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
149
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
153
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.
156
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.
160
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.
161
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.
Hypothesis 2 (Test 2)
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
Agro Forest Mineral Engineering Electronics Electrical Textile Chemical Service Misc. Total
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
Agro Forest Mineral Engineering Electronics Electrical Textile Chemical Service Misc. Total
Table 5.14 Marketing Problem of the SSIs in Assam Hills
No. of units surveyed
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.
Hypothesis 2 (Test 3)
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)
Source- Field Survey
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
Agro Forest Mineral Engineering Electronics Electrical Textile Chemical Service Misc. Total
No. of units surveyed
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)
Source- Field Survey
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
Agro Forest Mineral Engineering Electronics Electrical Textile Chemical Service Misc. Total
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)
Source- Field Survey
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)
Source- Field survey (Figures in the parenthesis indicate percentage of total unit surveyed)
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)
Source- Field survey (Figures in the parenthesis indicate percentage of total unit surveyed)
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)
Source- Field survey (Figures in the parenthesis indicate percentage of total unit surveyed)
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