The rate of balanced economic growth can be accelerated with the development of both large scale and small scale industries. In our socio-economic structure cottage and small scale industries hold a very significant place.
Cottage industries are a rural venture formed and developed in the rural region. The case for small scale industries in the Indian economy can be justified on the following grounds-
More employment opportunities- Small scale industries are labour intensive. They require more workers and lesser machines and equipment. In this way, they will absorb more workers and will be suitable for the Indian economy, where unemployment is widespread.
Small capital and simple machines- Cottage and small scale industries can be started with small capital and simple machines, tools and equipment. In this way, these industries can be owned and managed by middle-income people also.
Lower degree of skill- These industries have simple technology. They do not require a higher degree of technical skill. These industries can be operated by persons of ordinary skill also.
Quick yielding- The formation of industries is simple and does not take long periods for establishment. The owner has not to wait for a longer period for income. The industries start paying rich returns quickly.
More equality in income distribution- In the case of large scale industries, the income concentrates in the hands of an industrialist. In the case of small scale industries, there remains a lesser amount with the owner after paying rent to land, wages to workers and interest on capital. Income is more equitably distributed.
Balanced regional development- Cottage and small scale industries can be started in every region. Even remotest villages can have these industries. The establishment of these industries in every regional rural sector will result in balanced regional development.
Mobilization of Savings- These industries can be started with small capital even on a cooperative basis. It can be a proprietorship or partnership. Persons desirous of establishing these industries accumulative savings and also mobilize saving from other members. These industries provide an incentive to the weaker section of society to form these industries with their small savings.