Contribution of Industries to National Economy in India

The distribution of industries, their concentration in certain industrial regions as well as their pattern actually present a certain theoretical framework in which to examine the importance of industries and their contribution to national economy. Obviously this contribution is more significant if examined relative to two other sectors of the economy namely the primary sector and tertiary sector. The chief areas of this contribution are the following:

(a) Contribution to National Income : It is one of the two significant measures of industry’s contribution to national economy. The other being employment discussed below. Contribution to National Income is considered a value measure. It measures the value of finished product and is made up of different components like value of labour, interest on capital invested and taxes paid etc. The share of industrial sector has been consistently rising since industrialisation began in 1950s. It has reached to the level of about 18 per cent against 26 per cent of agricultural sector in 2001.

(b) Employment: According to the results of Economic Survey conducted in 1998 there were about 32 million enterprises in the country Out of these 27 million enterprises were in non-agricultural sector. Total number of hired workers in non-agricultural sector stood at about 40 million. While agriculture continues to provide employment to about 62 per cent of the work force, its share has been declining and that of industry rising.

(c) Growth: Industry is chiefly responsible for economic growth. Though the growth tale of industrial sector itself has slowed down to 5.6 per cent against the target of 8.2 per cent during Ninth Plan (1997 — 2001), industry significantly contributes to over all growth of the economy because of interdependence and linkages with agricultural sector.

(d) Trade : Trade is entirely dependent on’two important factors—(i) development of transportation and communication (ii) technology for making use of unevenly distributed resources of the earth. Both these factors depend on industry. India’s trade today is highly diversified and Indian industrialists including skills are finding greater and greater acceptance in international market. Daring 2001, exports have grown by about 20 per cent. A good part of these exports come from industrial sector and non-traditional products.

(e) Urbanisation : Industrialisation along with development of trade are chiefly responsible for emergence of large towns and cities. Industry not only provides economic base to urbanisation but also helps provide public utility services like for example drinking water, waste disposal system aid many other comforts for living.

A number of other value measures like for example development of transport, communication, education, entrepreneurship, better standard of living, higher health standards and other contributions can also be attributed to industrial development.