financial problem and the performances of 52.7% units

are not satisfactory. Finance is a serious problem for 51.8% units; while for

27.3% units it was not so serious. Thus financial problem affects the success of

small enterprises; which ultimately impede in the growth of Small scale sector in

Assam Hills. It has been further tested by the application of chi-square test. The

calculated value of x with 2df (6.755) is greater than the tabulated value at 5%

level (5.991) of significance (Appendix I, HP 2.2); hence there is association

between the performance and financial problem.

3. Problem of Power

Growth of industry in a particular region depends upon adequate and

uninterrupted power supply. Power shortage, power shutdown and power cuts

could paralyze industrial activity, throw thousands of workers out of job and

cause inconvenience to consumers (Aziz & Babu 1997). The power sector in the

State did not show much improvement over the years. The installed capacity of

power in Assam has remained at the same level i.e. at 574.4 MW for last several

years. During 2000-01 the energy requirement of the State was 3323.16 MU

while the availability was 3092.4 MU and thus shortage was 6.9%). The acute

power shortage in the State compelled the Government to impose power cut on

industrial units, which naturally throttled some industrial units using power. The

entrepreneurs are facing difficulties in continuing their programme of

production schedules due to inconvenient load shedding schedules by the ASEB.

The following table shows the number of villages electrified in Assam Hills.

No. of District/State

Karbi Anglong North Cachar Hills Assam Hills (Total) Assam

Table 5.10 Villages electrified in Assam Hi l ls as on 31** March 2003

No. of villages 2520 577 3097

25685

Villages electrified 1042 261 1303 19039

P.C. of villages electrified 41.35 45.23 42.07 77.13

Source-Directorate of Economics and Statistics, Government of Assarn

164

The above table shows that 42% of the total villages of Assam Hills as

against 77% of the State have been electrified as on 31^' March 2003. It clearly

indicates the poor power situation of the two hill districts. The study disclosed

that in Assam Hills 49% SSI units use power. Yet, unfortunately supply of

electricity is inadequate to meet the requirement of Assam Hills. The frequent

power shortage even keeps the main towns under darkness hour after hour. The

Power problem of SSIs in Assam Hills has shown in the following table.

Types of SSIs


Table 5.11 Industry-wise Electricity problem of SSIs in Assam Hills

Power used

16 -6 5 1 2 -2 12 10

54(49)

Gravity of Problem Serious

25 4 6 8 4 3 2 3 17 11

83(75)

Not serious 3 2 2 -----6 2

15(14)

Total 28(25.5) 6(5.5)) 8(7.3) 8(7.3) 4(3.6) 4(3.6) 2(1.8) 3(2.7)

23(20.9) 13(11.8) 98(89)

No

2 4 --2 -1 1 2 -

12(11)

Source-Field Survey (The figures in the parenthesis indicate percentage of total units)

The above table shows that inadequate power is a major obstacle for growth

of small-scale enterprises of Assam Hills. Electricity supplied by ASEB is the

main source of power supply to all the SSIs whether using power or not are

almost same and disturb the normal operation of the units. 89% units reported

electricity as a problem and among them 75% stated it to be serious. Units using

no power line reported that frequent Load shedding Problem (Power cut) affect

the normal activities of their units. 18% entrepreneurs complained that apart

from inadequate supply of power to their units, frequent power cuts affected the

performance of their units as their workers had to idle their time on duty during

the period of power cuts. Inadequate power supply and frequent breakdown are

two major causes for under utilization of the installed capacity. The recent hike

165

in unit cost of electricity has also affected the SSI units in Assam Hills.

4. Underuiilization of Capacity

Under-utilization of capacity is a crucial problem faced by the small

entrepreneurs of Assam Hills; which debarred them from availing the economies

of scale. This under utilization of capacity happens mainly due to the lack of

marketing facilities (Anantha, et. al. 2004). As stated earlier, 49% SSI units of

Assam Hills use power in the manufacturing process and all these units are

suffering the problem of under-utilization of capacity. However, Lack of market

demand is the most integral factor of under utilization of capacity. The following

table shows the problem of under utilization of capacity in the study region.

Table 5.12 Problem of Underutilization of Capacity

Causes of under utilization Power Market Working Capital Raw-material Labour Total

K. Anglong 23 54 6 1 1

56(51)

N.C. Hills 4 37 14 3 4

44 (40)

Total 27(24.5) 91(82.7) 20(18.2) 4 (3.6) 5 (4.5)

100(91)

Source- Field Survey (The figures in the parenthesis indicate percentage of row total)

The study observed that 51% SSI units of Karbi Anglong and 40% of

N.C. Hills,, totaling 91% units are suffering under utilization of capacity.

Capacity utilization is the effect of several factors. The above table reveals that

very integral to the problem of under-utilization of capacity is the lack of market

demand and inadequate power. 82.7% units are suffering this problem due to

lack of market demand while 24.5% suffering due to inadequate power. Problem

of working capital is the third important factor of underutilization of capacity.

5. Lack of Technology

In this age of stiff competition the knowledge of latest technology in the

production process is highly essential to cope with the situation. For increasing

productivity and reduce the cost of production technical training and provision

166

for the latest machines and equipment for small scale sector, market surveys and

demand forecasts and their products, provision for working capital and long

term finance in liberal terms and managerial training for entrepreneurs is

indispensable. SSI units suffer from technological obsolescence in India due to

dumping of cheap products in the market under the liberalized economy. One of

the major handicaps of the small-scale sector has been the absence of the latest

technology, which alone can ensure quality, and high rate of production (Kumar

& Ganesh, 1997). Though acquisition of technical and professional skills gives

impetus for entrepreneurial advancement in any region, the small entrepreneurs

of Assam Hills are lacking the technical and professional skills. From the survey

it reveals that only 5% entrepreneurs have technical qualification but no one has

been found having professional skills in any enterprise. The study finds that the

entrepreneurs of Assam Hills are lacking necessary scientific knowledge about

different alternative technologies and processes available for manufacturing

their product to improve the quality of products and to reduce costs. Most of the

small entrepreneurs of Assam Hills are unable to adopt modern techniques of

production, which is reflected in the poor quality of the products. The SSIs of

the Hills regions are not in a position to cater to the market demand without

upgrading the quality of the products. The choice of technology open to small

enterprises is very limited in the study region. The use of obsolete technology

and dependence only on individual expertise without proper awareness about the

need for upgradation and modernization with newly developed appropriate

technologies is one of the major reasons for large scale sickness of small units,

which also contributes greatly to low level of enterprise for setting up newer

units, in spite of existence of great potential and prospects (Paul & Basu, 1987).

Though more than 50% of the entrepreneurs have the technical knowledge of

operating their machines they are not well acquainted with the latest

167

technological development, which highly essential for improving productivity

and reducing cost. It appears from the study that lower education levels and lack

of technical skills of the entrepreneurs do not allow them, either to increase

productivity in their units or enable them to pursue the product diversification

with the resources available within Assam Hills.

6. Inadequate Support System

The disclosure of the study is that the industrial support systems in Assam

Hills are neither adequate nor well equipped with modern facilities. There is

absence of Central or State level SSI organizations in the hilly region and their

activities are also almost nil. Though both the districts have District Industries &

Commerce Centres (DICCs), except some routine works, there is lack of proper

planning and keen interest for entrepreneurial development. The Industrial

Estates of Assam Hills are found inoperative due to lack of adequate facilities

needed for growth of SSI sector. The facilities of tool rooms, repair shops,

quality control etc are poor or do not exist at all in and around the Industrial

Estates of Assam Hills.

5.2.2. MARKETING PROBLEM

Marketing is a comprehensive process of bridging the gap between the

producer and consumer (Ahmed, 1989). The crucial role of marketing in

facilitating industrial development can best be put as 'if the proof of pudding lies

in eating, the proof of all production lies in consumption/marketing. This means

that the goods have no value for the manufacturing units unless these are sold

(Khanka, 1994). Marketing in a dynamic sense involves finding out what

consumers want, then planning and developing a product or service that will

satisfy those wants, and then determining the best way to price, promote and

distribute that product or service (Stanton, 1964). The attitude of the small

entrepreneurs towards marketing his own product is a crucial factor in the

168

success and growth of his enterprise. Business owners without marketing skills

have a greater chance of failure than others with marketing skills (Siropolis

1998). Small industries in the country are now facing many difficulties in

marketing their products due to growing competition from their sister concerns

and in recent years due to emergence of stiff competition from foreign goods in

the wake of economic reforms. Besides, they are also facing competition from

large industrial units producing the same products (Reddy, 1991). Small

enterprises, because of limited resources and experience they are unable to spend

huge sums on publicity and sales promotion measures (Lakshman, 1999).

The State of Assam is located in the extremely east of the country; as a

result the State can not enjoy locational advantages in marketing of its products.

The most important reasons for the poor industrial structure in Assam Hills are

relative isolation of the region from the main centres of trade and industry,

inadequate economic and physical infrastructure, smallness of the market inside

the region. The products of Small-scale units do not have any market value due

to competition from highly finished machine goods that are cheap and

maintenance free. Large number of small industrial units of this region is either

closed or become sick due to this problem. The ability to produce is a necessary

condition but it is not the sole condition for success. It is the market force that

guides and decides the fate of any enterprise (Reddy, 1991). It is a fact that the

North Eastern region is heavily depend upon other industrially developed States;

particularly the neighbouring State of West Bengal for its consumer goods. This

is one of the reasons why we find that the largest numbers of SSI units in the

country are located in West Bengal, and many of them depend on the raw

materials supplied from and the market available in the North Eastern Region

(Paul & Basu, 1987). In the same way many SSI units of the nighbouring

districts are the feeder of the raw materials available from the two Hill districts.

169

Small industrial units lack synchronization between production and marketing.

Greater emphasis is put on production, while marketing of the products does not

get its due share of the entrepreneurs' attention, as they do not posses the

necessary marketing intelligence (Narsaiah & Margaret 1989). Successful

marketing would involve consideration of both quantity and quality entailing

large investments, which are generally beyond the capacity of small-scale

industrial units. The products of small-scale industries, small and shoddy in

quality, make them unable to grapple the competition with the products of large-

scale industries and MNCs. Most of the SSI units cannot afford even to subject

their products to quality test nor they can obtain ISI marks for their products due

to smallness of their scale of operation, constraint of fund and lack of

professionalism in different management areas (Baruah, 2000). In Assam Hills

many SSI units produce goods without proper market research and without

anticipated demand. The following table shows the district-wise size of market

of SSI units in Assam Hills:

Table 5.13 District-wise Size of Market in Assam Hills

K. Anglong N.C. Hills Total

No. of units 60 (54.5) 50 (45.5) 110(100)

Local 40 (36.4) 35(31.8) 75 (68.2)

Local & District 17(15.5) 10(9.1)

27 (24.5)

Local & Outside 3 (2.7) 5 (4.5) 8(7.3)

Source- Field Survey (Figures in the parenthesis indicates percentage of total units surveyed)

The study observed that 68% SSI units of Assam Hills produce goods to

meet the local demand; while 25% units are dependent for marketing of their

products on the local as well as other parts of the district. 7% units have been

found which produce goods for local as well for distant market. The export

potential enterprises were not found in the sample. In Assam Hills, 90% of the

SSI units have retail distribution. The following table shows the level of

marketing problem in different categories of SSIs in Assam Hills.

170

Types of SSIs


Table 5.14 Marketing Problem of the SSIs in Assam Hills


30 10 8 8 6 3 3 4 25 13

110(100)

Serious 18 6 7 1 6 3 3 2 13 11

70(63.6)

Problem

Not serious 10 4 1 6 ---2 9 2

34(30.9)

Total

28(93) 10(100) 8(100) 7(88)

6(100) 3(100) 3(100) 4(100) 22(88) 13(100)

104(94.5)

No

2 0 -1 ----3 0

6(5.5)

Source- Field Survey (Figures in the parentiiesis indicates percentage of row total)

It has been observed that 95% SSI units under study are suffering

marketing problem. The problem is serious for 64% while for 31% units the

problem is not so serious. The analysis of Industrial category wise marketing

problem shows that all the units (100%) of most categories are suffering

marketing problem. It is noteworthy that the forest-based industries have good

marketing potential, but there has been great setback of these industries since

1996 as stated earlier, when Supreme Court banned cutting of trees. Though

Plywood has great demand in domestic market as well as outside the State, these

industries are closed down since 1996. Due to abundance of cheaper steel and

plastic furniture, demand of wooden furniture has been decreased during recent

years. Nowadays the Wooden furniture are used only in educational institutions;

while decorative furniture are used by well to do families. There are 13

registered Saw mills in Assam Hills but these mills are in great trouble as the

timbers are not available after banning of cutting trees from the forests.

Agro-based industries are dependent on the availability of raw materials

and market demand. The Mini Rice Mills located in the plain areas of Karbi

Anglong are facing the acute problem of lack of demand and shortage of power

171

supply. In the recent years the Government of Assam introduced, 'Rs. 3 a kilo

rice scheme' for the people below poverty line (BPL), which has adversely

affected on the demand of local rice. The Rice mills are facing severe

competition from the subsidized rice of Food Corporation of India (FCI) and

State Food and Civil supplies Department brought from outside the State. The

subsidized rice is found in abundance in the open market. The Rice mill owners

have expressed their dissatisfaction towards the attitude of the Government.

While they are struggling for survival the FCI and State Government has been

making gainer the supplier of the outside State. Besides, Underutilization of

capacity due to irregular power supply is the major problem for Rice, Flour

Mills and Spices grinding units. Due to lack of marketing strategy, financial

crisis and low capacity utilization, most of the units of AHSIDC had suffered

operating loss and consequently many of these are already closed. Some units

like rice mill, spice-grinding mills are also suffering due to seasonal fluctuations

of supply of raw materials.

Despite large demand of traditional tribal handloom products in the market,

there are very few registered textile based units in Assam Hills. The market

competition of traditional handloom and weaving sector with the modern textile

mill products has aggravated due to several factors over the years. Traditional

weaving products are cheap in the place of production but become costlier in the

hand of middlemen, which ultimately effect on the market demand of these

products. Though there are some unregistered tailoring and embroidery units in

urban and semi-urban areas, these units are facing stiff competition due to

increasing demand for readymade garments and machine embroidered apparels.

Engineering units are emerging as an important service based industry in the

hilly region with 67 units. These units are also facing the problems of electricity

and technological deficiency.

172

There are 26 registered Chemical units in Assam Hills. Most of these units

are closed and the survey covered one Soap factory at Haflong. This unit

produces ball soap and has good demand among tribal people, but irregular

supply of chemicals and high transportation cost are the major problem facing

by this unit. The registered candle factories of the two districts are found closed

due to lack of adequate finance and raw material. With the emergence of offset

printing, the old manual Printing Presses have lost their market and become sick.

Two units producing ice candies and ice cream also suffer lack of demand

during winter season; which remain idle and undergo loss of non-recurring

expenses.


From the foregoing discussion it is observed that marketing is one of the

important problems for growth of Small-scale enterprises in Assam Hills. The

study observed that marketing problem limit the size of the market and thus

impede in the growth of SSI sector. It has been tested by the application of chi-

square test. The following table shows the marketing problem with reference to

size of the market.

Size of market Local Local & within district Local & outside district Total

Table 5.15 Size of Market and Marketing Problem

Marketing Problenn Serious 55(50) 11 (10) 4 (3.6)

70 (63.6)

Not serious 19(17.3) 13(11.8)

2(2) 34 (30.9)

Total 74 (67.2) 24(21.8)

6 (5.5) 104(94.5)

No 1(1)

3(2.7) 2(2)

6 (5.5)

Total 75 (68.2) 27 (24.5))

8(7.3)) 110(100)


The chi-square test proves that there is association between the size of

market and marketing problem as the calculated value of x with 2df (8.836) is

greater than the tabulated value at 5% level (5.99) of significance (Appendix I,

HP 2.3); Therefore, the marketing problem limits the size of market and

173

consequent growth of small scale sector in Assam Hills.

The present survey shows that most of the entrepreneurs are not aware of

the market survey of the products. The entrepreneurs of Assam Hills lack the

innovative trick and they do not bother to gather information regarding market

prospect of their products; the state of competition in the product line, the

prospect of future growth of the market for the product; the position of its

substitutes. The existing as well as prospective small scale units as and when

come up in the suggested line will also not able to get good market within the

district or State as well in the region or in the country due to poor transport and

communication facilities. 85% units are dealing with general market and facing

the marketing problems and they cannot expand production due to lack of

sufficient market demand while 15% producing for specified markets, though

they are facing some problems like under-utilization of capacity, delayed

payments etc. There is no any marketing organizations or market channel in the

study area; as a result the entrepreneurs sell the products at low price to the

wholesalers. The study also reveals that there is absence of purchase by

Government agencies in Assam Hills. 69 units of Karbi Anglong and 38 units of

N.C. Hills registered under Assam Preferential Stores Purchase Act, 1989. But

the entrepreneurs expressed dissatisfaction that there was hardly any purchase

by Government departments from SSI units registered under this Act. The

entrepreneurs have lack of knowledge to practice the method of sales promotion,

as most of them have no knowledge about the potential market. The small units

cannot afford to spend as heavily large units do on marketing their products.

Advertisement through different electronic media has become increasingly

fashionable particularly in the case of large and medium scale industries. The

Small-scale industrial units of Assam Hills cannot resort to advertise media as it

is beyond their capacity to afford costly advertisements.

174

The major underlying causes of marketing problems in the study area are

poor quality of the product and high prices, lack of knowledge of the market and

lack of distributive contracts. The products of small-scale units do not have any

market value due to competition from highly finished machine goods that are

cheap and maintenance free. The DICCs of the two Hill districts are found

inoperative in providing marketing assistance to small-scale industries.

5.2.3. Problem of Raw Materials

Scarcity and high cost of raw materials were found to be most difficult

problem followed by poor quality and transportation problems in Assam Hills.

The difficulties in procurement of raw materials adversely affect the production

of small-scale units. Of the total number of unit in Assam in the small and

village sector, around 50% are based on locally available resources with limited

diversification (Sikidar, 1987). Inadequate transport and communication has

been the major problem of irregular supply of raw materials for many SSI units.

Sources and nature of supply of raw-materials of SSI units of Assam Hills is

given in the following table:

Table 5.16 Sources and Nature of supply of Raw Materials in Assam Hills

Type of SSI units

Agro Forest Mineral Engineering Electronics Electrical Textile Chemical Service

Misc. Total % of total unit .

Local

12 5 2 1 2 ---3

4 29 26

Source of Raw materials Within district

7 3 1 ------3 14 13

Outside district

10 -1 7 4 2 3 3

22

8 60

54.5

Source-

Outside State

1 -4 --1 -1 --7

5.5

i ield Sun

Imported

--

----1 --1 1

ey

Nature of Supply Regular

18 9 6 5 6 3 1 1

16

9 74 67

Seasonal 10 -1 -------

11 10

Irregular 2 1 1 3 --2 3 9 4 25 23

The above table reveals that about 55% units procure raw-materials from

outside the district. The SSI units of Assam Hills have been facing the problem

175

of procurement of raw materials due to periodic scarcity of both indigenous and

outside sources. It has been observed from the present survey that in Karbi

Anglong 67% units procured raw materials regularly because of better

transportation facilities than N.C Hills. Again supply of raw materials for 10%

units is seasonal and 23% units are irregular. In Karbi Anglong the problem of

scarcity of raw material is less severe for the units depending on the local raw

materials than those outside sources; while in N.C. Hills problem is almost same

for both local and outside sources. It is observed in the present study that the

availability of raw material is a major problem for the Chemical and Textile-

based industries. Except Agro, Forest and Mineral-based SSI units all other

categories of SSI units are dependent on supply from the outside the districts.

The Rice mills, the Spice grinding units cannot utilise full capacity due to

irregular and seasonal supply of raw materials. The bakery owners has expressed

grievances that there is no provision of quota for supply of flour and sugar at

subsidized rate and the Supply Department is apathetic in this regard. The

entrepreneurs have to purchase the raw materials at higher prices in the open

market leading to concomitant fall in their margin.

However scarcity of raw materials is always not the sole problem for

certain type of SSI units of Assam Hills. For instance, though production and

supply of ginger is abundant in and around Mahur Area, the Ginger dehydration

plant under Co-operative sector at Mahur had to close down due to the

mismanagement of the Cooperative Department. Forest-based units using local

raw materials has steadily gone up, on the contrary the availability of timber has

conspicuously gone done over the years. The Saw mills are suffering due to

shortage of woods. Nearly 300 plywood factories in Assam producing 371 lakh

sq. meters of commercial plywood per annum had to close down since 1996

(NEDFI, 2002). Timber industries of Diphu and the Plywood industry at

176

Sariahjan of Karbi Anglong have been closed due to non-availability of raw

materials. The unabated deforestation leading to growing concern for

environmental problems in the region has compelled the government to

introduce total embargo on cutting the trees, have greatly limited the availability

of the forest products in Assam Hills. This argument is buttressed by the fact

that a large share of income originating in the forest sector in the Hills region

does not accrue there, and thus produces no impact on the economy of Assam

Hills. Moreover, the important feeders of forest products, particularly Saw mills

and Furniture making units have been located in the urban and semi urban areas,

which are far away from the place of supply of wood, transportation problem

creates artificial shortage of wood to these units. Thus acute shortage of raw

materials compelled many forest-based industries to close down. However, for

mineral-based industries, it is a partial problem when some raw materials like

coal, chemicals etc. are to bring from out side the districts. Procurement of raw

materials is one of the barriers in spontaneous growth and continuous production

of many SSI units in Assam Hills as revealed in the following table.

Table 5.17 Problem of Raw Materials in Assam Hills

Type of SSI units



30 10 8 8 6 3 3 4 25 13

110(100)

Problem Serious

12 1 2 --2 2 1

10 3

33(30)

Not serious 12 7 2 4 3 -1 2 13 3

47(43)

Total 24(80) 8(80) 4(50) 4(50) 3(50) 2(67) 3(100) 3(75)

23(92) 6(46)

80(73)

No

6 2 4 4 3 1 -1 2 7

30(27)


The study observed that procurement of raw material is a problem for all

categories of SSI units of Assam Hills. Out of 110 sample units 73% units have

177

been suffering the problem of raw materials. The problem is serious for 30%

units; while it is not a serious problem for 43% units. There is no Govt, agency

for supplying raw materials to the small-scale units in Assam Hills. These units

are to purchase the raw materials at high prices. The entrepreneurs have great

resentment on the activities of the DICCs and Industries Department that they

have not taken any steps to provide raw materials at subsidized rate or to make

any provision for regular supply of raw materials to the SSI units. High price of

raw materials adversely affects on the cost of production and most of the SSI

units cannot compete in the market.

The traditional industries of Assam Hills such as Handloom and Khadi,

bell-metal works are to depend on the supply of raw materials from the outside

the district. It is mentioned earlier that almost every household in the rural areas

of Assam Hills are connected with the weaving industry, but most of them

produce cloths mainly for family requirements. The existing handloom and

handicrafts group though constitute the mainstay in the small scale sector and

constitute 45% of the total unit under SSI; they are still using traditional

technology, as a result they are facing sever competition with the modem mill

textile products both in cost and quantity. The weavers of the Hills areas depend

for their requirement of cotton on local traders. But these traders sell cotton to

them at fairly high prices; on the contrary they purchase the ready cloths at very

low prices. Thus the poor weavers are subjected to double exploitation at the

hands of traders.

5.2.4. Labour Problem

Lack of both skilled and unskilled workers is one of the most crucial

problems in the hilly region. Jhuming is the traditional agricultural practice of

the tribal people where most of the work force is engaged and these people

seldom found interested in the industrial activities. It reflects in the composition

178

in the total workforce as revealed in the occupational distribution (Table 2.9).

Due to non-availability of local workers, the existing industrial units of Assam

Hills are suffering and compel them to bring required workers from outside. The

nature of workers problem is given in the following table:

Type of SSI units


Table 5.18 Domicile of Workers in Assam Hills

No. of unit surveyed 30 10 8 8 6 3 3 4 25 13

110(100)

Local

108 59 113 26 g 7 8

50 64 43

487 (77)

Outside District

63 21 -

14 5 -3 3 30 6

145 (23)

Total workers 171 80 113 40 14 7 11 53 94 49

632(100)


The above table reveals that ratio of local and migrant workers employed

in SSI units of Assam Hills are 77:23. Though the local workers constitute the

major percentage of workers; only 20% of them are tribal. The survey observed

that there is apathy among the local tribal people to get employed as workers in

the industrial sector. The inflows of migrant workers are from neighbouring

districts as well as from outside the State. More than 75% workers are either

casual workers or employed on temporary basis. From the survey it appears that

agro-based industries employed highest number of workers. Though Rice mills

owners employ local people, the most of the workers employed in the Bakeries

are outsiders. The mineral-based industries such as Hume pipe and Stone

granulating units employed the workers from the local areas. The following

table shows the industrial category-wise workers problem in Assam Hills.

179

Table 5.19 Labour Problem in Assam Hills

Type of SSI units "^ Problem—» Agro Forest Mineral Engineering Electronics Electrical Textile Chemical Service Misc. Total

Serious 8 1 2 1 1 --1 2 3

19(17)

Not serious 14 4 4 3 4 3 2 2 11 5

52 (47)

Total (%) 22 5 6 4 5 3 2 3 13 8

71(64)

No 8 5 2 4 1 -1 1 12 5

39(36)

Total (%) 30 10 8 8 6 3 3 4 25 13

110(100)

Source: Field Survey

The above table reveals that 64% SSI units have been suffering labour

problem and 17% of them stated it to be serious; while 47%)-stated that it is not

serious problem for them. It is also observed during survey that 65% units

suffered due to irregular supply of workers. It is mainly the supply of skill

workers, which is great problem for all categories of SSI units except agro and

forest-based units. There is no training facility for workers in Assam Hills.

Many entrepreneurs expressed dissatisfaction that due to lack of training

facilities, there was a shortage of skilled workers. There is no Labour union in

Assam Hills and the workers are not aware of the prevailing Labour laws of the

county regarding the minimum salary they entitled to, bonus. Employees State

Insurance (ESI) etc.

The field survey and analysis of the above data make the ground for

accepting the hypothesis that the most inhibiting factor in growth of SSIs in

Assam Hills is the "Lack of Infrastructure".

180

PARTE

5.3. ENTREPRENEURSHIP AND SMALL SCALE INDUSTRIES

An important aspect of creating the right environment under which Small

Scale industries can thrive is entrepreneurship development (Kasturi 2003).

Entrepreneurship development is and small scale industry development are the

obverse and reverse of the same coin. Small scale enterprise is a breeding

ground for entrepreneurship (Desai, 2003). Small Scale enterprise and

Entrepreneurs are concomitant to each other (Khanka 2000). Most

entrepreneurial development programmes in our country are not distinguished

from the programme for the development of small-scale industries (Zutshi,

1992). In Assam, both governments and various industrial promotion and

support institutions are making considerable efforts to facilitate the process of

emergence of new entrepreneurs for setting up enterprises in small-scale sector.

These efforts involved making attractive schemes for availability of finance and

various other assistances including technical know how, training, sales,

purchases, etc (Nayak 2004).

5.3.1. Entrepreneurial problem in Assam Hills

In Assam Hills, lack of entrepreneurship is one of the important reasons

for slow growth of industries. The growth of entrepreneurship among Scheduled

tribes in comparison to non-tribals is significantly low in the hilly region.

Though 58% population of Assam Hills is tribal; sample tribal entrepreneurs

constitute only 20%. The unemployed youths of the State as well as Hilly region

desire to, by and large, some kind of job having assured and stable income,

preferably in government and semi-government establishments. The following

table shows the distribution of sample entrepreneurs according to caste and tribe

in Assam Hills.

Table 5.20 Tribe/Caste-wise distr ibut ion of entrepreneurs in Assam Hi l ls

Tribe/Caste"^ Districts—* Scheduled Tribe Scheduled Caste Others Total

No. of sample Entrepreneurs Karbi Anglong

7 (6.4) . 5 (4.5) 48 (43.6) 60 (54.5)

N.C. Hills 15(13.6) 6 (5.5)

29 (26.4) 50 (45.5)

Total 22 (20) 11(10) 77 (70)

110(100) Source- Field Survey

(Figures.in the parenthesis indicates percentage of row totals)

The study reveals that 20% entrepreneurs of Assam Hills are tribal; while

80% are non-tribals, comprising of 70% General and 10% Scheduled Caste

entrepreneurs. Of the total tribal entrepreneurs 13.6% and 6.4%) belong to N.C.

Hills and Karbi Anglong respectively. It indicates that there is lack of

entrepreneurship among the tribals; and local entrepreneurship has developed

more in N.C. Hills than Karbi Anglong. The present Survey also shows that

percentage of women entrepreneurs both among tribal and non-tribal is much

lesser than male entrepreneurs. The diagrammatic presentation of the data given

in the above table will give clear view.

Figure 5.1 Tribe/Caste-wise Entrepreneurs in Assam Hills (in percentage)

Others

Scheduled Caste

Scheduled tribe

1 1

T 1

1

0 10 20 30 40 50 60 70 80

DK.Anglong DN.C. Hills • Assam Hills

182

The above diagram clearly indicates that there is lack of entrepreneurship

among the indigenous tribal people of Assam Hills. Thus tribe and caste is an

important factor in the growth of entrepreneurship in Assam Hills.

5.3.2. Entrepreneurial Development and different Variables

Entrepreneurial development depends upon various attributes of the

entrepreneurs such as age, marital status, caste/tribe, educational qualification,

parental occupation etc. The qualities, skills, abilities and resourcefulness of an

entrepreneur, required for the promotion and management of an enterprise, may

be influenced by his past background i.e., education, training, experience,

income, and so on (Tewari et.al., 1991). The background profiles of sample

entrepreneurs are studied here with reference to educational qualification, age,

gender, marital status, domicile, family background, training etc. In the present

context, educational and occupational background of the entrepreneurs has been

considered for entrepreneurial development in Assam Hills.

1. Educational background of the Entrepreneurs

Growth of Entrepreneurship depends on the literacy of the people as it

effects the decision of a prospective entrepreneur in the selection of an

enterprises, location and cost of project and application of modern technology.

Educated entrepreneurs are more aware of the various facilities and incentives of

the government. But present study observed that there is lack of entrepreneurial

education to motivate small entrepreneurs in Assam Hills.

Education of entrepreneurs is an important factor that affects the

entrepreneur's style of functioning. Although there are many instances where

people with a little education were more successful than others, the fact remains

that it does have some effect on business (Reddy & Murthy 1979). The

following table shows the educational background of the entrepreneurs which is

an important bearing on setting up of the small enterprises in the study region

183

Table 5.21 Education level of Entrepreneurs in Assam Hills

Districts"^ Education level—• K. Anglong N.C. Hills Assam Hills

Below HSLC 28 (25.5) 17(15.5) 45(41)

HSLC to Under graduate 17(15.5) 27 (24.5) 44 (40)

Graduate 15(13.6) 6(5.5) 21 (19)

Total 60 (54.5) 50 (45.5) 110(100)

Source- Field survey (Figures in the parenthesis indicate percentage total unit)

(Engineering diploma and degree holders are included in 10+ and graduate category respectively)

The distribution of sample units by their educational qualifications reveals

that 41% entrepreneurs have been found below HSLC standard; while 40%

entrepreneurs are found between HSLC and undergraduate level. Percentage of

Graduates entrepreneurs is only 19. Number of entrepreneurs with technical

background is only 5, which are included in the second and third categories.

Among the sample entrepreneurs no entrepreneur has been found with PG

degree and qualification in Business Management. The above analysis shows

that in Assam Hills, the entrepreneurs below HSLC level of education have the

highest nurnber followed by HSLC passed and undergraduate level. It is due to

the low level of education, the entrepreneurs of Assam Hills are not aware of the

government policies and different incentive schemes for the growth of SSI

sector, which is an important constraint in the grov^h of Small scale enterprises.

2. Occupational background of the Entrepreneurs

Knowledge of the main occupation of the entrepreneurs prior to

commencement of business would throw light on occupational mobility, besides

providing the background needed to elicit the reasons for their entry into

business. Occupational background and mobility of entrepreneurs is the

indicator of further direction of activities (Lokhande, 2006). Business owners

whose parents did not own a business have a greater chance of failure than

owners whose parents did own a business (Siropolis, 1998). Though family and

occupational background plays an important role in the success of the enterprise.

184

the present study reveals that the effect of occupational background of the

entrepreneurs is only upto the setting up of the units. For the purpose of

convenience in the present study the occupational background of the

entrepreneurs are grouped into three categories viz., Agriculture/Farming,

Business/Manufacturing, Service and others. The following table shows the

distribution of the entrepreneurs according to parental occupation.

Table 5.22 Occupational distribution of Entrepreneurs in Assam Hills

Districts"^ Parental occupation—>

K. Anglong N.C. Hills Assam Hills

Agriculture/ Farming 18(16.4) 11 (10)

29 (26.4) Source- Fie

Business/ Manufacturing

37 (33.6) 29 (26.4) 66 (60)

d Survey

Service and others

5 (4.5) 10(9.1)

15(13.6)

Total

60 (54.5) 50 (45.5) 110(100)

(Figures in the parenthesis are the percentage of total units)

The study observed that parents of 60% respondents' parents were

engaged in some kind of business activities. Out of 110 respondents, 15 (13.6%)

respondents' parents were engaged in government services while 29 (26.4%)

entrepreneurs belonged to the families engaged in agricultural and farming.

3. Impact of Educational and Occupational background in Entrepreneurial

Development

In the aforesaid analysis it has been observed that entrepreneurs below

HSLC level as well as HSLC and undergraduate level playing dominant role in

business and industrial sector. Again, entrepreneurs with business background

has been also playing vital role in this sector. Now let us see whether there is

association between occupational and educational background in the growth of

small scale enterprises in Assam Hills. Unless the impact of the educational and

occupational background of the entrepreneur is studied together, reliable and

useful conclusion cannot be drawn.

185

Education and Occupation Family occupation —>

Education level"^ Below HSLC HSLC and under graduate Graduate Total

Table 5.23 -wise distr ibut ion of Entrepreneurs in Assam Hills

Agriculture/ Farming 13(11.8) 11 (10) 5 (4.5)

29 (26.4)

Business/ Manufacturing

30 (27.3) 27 (24.5)

9 (8.2) 66 (60)

Service and others

2(1.8) 6 (5.5) 7 (6.4)

15(13.6)

Total

45(41) 44(40) 21 (19)

110(100)

Source- Field Survey (Figures in the parenthesis are the percentage of row totals)

The study observed that 60% entrepreneurs' family occupation was

business and out of these 24.5% entrepreneurs are qualified upto HSLC passed

and undergraduate level of education; while 8.2% entrepreneurs are Graduate.

Thus a total of 32.7%) entrepreneurs are HSLC and above HSLC level of

education are from business family background. The entrepreneurs above HSLC

level from the families with business background have been playing foremost

role in business and industrial activities. Entrepreneurs with agricultural

background (26.4%)) are playing second important role in industrial activities in

the hill districts of Assam. Almost 60% of the total entrepreneurs are HSLC

passed and above as against 40% below HSLC level of education. Thus most of

the entrepreneurs of second generation are entering in the entrepreneurial

activities after being educationally qualified. 32.7% entrepreneurs with business

background are qualified upto HSLC and above as against 27.3%) below HSLC

level of education. The above analysis clearly indicates that there is significant

relation between family occupation and educational background in the growth of

SSI units in the study area. It has been tested by application of chi-square

technique. The calculated value of f- (9.93) is greater than the table value

(9.488) at 4df 5%) level of significance (Appendix I, HP 3.1); hence difference is

significant. Thus the result of the test shows that there is significant association

between level of education and occupational background of entrepreneurs in

Assam Hills.

186

5.4. PROFILE OF SAMPLE ENTREPRENEURS

Entrepreneurship and ownership structure is important aspect while

discussing profile of sample entrepreneur. Majority of the entrepreneurs i.e.,

91% under study had preferred proprietary organization; while the other had

chosen Partnership and Cooperative as form of organization. 52% SSI units are

more than 15 years old. 17%) units setup during the period of 1991-95, \6%

during 1995-2000 and 15%o came up after 2000. It clearly shows that the growth

trend of entrepreneurship in Assam Hills has been gradually decreasing since

starting of the process of economic reforms and liberalization in 1991. The

following table shows the profile of sample entrepreneurs in Assam Hills:

Districts

K. Anglong N.C. Hills

Total % of unit

Marital status

2 0)

Q .

' • '

44 24 68 62

c 3

3 —1

CL

16 26 42 38

cn H

7 15 22 20

Table 5.24 Profile of Entrepreneurs in

Caste

U) o

5 6 11 10

o CD

47 30 77 70

Age

> o-o < CP

O l o

2 2 4 4

0 0

a> CD

m

o c!n o

7 3 10 9

DO CD

CO

m CO

o o 12 13 25 23

DO (O O

w o

39 32 71 65

Assam Hills Domicile

1—

o y.

31 35 66 60

O c

Q.' <D Q. at'

13 12 25 23

O c

a. a> CO

I—-

16 3 19 17

Educational Qualification

03 a> o I CO r— O

28 17 45 41

I a> r-O Co 01

O

<

17 27 44 40

D CD

CO (D CO

u-O < ca

15 6 21 19

EDP

z o Q)

3 fl) a. (D

33 32 65 59

> a

(D Q .

27 18 45 41

Source: Field Survey

5.4. L Reasons for Selecting Small Scale Enterprises

The Small Scale Industry as appears from its name can be managed with

little resources and in terms of returns provides much better results (Funda,

2003). "In fact, it is often easier for men and women to go into business for

themselves than to find employers" (Siropolis 1998). While entrepreneurs were

asked "Why had they selected SSI units in the present location?" Many of them

stated one reason while some mentioned more than one reasons for selecting SSI

units. The survey result has been given in the following table.

187

Table 5.25 Reasons for selecting SSI units

Reasons Easy start Market potentiality Availability of raw-materials Govt, incentives Home place or residence in neighbourhood Other

No. of units (%) 104(95) 65 (59) 31(28) 06(5) 75 (68) 01

Source- Field Survey It is noteworthy that 95% entrepreneurs had deliberately selected small

enterprises because of the advantage of easy start, as they did not have any

experience of manufacturing or trading activities. It was noticed that birthplace

or native place was important consideration for selecting the location for SSI

unit in case of 6S% respondents. Market potentiality is the third important

location factor in case of 59% respondents; while 28% entrepreneurs have

chosen SSI units because of availability of raw materials in their locality. The

incentives schemes of government have been found effective in case 5% units.

However, many entrepreneurs stated two or more reasons at the same time and

thus multiplied the reasons of selecting the location of their units.

5.4.2. Motivational Factors

The study disclosed that majority of the respondents i.e. 70% of the total

110 respondents were self-motivated and had entered the field of

entrepreneurship as there was no availability of jobs. The shrinkage of job

opportunities in recent years even in reserve job category has been responsible

for enforcing job seekers from ST/SC categories to undertake either

manufacturing or trading activities. Now the supply of educated youths has far

outstripped the demand for jobs in the hilly region of the State. On the other

hand there have been rapid changes in the economy due to globalization and

liberalization, which have thrown, open a host of opportunities. Among the

respondents 15% replied that they were motivated because of nearness to

188

market, while 9% entrepreneurs were motivated to undertake entrepreneurial

activities because of government's supportive policies in the form of different

incentive schemes and facilities. Some (6%) respondents were found encouraged

by their friends and relatives to start small enterprises.

5.4.3. Performance of SSI units and other variables

Industrial development in any region depends upon the successful

operation of the enterprises and performance is the main yardstick of growth in

this sector. In the present study, an attempt has been made to see whether there is

any significant association between some of the individual background aspects

of entrepreneurs like tribe, caste, age, gender, marital status, education, training,

residence and parental occupation and the performance of their units with the

help of chi-square technique.

Table 5.26 Relation between Performance and other Variables

Variables Tribe/Caste Age Sex Marital status Family background Domicile Education Attend in EDP

X value 5.507 1.584 0.539 0.081 1.168 0.221 0.694 1.359

Table Value 5.991 5.991 3.841 3.841 5.991 5.991 5.991 3.841

Degrees of freedom 1

' 2 1 1 2 2 2 1

Remarks Not significant Not significant Not significant Not significant Not significant Not significant Not significant Not significant

X^=X(0-E)^/E, Significant at 5 percent level

Chi-square values of all the above variables are lesser than the table

values. Hence there is no significant association between the performance of

entrepreneurs and the above-mentioned variables. A detail analysis has been

made in the following paragraphs.

/. Performance and Tribe/Caste

It is noteworthy that tribal population of N.C. Hills and Karbi Anglong

constitute 68.2% and 55.7%; while tribal entrepreneurs form only 13.6% and

189

6.4% in the two districts respectively. The aforesaid discussion and analysis

gives an overview that the tribe and caste is an important factor in the

spontaneous growth of entrepreneurship in Assam Hills. The following table

shows the tribe/caste-wise performance of the entrepreneurs.

Table 5.27 Tribe/Caste-wise Performance of the Entrepreneurs

Tribe/Caste"^ Performance^ Scheduled Tribe Scheduled Caste Others Total

Satisfactory 7(6) 3(3)

42 (38) 52 (47)

Not satisfactory 15(14) 8(7)

35 (32) 58 (53)

Total 22 (20) 11 (10) 77(70)

110(100)

Source- Field survey (Figures in the parenthesis indicate percentage of total unit surveyed)

The data analysis shows that the entrepreneurs of other categories

consisting of general and other backward caste is the highest successful group in

the study area. 47% entrepreneurs are running their units satisfactorily; while

majority (53%) of them has been found unsatisfied with their performance. Due

to poor performance of the existing units there is slow growth of

entrepreneurship in Assam Hills. It has been tested by application of chi-square

technique. But the result of the test shows that there is no significant association

(Appendix I, HP 3.2) between the tribe/caste of entrepreneurs and performance

of the units (x^=5.507 not significant at 5%).

2. Performance and Age

The age of the entrepreneur plays an important role in the growth and

expansion of industry because the adoption of new methods and techniques of

production, progressive outlook, innovative spirit, risk taking etc., are closely

related to the age factor of the entrepreneurs (Hussain, 2003). The present survey

has covered the age of entrepreneurs at which they started their units. The

following table shows the performance of entrepreneurs according to age.

190

Table 5.28 Age-wise Performance of Entrepreneurs in Assam Hi l ls

Age~^ Performance—• <30 30 to 40 40 to 50 50> Total

Satisfactory 36 (33) 9(8) 5(5) 2(2)

52 (47)

Not satisfactory 35 (32) 16(15) 5(5) 2(2)

58 (53)

Total 71 (65) 25 (23) 10(9) 4(4)

110(100)

Source- Field survey (Figures in the parentiiesis indicate percentage of total unit surveyed

The distribution of sample entrepreneurs by their age at the time of

starting their units reveals that age group below 30 years is the mainstay for the

entrepreneurship representing 65% followed by 23% in the age group of 30-40.

The highest number (33%) of entrepreneurs, below 30 years of age group has

been found satisfied in their venture. It reveals from the above table that young

people are showing keen interest in the establishment of small industrial units.

This finding is certainly contrary to the view of Siropolis (1998), who stated that

younger people who start a business have greater chance of failure than older

people do. There is no significant association (Appendix I, HP 3.3) between age

of entrepreneurs and performance of the units (x^=1.584 not significant at 5%).

3. Performance and Gender

It is noteworthy that 93% entrepreneurs of the study area are male.

Women entrepreneurship is yet to develop in this backward and hilly region.

Entrepreneurship offers tremendous opportunities for women across the world

by opening doors to greater self-sufficiency, self-esteem, education and growth

not only for the women themselves, but also for their families and their

employees (Ghosh, 2006). There are many avenues in Assam Hills where tribal

women can take entrepreneurial part. The performance of entrepreneurs

according to sex in the study area has been given below.

191

S e x ^ Male Female Total

Table 5.29 Sex-wise Performance of Entrepreneurs in

Performance—* Satisfactory 49 (45)

3(3) 52 (47)

Not satisfactory 53 (48) 5(4)

58 (53)

Assam Hills Total

102(93) 8(7)

110(100) Source- Field survey

(Figures in the parenthesis indicate percentage of total unit surveyed

From the above table it is obvious that the male entrepreneurs with 93%

dominating the industrial activities. Among the male 45% are satisfied with their

performance. It is disappointing to note that more than half of the entrepreneurs

are not satisfied in their performance. There is no significant association

(Appendix I, HP 3.4) between gender of entrepreneurs and performance of the

units (%^=0.539 not significant at 5%). Women entrepreneurs constitute a very

small segment of the total entrepreneurial class; among them also majority are

found not satisfied with their performance.

4. Performance and Marital Status

The study observed that 62% entrepreneurs were married before starting

their units in Assam Hills. The following table shows the performance of the

entrepreneurs on the basis of marital status.

Mar i t a l Status and Marital status"^ Performance-*

Married Unmarried Total

Table 5.30 Performance of Entrepreneurs in Assam Hi l ls

Satisfactory 33 (30) 19(17) 52 (47)

Not satisfactory 35 (32) 23(21) 58 (53)

Total 68 (62) 42 (38)

110(100)


The above table shows that 30% married and 17% unmarried entrepreneurs

has been satisfied in their performance. Majority of the entrepreneurs both

married and unmarried are found not satisfied with their present performance.

There is no significant association (Appendix I, HP 3.5) between marital status

of entrepreneurs and performance of the units (x^=0.081 not significant at 5%).

192

5. Family background and performance

The encouragement that an entrepreneur gets from his family members or

his friends and relatives, earlier experience, the property he has acquired or

inherited etc. are also factors influencing entrepreneurship (Murthy et. al. 1992).

Though family and occupational background is an important determinant of the

better performance of the entrepreneurs it is not the main motivating factor in

Assam Hills. The following table shows the performance of the entrepreneurs

according to parental occupation.

Table 5.31 Family Background and Performance of the Entrepreneurs

Occupation"^ Performance-* Business/manufacturing Agriculture/Farming Service and others Total

Satisfactory 33(30)

12(10.9) 7 (6.4)

52 (47.3)

Not satisfactory 33(30)

17(15.5) 8 (7.3)

58 (52.7)

Total 66 (60)

29 (26.4) 15(13.6) 110(100)


It has been observed from the above table that 60% entrepreneurs have

been from business background in Assam Hills. The performances of all

entrepreneurs coming from different family background are almost same as

revealed in the above table. There is no significant association (Appendix I, HP

3.6.) between parental occupation of entrepreneurs and performance of units

(X^=1.168 not significant at 5%).

6. Performance and Domicile

The Assamese society is a "Status quo" society disinclined to chase

uncertainties or take risks and strains for something better. The job-culture,

complacency, ease, lethargy, shyness and hesitancy for risk taking and general

ignorance about industries and finance have been dominating factors obstructing

the emergence of a broad based entrepreneurial cadre. This explains why the

major chunk's of the States industry and business is held and owned by persons

from outside the State (Baruah, 2000). While studied about the domicile of the

193

entrepreneurs of Assam Hills, 40% entrepreneurs have been found migrants.

Migrants from neighbouring districts and outside States constituted 23% and

17%) respectively. Most of the migrants of N.C. Hills were from the districts of

Barak valley viz., Cachar, Karimganj and Hailakandi while migrants of Karbi

Anglong were from Nagaon and Golaght districts. Among the migrant from

outside State most of them were from neighbouring States of Tripura, Manipur

and Nagaland; while few numbers from the States of Rajasthan, Bihar and other

parts of the country. The following table shows the performance of the

entrepreneurs in relation to their residence.

Table 5.32 Residential Status and Performance of Entrepreneurs in Assam Hills

Domicile"^ 'Performance—• Local Outside District Outside State Total

Satisfactory 32 (29) 11 (10) 9(8)

52 (47)

Not satisfactory 34(31) 14(13) 10(9)

58(53)

Total 66 (60) 25 (23) 19(17)

110(100)

Source- Field survey (Figures in the parenthesis indicate percentage of total unit surveyed

The above table clearly indicates that 60% of the entrepreneurs are local

and among them 29%) are found satisfied with their performance. Their units are

either located at the home places or neighbouring places of home town in the

district. Migrants from outside districts and States are also found satisfied at the

same ratio. Thus, observation on the above table shows that overall performance

of the local and migrant entrepreneurs almost are same. There does not seem to

be a significant difference between (Appendix I, HP 3.7) domicile of

entrepreneurs and performance of the units (%^=0.221 not significant at 5%)).

7. Performance and level of Education

Generally success in industrial activity depends on level education of

entrepreneurs. But in Assam Hills among the existing entrepreneurs level of

education is not a factor in success of their unit. The following table shows the

education level and performance of entrepreneurs.

194

Table 5.33 Level of Education and Performance of Entrepreneurs

Performance "!• Level of education-* Satisfactory Not satisfactory Total

<HSLC 25 (22.7) 20(18.2) 45(41)

HSLC to Undergraduate 27 (24.5) 17(15.5) 44(40)

Graduate 14(12.7) 7 (6.4) 21 (19)

Total 66 (60) 44 (40)

110(100)

Source- Field Survey The study observed that out of 41% entrepreneurs' below HSLC level

22.7% was successful. The entrepreneurs between HSLC and undergraduate

level are 40%) and 24.5% amongst them were satisfied. Out of 19%) graduate

entrepreneurs 12.7%) was successful. Thus performances of entrepreneurs in

order of education level were 55.6%), 61.4%) and 66.7%) respectively. It indicates

that entrepreneurs with higher education level are found most successful.

Further, it has been tested by application of chi-square technique. The calculated

value of x at 2df=0.694 at 5% level of significance is lesser than the table value

(Appendix I, HP 3.8) and hence the difference is insignificant. Therefore,

education level has no effect on the performance of entrepreneurs and

consequent growth of this sector.

8. Performance and Entrepreneurship Training

The success of an industry is largely determined by a satisfactory

management of finance, inventory, budgeting, marketing, accounting and

manpower. Management of Tiny and Small business units is shaped by the

entrepreneurial talent (Kumar & Ganesh, 1997). According to Trivedi (1987) in

North East Region, "the limited facilities for technical education and training

and the present low level of manpower development impose great constraints on

adopting modem technology in the production process". In Assam Hills, most of

the entrepreneurs are lacking the qualities of a good manager, which is the great

hindrance in the proper coordination between the different activities and

employer-employee relationship. There are large numbers of SSI units in study

area which have been closed or become sick due to mismanagement or lack of

195

managerial skills.

The District Industries & Commerce Centres arrange Entrepreneurship

Training from time to time as a routine work for the new as well as existing

entrepreneurs, which have not as much of practical affect in operation of the

units. This has raised doubts whether the training is defective or whether the

right person is chosen for right job or whether trained persons have been able to

get adequate and timely assistance from the financial institutions (Goswami

1987). Passive responses from the officials of implementing agencies are

responsible for guiding the entrepreneurs (Mali, 1999). The performance of the

entrepreneurs according to the training under EDP has been given in the

following table.

Table 5.34 Entrepreneurial Training and Performance of Entrepreneurs in Assam Hills

Training ~^ Performance-^ EDP attended EDP not attended Total

Satisfactory 24 (22) 28 (25) 52 (47)

Not satisfactory 21 (19) 37 (34) 58 (53)

Total 45(41) 65(59)

110(100)


The Entrepreneurial Training has got less importance among the entrepreneurs

in Assam Hills. 41% entrepreneurs attended EDP while 59% have not attended

any training or they are not aware of such training. Out of 41 % entrepreneurs

who attended EDP, 22% are operating their units satisfactorily. Again among the

59% entrepreneurs not attending EDP, 25% are running their units satisfactorily.

On the other hand, 34% entrepreneurs who did not attend any EDP, their

performance was also not satisfactory. Thus it observed that EDP has mixed

affect on the performance of SSI units. Further, it has been tested by application

of chi-square technique. The calculated value of x with Idf (1.359) is lesser than

the tabulated value at 5% level (3.841) of significance; hence difference is

insignificant (Appendix I, HP 3.9). Therefore there is no impact of EDP on the

196

performance of the SSI units and consequent growth of small scale sector.

5.4.4. Previous Experience

Business experience provides confidence to the entrepreneurs which helps

to reduce the element of uncertainty regarding demand of the product,

technology, raw material, etc. (Misra, 1987). Business run by people without

prior industry experience have a greater chance of failure than business run by

people with prior industry experience (Siropolis 1998). The study reveals that,

72% of the entrepreneurs did not have prior experience before starting the units

and have established their units with the help of their own knowledge and

education.

5.4.5. Unfavourable Socio-economic Environment

Socio-economic environment is an important factor in Entrepreneurship

development of any region. If the entrepreneurs suffer from social and economic

insecurity they hesitate to investment in that area. The unemployment and

underemployment commensurate with the accelerated population growth is now

an important cause of social unrest in Assam Hills. Undue interference by the

political leader, extortion, threatening from the unsocial elements, frequent

bandh call by different organizations and outfit, law and order problem are some

inhibiting factors in the growth of entrepreneurship in Assam Hills.

The foregoing discussion and analysis of the data obtained from the field

survey make the ground for accepting the hypothesis that the lack of

entrepreneurship is one of the most important factors that hindering in the

growth of small scale industrial units in Assam Hills.

197

chapter 5 problems of industries j -...

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