ASIAN JOURNAL OF RESEARCH IN BUSINESS ... KHOSLA*; DR. MANOJ SHARMA** *Associate Professor and Head, Chandigarh Business School, Gharuan. **Professor of Economics, University Business

Volume 2, Issue 3 (March, 2012) ISSN: 2249‐7307

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Journal of Asian Research Consortium 176

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A P e e r R e v i e w e d I n t e r n a t i o n a l J o u r n a l o f A s i a n R e s e a r c h C o n s o r t i u m

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A S I A N J O U R N A L O F R E S E A R C H I N B U S I N E S S

E C O N O M I C S A N D M A N A G E M E N T

AGRO PROCESSING INDUSTRIES IN INDIA – AN INTER STATE

GROWTH ANALYSIS

DR. RAJIV KHOSLA*; DR. MANOJ SHARMA**

*Associate Professor and Head, Chandigarh Business School,

Gharuan. **Professor of Economics, University Business School,

Panjab University, Chandigarh.

ABSTRACT

Development of an economy is followed by some major structural changes leading to a decrease in the importance of primary sector thereby increasing the importance of non-agricultural sectors. Yesteryears have evidenced the development of agro based industries in this process of progression in the developed nations. Cheap availability of labour, increasing government consideration and abundant availability of raw material throughout the year, imparts competitive advantage to the Indian agro industry In the present study, it is revealed that huge variation exists among the Indian states in the growth of agro based industries as seen from various indicators. It calls for the remedial measures in the low growth states to promote the agro based industries. Similarly, effective steps should be undertaken in the high growth states so that the sustainability of the agro based industries is ensured. The present study aims to find out the growth of agro processing industries from the viewpoint of populace, workers and the investors.

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INTRODUCTION

SECTION I

Economic growth is generally accompanied by a transformation of the economy from the state of dominance of agriculture to that of industrial and services sectors (Clark, 1957). A look at the history of developed economies reveals one thing in common. Their agriculture sector was developed first rather than industrial or tertiary sectors. In the initial stages of economic development, agriculture and/or primary sector has a greater importance and more than 60 percent of GDP originates from this sector, and to a large extent the population is engaged in this sector for earning their livelihood. However, as the economy develops some major structural changes take place in the economy and the importance of primary sector declines while the importance of manufacturing sector and of tertiary sector increase. This structural shift away from agriculture has taken place in industrially advanced countries and the developing countries are trying to tread this path. Further, a study of the history of advanced nations reveals that agro-based industries were first to develop.

Sutcliffe (1971) argues that for the vast majority, if not for all countries, high levels of income cannot be reached without industrialization. According to Sutcliffe, country may be regarded as industrialized if at least 25 percent of its GDP originates from the industrial sector of which at least 60 percent is from manufacturing, and which has at least 10 percent of its population employed in manufacturing. Industrialization commences with utilizing the agricultural output as input. Agriculture plays many roles in the processes of economic growth and development, but most of them can be summarized under four headings as providing more food and raw materials; serving as the market for the products of the industrial sector; supplying savings to other sectors of the economy and providing productive employment Zuvekas (1979).

Ahluwalia and Rangarajan (1987) are of the opinion that of the various form of linkages between the agricultural and industrial sectors, principal linkages between the two sectors can be traced through the role of agriculture as (i) a supplier of wage goods (food) to the industrial sector, (ii) a provider of raw material for the agro-based industries, and (iii) a generator of agricultural incomes which create final demand for outputs of the industrial sector. The first two constitute supply side linkages while the third one is the demand side linkage between agriculture and industry. As an economy progresses, the inter-sectoral linkages between agricultural and non agricultural sectors get strengthened.

Agro-based industry plays a vital role in the national economic development and has potential to meet the local needs and export requirements. In the Indian context, Planning Commission has defined agro-industries as the industries that are concerned with the processing of agricultural products, including animal husbandry, horticulture and poultry, and also those concerned with the manufacture of inputs required for agricultural production like agricultural implements (Government of India, 1993).

Agro–based industry is regarded as a sunrise sector of the Indian economy in view of its large potential for growth and likely socio-economic impact specifically on employment and income


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generation. Properly developed agro-processing sector can make India a major player at the global level of processed food, feed, wide range of other plant and animal products and a major source of employment. Different authors have given different rationale for the development of agro industries in the country. Some of these viewpoints are discussed in the next section.

SECTION II

REVIEW OF LITERATURE

Naik (1993) argued that the diverse agro-climatic conditions prevalent in the country are suitable for growing all types of fruits and vegetables. The study experienced that world trade in processed fruits and vegetables were continuously increasing. International trade was around US $5 billion consisting largely of juices, concentrates, pastes, etc. The main exports were to the Middle East countries where the market is always uncertain.

Vellaichamy (1993) found that level of utilization of fruits and vegetables for processing purpose was around 2 percent of the total production of 40 lakh tonnes. One-fifth of the production was lost during the post harvest handling. The study acknowledged the prospects of food-processing industries in North East or East Indian states comprising Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura as bright if proper attention was paid. The study suggested that modernization and trained manpower for post harvest handling and processing can reduce the losses.

Mahadevan (2003) observed that the effects of globalization process since early 1990s on the productive efficiency enhanced value added activities in agriculture through agro-processing and exports of agricultural and agro-based products. These activities in turn increased income and employment in the industrial processing sector. Thus, globalizing agriculture had the potential to transform subsistence agriculture to commercialized agriculture and to improve the living conditions of the rural community.

Kachru (2006) in his study stated that the estimated post production losses in food commodities are to the extent of Rs. 75000 - Rs. 100000 Crore per annum. But, round the year availability of raw materials, social acceptability of agro-processing as an important area, support from the central government and vast domestic market are the major strengths for the Indian agro-processing industries.

Ministry of Food-Processing Industries (2006) observed that food-processing has become an important sub-sector of agro-based industries. Food habits, ready-to-cook and ready-to-eat life-style have given a new dimension to the food-processing industry. Domestic consumption of processed food is low but is fast picking up with rising income levels and changing consumer behavior due to economic growth and changing life styles. Moreover, Indian processed food industry has competitive advantages over other countries due to cheap workforce, government initiatives (tax holidays) and abundant availability of raw materials.

Johl (2011) argued that setting up more and more agro based industries in India will help get rid of the surplus labour contained in the agricultural sector. Indian agriculture is plagued by the


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disguised unemployment. Due to this, there has been a decrease in the size of operation holdings from 2.30 hectare in 1970-71 to 1.81 hectare in 1980-81 and further to 1.33 hectare in 2000- 01. This calls for a diversification of cropping pattern and to diversify the rural economy small and ancillary agro based industries in the rural areas need to be established.

Indepth examination of the studies reviewed brings out the fact that most of the studies are not empirical in nature and based on observations of individual researcher. Thus, a clear void exists in the literature and a need for a comprehensive study has been felt. The present study has been carried out to fill this void in an absolute manner. More specifically, the present study intends to find out the growth of agro processing industries from the point of view of society, workers and the investors i.e. in terms of output per factory, wages per factory and capital invested per factory in the recent past in India. The objectives of present study are to

a) To find out those agro based industries which have performed well in all the parameters discussed above.

b) To find the laggard agro industries in the country in terms of the selected parameters.

c) To find out if the list of laggard agro industries has some potential to be developed in the selected states or not.

SECTION III

DATABASE AND METHODOLOGY

In order to fulfill the above mentioned objectives, secondary data from various issues of Annual Survey of Industries (ASI) published by the Central Statistical Organization has been used. The study identified a group of 18 agro processing industries for the years 2003-04 and 2007-08 for which an analysis has been made (based on NIC – 98).

For studying the growth of agro-based industries, compound growth rate of each of the selected indicators have been calculated for the period from 2003-04 to 2007-08. The trend in growth has been studied by computing the compound growth rate through principle of least squares, using following formula

tbLogaLogYLog )(+=

The data given in ASI reports is on current prices but for proper comparison, the values are deflated with suitable deflator and expressed in 1993-94 prices. The formula used for calculating index to deflate the different series in wholesale price index

100Pr

Pr×

yearbasetheforIndexiceWholesaleyearcurrenttheforIndexiceWholesale

The study has been divided into five sections. Section I is introductory in nature. In section II existing literature pertaining to the agro based industries is reviewed. Database and methodology


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for the present study is discussed in section III. Growth of agro based industries in terms of output per factory, wages per factory and invested capital per factory for the years 2003-04 and 2007-08 is discussed in section IV. Concluding remarks follow section V.

SECTION IV

GROWTH OF AGRO BASED INDUSTRIES IN INDIA

In this section, we have carried out the growth rates of output per factory, wages per factory and capital invested per factory for those states for which the data was available. Compound growth rates of output per factory for different industries for the year 2003-04 and 2007-08 are given in table 1. Table shows that five industries namely printing and service activities related to printing (222), manufacture of knitted and crocheted fabrics and articles (173), manufacture of products of wood, cork, straw and plaiting materials (202), saw milling and planing of wood (201) and manufacture of beverages (155) experienced a maximum growth in the time period taken for study. Specifically, the growth rates for these industries stand at 13.73 percent, 12.33 percent, 9.67 percent, 9.37 percent and 7.90 percent respectively. Further, a look at the agro based industries across the Indian states indicate that as many as fifteen industries (out of eighteen selected for study) showed a positive growth rate in terms of output. An indepth analysis of the fastest growing agro based industries is carried out in the following paragraphs.

In case of printing and service activities related to printing (222) industry, highest growth rate in terms of output for the years 2003-04 to 2007-08 is recorded in Bihar (96.24 percent), Rajasthan (54.56 percent), Madhya Pardesh (21.43 percent), Haryana (20.65 percent) and Himachal Pardesh (19.24 percent) states vis-à-vis other states selected for study. As many as thirteen states have shown a positive growth rate in this industry. The overall growth rate in terms of output for printing and service activities related to printing industry for the all the states put together worked out to be 13.73 percent. So far, the negative growth rate is concerned in this industry, there are five states exhibiting negative growth rate in the time period taken for study. To be specific, Orissa (-15.65 percent), Chhattisgarh (-10.65 percent), Assam (-4.94 percent), Kerala (-1.47 percent) and Andhra Pardesh (-0.72 percent) experienced a negative growth rate in this industry.

Similarly, for the manufacture of knitted and crocheted fabrics and articles (173) industry, Rajasthan (35.97 percent), West Bengal (21.85 percent), Andhra Pardesh (30.73 percent), Karnataka (29.10 percent) and Maharashtra (16.14 percent) states showed a high growth. Overall growth rate for all the states put together turned out to be 11.71 percent for the years 2003-04 to 2007-08 in this industry. The states that showed a dismal performance in terms of growth in the time period studied comprise of Uttar Pardesh (-10.93 percent), Kerala (-9.93 percent), Haryana (-2.71 percent) and Madhya Pardesh (-1.33 percent).

Manufacture of products of wood, cork, straw and plaiting materials (202) industry showed an outstanding performance in terms of output growth in the time period 2003-04 to 2007-08. Average output growth for all the states put together augmented to 9.67 percent. Only


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TABLE 1

151 152 153 154 155 160 171 172 173 181 182 191 192 201 202 210 221 222

Andhra Pradesh

-7.56

-1.83

21.25

6.11

0.00

-0.88

-1.24

14.75

23.75

-0.50

27.13 6.26 5.11

-2.20

-0.72

Assam

-12.81

-8.81

-12.88

3.01

6.12

-19.32 6.23 5.17

27.53

-9.71

23.34

-4.94

Bihar

-32.89 1.02 5.20

4.20

5.11

25.62

37.28

-8.19

20.88

-12.47 5.03

-7.36 6.34

96.24

Chattisgarh 8.40 6.03

-6.61

10.66 3.62 6.06

-14.64

-9.84 1.40 4.76 0.43 9.02

-10.01

Delhi -1.83

12.73

4.27

9.72

20.58

-34.76

-0.57

-3.47 1.88 8.61 0.53 0.02

-11.78 5.03

Gujarat 7.03 4.30 7.73 6.38

12.79

-4.51 9.40 4.41

-2.70

-3.55

-10.36 6.44

16.48

16.27 1.25 2.60 9.40

Haryana 21.8 11.4 16.4 0.7 16. 17.0 -

5.29 6.81 7.07 -1.8 13.4

1.70 - - - -

1.79


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9 7 3 1 91 1 3.32 6 5 2.70 2.31 3.90 8.08

Himachal Pradesh 7.22 9.60

-4.74

-0.75

-12.58

-1.12

-12.51

-14.79 0.18

160.48

-11.48 5.36 1.70

19.24

Jammu & Kashmir 9.76

-2.62

-0.18

5.52

11.52

19.55

-26.30 8.71

26.44

69.50

Jharkhand

-17.23 4.04

39.87

9.22

7.70

-3.53 0.15

10.71 6.00 4.42

-3.07

-6.51

18.19

Karnataka 3.55 3.56 3.06 2.83

6.10 1.00 7.45

-12.85

20.96

14.77

-16.67

-0.82 3.35

15.39 3.28

15.67 6.20

Kerala -3.72

-14.01 0.96

-0.97

-3.45

-10.28

-11.70 4.22

-15.89

26.30

33.44

-14.02 8.75

15.35

-10.68 7.16

-1.47

Madhya Pradesh 8.24

14.97 8.37

-0.64

9.58

-5.31 2.23

21.35 6.84

17.11

-11.65 3.60

-8.17

-1.81 2.93

-11.20

21.43

Maharashtra 5.96 1.47 4.20 9.68

-3.56 3.04 4.56

12.58

20.56

12.22

-5.91

11.72

54.85 8.87 5.30

10.62

20.65

Orissa 19.11 9.86 -

19.2

15.15

3.80 1.85 8.05 2.62 5.37 7.53 3.97

-1.43 -

15.6


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6 5

Punjab -3.56

-17.60 5.22

8.79

22.58 7.94 9.50

13.01 8.57

10.77 5.29

-3.90 6.04 0.50

54.09

12.20

Rajasthan -0.38 8.20

-3.60

2.95

3.67

-5.22 7.88

13.75

41.36 4.52 4.91

46.33

-8.08 4.81

-16.85

54.56

Tamil Nadu 30.79 7.73

-5.80

3.82

3.33

-3.56 4.72 1.82

15.09

-2.29 7.30 8.13

45.64

-18.08 7.67 1.47 3.80

Uttar Pradesh 9.29 2.90 7.22

10.28

6.60 2.71

-8.10

-0.99 3.52 3.37

-6.66

-2.31 9.80

-1.56 5.59 4.66 1.70

Uttaranchal

-19.50

-44.96

11.26

15.32

-5.52

39.45

44.53 8.65 5.84

51.01 4.76

-5.56

West Bengal 18.62

-3.42 2.46

6.75

0.97

-6.31 4.45

-10.68

24.59 5.45

-1.99 6.93 8.88

21.02 7.04 1.24 8.63

Overall Growth 4.83 2.48 7.83

5.82

7.90

-2.62 5.48 7.37

12.33 1.28

-4.87

-6.04 7.73 9.37 9.67 0.15 3.82

13.73


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GROWTH OF AGRO PROCESSING INDUSTRIES IN TERMS OF OUTPUT PER FACTORY IN INDIAN STATES

Source: Supplement to Annual Survey of Industries, 2003-04 and 2007-08

Six states i.e. Uttaranchal (51.01 percent), Assam (27.53 percent), West Bengal (21.02 percent), Gujarat (16.27 percent), Karnataka (15.39 percent) and Kerala (15.35 percent) had a growth rate over and above the overall growth rate. Fifteen states showed a growth rate less than the overall growth rate in this industry. Further, four states viz. Tamil Nadu (-18.08 percent), Rajasthan (-8.08 percent), Haryana (-2.31 percent) and Madhya Pardesh (-1.81 percent) demonstrated a negative growth rate in this industry.

Highest growth rate in saw milling and planing of wood industry (201) is bagged by Maharashtra (54.85 percent) followed by Rajasthan (46.33 percent), Tamil Nadu (45.64 percent) and Gujarat (19.24 percent) for the years 2003-04 to 2007-08. Interestingly, only four states experienced a growth rate more than the overall growth rate in this industry. Overall growth rate in terms of output for the industry is 9.37 percent. It clearly brings forth the inequality in the growth rate among the Indian states in this agro industry. Seven states i.e. Jammu and Kashmir (-26.30 percent), Bihar (-12.47 percent), Himachal Pardesh (-11.48 percent), Madhya Pardesh (-8.17 percent), Punjab (-3.90 percent), Haryana (-2.70 percent) and Uttar Pardesh (-1.56 percent) had a negative growth rate.

Punjab (22.58 percent) followed by Haryana (16.91 percent), Gujarat (12.79 percent), Jammu and Kashmir (11.52 percent) and Chhattisgarh (10.06 percent) showed a high growth in manufacture of beverages (155) industry. This industry has performed well in all the states (except, Uttaranchal, Kerala and Himachal Pardesh) in India. Overall growth rate in this industry also stood high at 7.90 percent. Thus, beverages industry has shown a good temperament for development in all the Indian states.

Three industries i.e. tanning and dressing of leather, manufacture of luggage handbags, saddlery & harness (191), Dressing and dyeing of fur (182) and Manufacture of tobacco products (160) have shown a negative growth during the years 2003-04 and 2007-08 in terms of output (table 1). But the development of such industries having a negative growth rate cannot be retarded only on the grounds that they have a negative growth in terms of output. Logic that is of paramount importance here is to analyze these industries from other perspectives that is their growth in different states, growth in terms of other variables like wages to the employees and the capital invested etc. As far as the growth of tanning and dressing of leather, manufacture of luggage handbags, saddlery & harness (191) industry in different states is concerned, it is noticeable that in eight states, the industry has registered a positive growth rate.


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TABLE 2

GROWTH OF AGRO PROCESSING INDUSTRIES IN TERMS OF WAGES PER FACTORY IN INDIAN STATES

151 152 153 154 155 160 171 172 173 181 182 191 192 201 202 210 221 222

Andhra Pradesh

1.57

-3.43

14.41

1.97

1.07

-2.88

-0.88

36.63

30.73

12.21

7.24

63.68

4.39 1.39

-6.04

-4.09

Assam

-6.75

-7.74

-0.40

0.55

-2.23

-7.79

-4.56

10.87

16.44

-12.54

44.71

-21.80

Bihar

-8.07 5.45

2.44

5.19

-5.23 8.32

18.58

-4.61 9.05

-9.58

8.84 4.32

-2.15

55.41

Chattisgarh 10.82

3.52

22.05

-6.23 9.23

-2.68 0.46

-9.90

13.96

0.59

-1.56

-4.54

-3.15

Delhi

-3.37

21.00

5.83

2.54

23.03

-7.67 0.99

14.77

4.88

14.14 3.46 7.31

-17.11 4.33

Gujarat

-0.93 0.17

3.33

3.72

19.75

-6.41 7.40 3.12 3.71

-6.00 0.81

12.34

15.53

5.56

-2.48 9.77 7.48

Haryana 50.55

10.69

5.84

1.27

12.01

10.51 6.52

13.83

-2.71

10.09

0.81

16.55 8.07 1.58

3.22 5.51

-7.26

-6.08


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Himachal Pradesh

10.55

20.20

29.13

4.99

-9.06

-2.80

-19.08

19.09

-3.80

57.25

-4.00

8.77

-7.18

22.18

Jammu & Kashmir

6.76 5.44

-3.06

5.86

10.58 9.83

-6.23

-4.35

13.09

67.05

Jharkhand

-5.39 3.07

17.88

18.50

13.17

-9.89

-0.46 4.46 2.14

2.62

-15.75 2.71

11.48

Karnataka 15.13

-3.53

8.16

-0.88

8.15

-2.10 2.43

-3.47

29.10

11.98

-15.71

-1.45 5.98

19.03 1.15 4.11

10.14

Kerala 6.44

-12.25

-2.88

1.75

-6.61 0.56

-5.46 9.88

-9.93

25.14

37.54

-10.13 5.58

-0.88

-15.88 2.36 4.19

Madhya Pradesh

15.08 6.27

8.42

-3.85

5.31

-2.87

-1.62

10.12

-1.33

15.43

-12.35 3.71

-6.91

-1.53

-2.75 9.23

16.32

Maharashtra 7.16 0.76

0.81

1.25

0.27

-1.44

-11.37

14.21

16.14

11.62 0.20

14.01

-5.38

9.53 4.76

11.22 9.62

Orissa 26.83 8.56

-5.09

16.83

2.54

12.25

-1.40

-2.71 1.54

4.90 2.50 2.16

-11.38


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Punjab

-4.13

-11.46

-0.54

3.64

0.18 1.93

17.88

10.23

9.80

14.46 2.93

-2.48

1.86

-2.20 1.85

-5.08

Rajasthan 10.00 1.75

4.77

5.81

8.25

-16.05 5.27

14.74

35.97

12.97 7.29 9.94

5.93 7.37

-13.75

44.05


3.20

1.83

0.79 0.93 3.99

-2.75

22.27

4.94 9.88 4.36

-4.41

-4.67 1.87 3.12 1.77

Uttar Pradesh 3.00

-1.98

5.11

9.60

-5.49

-2.00

-6.40 1.01

-10.93

11.91

15.07 0.64 7.99

-10.56

4.19

-6.07 4.49

23.52

Uttaranchal 7.54

-45.95

1.03

6.07

-2.22

36.66

41.99

11.15 7.85

49.17

-6.07

-2.31

West Bengal 6.47

-2.83

-2.36

-1.15

1.99

-0.55 1.31

-2.45

21.85

2.80 0.68

-14.14 1.79

11.56 2.33 5.00

-1.62

Overall Growth

6.95

-0.55

6.00

4.74

2.20

-1.36 2.25 6.43

11.71

11.12

4.91

-4.10

-2.25 2.00

7.18

-3.32 1.70 7.20

Note: Wages include the salaries paid to employees and the employer’s contribution



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Further, Kerala, Andhra Pardesh and Assam recorded a growth rate of more than 20 percent. Similarly, for the manufacture of tobacco products industry as many as eight states showed a positive growth in the years 2003-04 and 2007-08. Maximum growth rate is achieved by Bihar (25.62 percent) followed by Delhi (20.58 percent) and Haryana (17.01 percent). Thus, the industry has shown the symptoms of development in the selected states. As far as, the performance of dressing and dyeing of fur (182) industry is concerned, none of the states could exhibit the growth phenomenon. Analysis from the point of view of other variables like wages to the employees and the capital invested is carried out in tables 2 and 3 respectively.

To conclude, we can say that by and large, all the agro-processing industries have shown a good potential for development in India. But large disparities exist among Indian states in the agro processing industries during the study period. Hence, efforts should be made to promote states with higher labour productivity in agro-based industries. This is the need of the hour also.

Table 2 shows the growth of agro processing industries in terms of wages per factory in the selected Indian states. Table shows that five industries namely manufacture of knitted and crocheted fabrics and articles (173), manufacture of wearing apparel ((181), printing and service activities related to printing (222), manufacture of products of wood, cork, straw and plaiting materials (202) and Production, processing and preservation of meat, fish, fruit, vegetables, oils and fats (151) experienced a maximum growth in the time period taken for study. A comparison of these five most labour adoring agro processing industries with five leading output growing agro industries reveal three industries in common i.e. manufacture of knitted and crocheted fabrics and articles (173), manufacture of wearing apparel ((181) and printing and service activities related to printing (222). Not only this, two industries manufacture of knitted and crocheted fabrics and articles and manufacture of wearing apparel figure in the list of top three industries identified in tables 1 and 2 respectively. Further, thirteen industries have shown a positive growth rate in the time period selected for study in terms of wages per factory. Detailed analysis of the most wages oriented agro processing industries is carried out in the following paragraphs.

For the manufacture of knitted and crocheted fabrics and articles (173) industry, five states that showed a high growth rate in terms of wages per factory included Rajasthan (35.97 percent), Andhra Pardesh (30.73 percent), Karnataka (29.10 percent), Tamil Nadu (22.27 percent) and West Bengal (21.85 percent). Further, a comparison with table 1 reveals that four out of five top states (Rajasthan, West Bengal, Andhra Pardesh and Karnataka) have excelled both in terms of output growth and emoluments sharing to the workers over a period of time. Overall growth rate for all the states put together turned out to be 11.71 percent for the years 2003-04 to 2007-08 in this industry. The states that showed a dismal performance in terms of growth in the said time period comprise of Uttar Pardesh (-10.93 percent), Kerala (-9.93 percent), Haryana (-2.71 percent) and Madhya Pardesh (-1.33 percent). Majority of the states in this industry paid off well to the employees.

Highest growth rate in terms of wages per factory in manufacturing of wearing apparel industry (181) is bagged by Kerala state (25.14 percent) followed by Himachal Pardesh (19.09 percent), Madhya Pardesh (15.43 percent), Rajasthan (12.97 percent), and Andhra Pardesh (12.21 percent)


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for the years 2003-04 to 2007-08. Interestingly, majority of the states experienced a double digit growth in terms of wages per factory in this industry. Overall growth rate in the industry remained 11.12 percent. It clearly brings to light the fact that there has been a swelling in the remuneration of the employees involved in this industry in all the states (except Gujarat).

In case of printing and service activities related to printing (222) industry, highest growth rate in terms of emoluments per factory for the years 2003-04 to 2007-08 is recorded in Bihar (55.41 percent), Rajasthan (44.05 percent), Uttar Pardesh (23.52 percent), Madhya Pardesh (16.32 percent) and Himachal Pardesh (22.18 percent) states. A comparison of these five top wages and salaries yielding states in this industry with the already identified top output growing states (table 1) shows that four states i.e. Bihar, Rajasthan Madhya Pardesh and Himachal Pardesh are common to both the lists. As many as twelve states have shown a positive growth rate in this industry in terms of emoluments growth. Overall growth rate in terms of output for printing and service activities related to printing industry for all the states put together worked out to be 7.20 percent. So far, the negative growth rate is concerned in this industry, there are seven states exhibiting negative growth rate in the time period taken for study. To be specific, Assam (-21.80 percent), Orissa (-11.38 percent), Haryana (-6.08 percent), Punjab (-5.08 percent), Andhra Pardesh (-4.09 percent), Chhattisgarh (-3.15 percent) and West Bengal (-1.62 percent) experienced a negative growth rate in this industry. A comparison of these dismally performing states with similarly performing states identified in table 1 shows four states i.e. Assam, Orissa,


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TABLE 3

GROWTH OF AGRO PROCESSING INDUSTRIES IN TERMS OF INVESTED CAPITAL PER FACTORY IN INDIAN STATES

151 152 153 154 155 160 171 172 173 181 182 191 192 201 202 210 221 222

Andhra Pradesh

-2.95

-9.99

16.36

1.50

-6.10 1.71 5.05 1.70

26.81

11.04

-1.52

37.72 5.89 8.65

10.04

-5.61

Assam 12.30 3.88

-8.50

0.62

-14.95

-2.80 0.36

16.59

21.83

-10.92

27.07 5.67

Bihar

-16.97 0.89 8.25

7.72

-5.09

24.19 4.55 0.15 1.19

-12.08

-12.34

-1.03 2.39

113.60

Chhattisgarh 22.27

-11.66

47.72

-7.79

22.41

-11.14 1.53 2.42 4.31

-8.56 4.18

24.70

-2.82

Delhi -5.20

19.61

3.32 2.67

28.39

-13.22 3.33 4.57

-0.86

-1.19 2.07 5.06

-12.42 4.12

Gujarat 6.02 6.64 6.60

-5.78

11.27

-3.59 7.62 5.00 0.93

-2.37 0.15

-0.31

11.10

10.09 1.38

-4.06

23.33


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Haryana 18.35

22.27

19.57

-5.87

24.54

14.25

-3.62

10.08 4.34 7.43

1.91 9.20 6.53

-6.21

-3.43

-5.78

-7.44

-2.80

Himachal Pradesh

18.26

27.86

4.06

-8.42 4.10

-0.49

-5.24

-22.18 1.37

109.28

26.68

71.30 8.11

32.55

Jammu & Kashmir

17.30

-9.43 9.18

13.70 0.92

29.45

-9.08

14.75

32.16

118.63

Jharkhand 1.38 -4.51

36.98

3.17 5.75

-15.80 2.09 9.12

-13.83 5.59

-4.22

-0.42

21.13

Karnataka 16.29

-6.11 2.98

1.38 2.64 4.91 5.93

-12.66

11.68

13.12

-16.48

-7.28

-9.08

13.93 3.73

-1.57

14.33

Kerala 3.19 1.88 4.38 0.83

-6.53

-16.46

-9.26

12.37

-32.80

33.32

40.93

-21.20 7.60

-6.75

-17.97 5.37 0.10

Madhya Pradesh

13.50

16.89

10.32

-8.18 3.09 1.45 1.50 8.48 3.86

58.38

-10.68 6.92

-15.98 3.13

-0.18

-8.59

15.79

Maharashtra 8.50 5.64 4.87

-3.95

-3.50 6.81 2.45 6.28

17.81 8.73

-3.84 7.80

70.72 1.84 0.95

21.93

18.07

Orissa 18.8 - - 6.2

4.13 7.65 3.61 1.43 13.3

4.06 -

3.61 12.4


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6 2.31 6.18 5 8 1.31 1

Punjab 0.56

-12.65

11.73

3.72 5.32 9.20

11.23

13.75 5.23

13.63

-0.68

-21.57

-2.15 7.59

21.08

12.52

Rajasthan 0.88 6.83 -1.01

4.02 3.82

-25.69 8.74

16.89

13.74 9.36 9.16

-4.66

-0.84 7.17

-13.56

29.93


-3.52

-0.87

-11.23

-5.34 9.49

10.94

21.68 1.74 8.63 1.32 0.29

-14.19 4.10 0.49 7.35

Uttar Pradesh 9.79 1.39

10.93

17.20 0.06

-0.11

-4.83

-4.43 4.72

-5.61

6.85

-0.90 6.18

-3.47

11.23 6.55 9.22

34.22

Uttaranchal 8.77

-27.99 9.98

6.27

-2.96

55.77

97.45

16.96

-3.69

66.43

-2.75

-4.34

West Bengal 20.25

-1.52 7.22

3.84

-5.26

-0.27 1.65 7.30

21.36

-1.02 2.64

11.29

21.35

14.84 8.63 3.69 7.92

Overall Growth

10.31 3.85

10.55

3.09 0.17 4.36 6.23

10.26

11.74

11.58

4.54

-3.63 7.08 4.89

13.28

-0.91 4.59

13.19



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Andhra Pardesh and Chhattisgarh in common. Thus, it may be interpreted that the states which produce more output also disburse more emoluments among its employees.

Uttaranchal (49.17 percent) has shown a magnificent growth in terms of workers per factory in manufacture of products of wood, cork, straw and plaiting materials (202) industry. Average output growth for all the states put together augmented to 7.18 percent. Most of the states (except Jammu and Kashmir, Tamil Nadu, Kerala and Madhya Pardesh) have shown a positive growth in terms of emoluments payments to the employees in this industry. As many as seven states could register a growth rate over and above the overall growth rate. These states are Uttaranchal (49.17 percent), Karnataka (19.03 percent), Assam (16.44 percent), West Bengal (11.56 percent), Maharashtra (9.53 percent), Bihar (8.84 percent) and Himachal Pardesh (8.77 percent) had a growth rate over and above the overall growth rate. Further, four (Uttaranchal, Assam, Karnataka and Bihar) out of top five states identified in table 1 and table 2 in this industry are same.

Haryana (50.55 percent) followed by Orissa (26.83 percent), Madhya Pardesh (15.08 percent), Tamil Nadu (12.75 percent) and Chhattisgarh (10.82 percent) showed a high growth in production, processing and preservation of meat, fish, fruit, vegetables, oils and fats (151) industry. Also, this industry has performed well in all the states (except, Bihar, Assam, Jharkhand, Punjab, Delhi and Gujarat) in India. Overall growth rate in this industry stood high at 6.95 percent. On the whole, production, processing and preservation of meat, fish, fruit, vegetables, oils and fats industry has shown a good potential in expending amount for the workers cause in all Indian states.

Five industries namely tanning and dressing of leather, manufacture of luggage handbags, saddlery & harness (191), Manufacture of paper and paper products (210), Manufacture of footwear (192), manufacture of tobacco products (160) and Manufacture of dairy product (152) have shown a negative growth during the years 2003-04 and 2007-08 (table 2). On thing must be noted here that tanning and dressing of leather, manufacture of luggage handbags, saddlery & harness (191), Manufacture of paper and paper product (210) and manufacture of tobacco products (160) figured in the list of laggard industries commonly in tables 1 and 2 respectively. Though, these industries experience a negative growth rate, yet their presence is valuable in some states owing to their high growth in terms of selected parameters. It leads us to the conclusion to develop laggard industries, so identified, only in those states where their growth is competitive.

Even if an agro processing industry is observing high growth in terms of output produced and wages paid, but its growth remains impeded, if it is capital starved. Our task now is to identify a set of agro processing which are leading in terms of invested capital in the selected states of the union. In table 3, an analysis of growth of agro processing industries in terms of invested capital per factory is carried out. It is evident from the table that five industries namely manufacture of products of wood, cork, straw and plaiting materials (202), printing and service activities related to printing (222), manufacture of knitted and crocheted fabrics and articles (173), manufacture of wearing apparel (181) and Manufacture of grain mill products, starches and starch products, and prepared animal feeds (153) experienced a maximum growth in terms of invested capital per factory in the time period taken for study. If these growth wise dominant agro industries are


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compared with the set of industries spotted in tables 1 and 2 respectively, it can be concluded that three industries i.e. manufacture of products of wood, cork, straw and plaiting materials (202), printing and service activities related to printing (222), manufacture of knitted and crocheted fabrics and articles (173) have performed well in all the three lists. Further, manufacture of wearing apparel (181) industry has performed well in terms of growth in wages per factory and invested capital per factory. Thus, it may be concluded that these four agro based industries are experiencing a genuinely good growth rate in the economy. A detailed analysis of the most capital friendly agro processing industries is brought out in the following paragraphs.

For the manufacture of products of wood, cork, straw and plaiting materials (202) industry, five states that showed a high growth rate in terms of wages per factory included Himachal Pardesh (71.30 percent), Uttaranchal (66.43 percent), Assam (21.83percent), West Bengal (14.84 percent) and Jammu and Kashmir (14.75 percent). Further, a comparison with tables 1 and 2 reveal that three out of five top states (Uttaranchal, West Bengal and Assam) have excelled in terms of output growth, emoluments to the workers and capital invested over a period of time. Overall growth rate for all the states put together turned out to be 13.28 percent for the years 2003-04 to 2007-08 in this industry. The states that showed a dismal performance in terms of growth in the said time period comprise of Tamil Nadu (-14.19 percent), Bihar (-12.34 percent), Kerala (-6.75 percent), Haryana (-3.43 percent) and Punjab (-2.15 percent).

In case of printing and service activities related to printing (222) industry, Bihar (133.60 percent), Uttar Pardesh (34.22 percent), Himachal Pardesh (32.55 percent), Rajasthan (29.93 percent) and Gujarat (23.33 percent) recorded the highest growth rate in terms capital invested per factory for the years 2003-04 to 2007-08. A comparison of five top states in this industry with the already identified top five states in this industry (tables 1 and 2 respectively) brings out the fact that three states i.e. Bihar, Rajasthan and Himachal Pardesh are common to both the lists. As many as sixteen states have shown a positive growth rate in this industry in terms of capital invested per factory. Overall growth rate in this industry for all the states put together worked out to be 13.19 percent. There are only three states (Andhra Pardesh, Chhattisgarh and Haryana) which exhibit negative growth rate in the time period taken for study. A comparison of these dismally performing states with similarly performing states identified in tables 1 and 2 shows that Andhra Pardesh and Chhattisgarh are common in all the lists.

Andhra Pardesh state (26.81percent) has shown an outstanding growth in terms of capital invested per factory in manufacture of knitted and crocheted fabrics and articles (173) industry. Average output growth for all the states put together augmented to 11.74 percent. All the states (except Kerala) have shown a positive growth in terms of capital investment in this industry. Half the states (where the industry is existing) registered a growth rate over and above the overall growth rate. These states are Andhra Pardesh (26.81 percent), Tamil Nadu (21.68 percent), West Bengal (21.36 percent), Maharashtra (17.81 percent), Punjab (13.75 percent) and Rajasthan (13.74 percent) had a growth rate over and above the overall growth rate. Further, two out of top five states (Andhra Pardesh and West Bengal) identified in table 3 in this industry are common to the lists identified in tables 1 and 2 respectively.


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Highest growth rate in terms of capital invested per factory in manufacturing of wearing apparel industry (181) is bagged by Madhya Pardesh state (58.38 percent) followed by Kerala (33.32 percent), Uttaranchal (16.96 percent), Karnataka (13.12 percent) and Andhra Pardesh (11.04 percent) for the years 2003-04 to 2007-08. A comparison of the top five states identified here with the similar states in table 2 reveals this industry is widespread in four states i.e. Kerala, Madhya Pardesh, Andhra Pardesh and Karnataka. Overall growth rate in the industry remained 11.58 percent. There are six states i.e. West Bengal, Uttar Pardesh, Delhi, Gujarat and Himachal Pardesh which experienced a negative growth rate in this industry.

Jharkhand (36.98 percent) followed by Himachal Pardesh 26.83 percent), Delhi (15.08 percent), Haryana (12.75 percent) and Andhra Pardesh (10.82 percent) showed a high growth in manufacture of grain mill products, starches and starch products, and prepared animal feeds (153) industry. Also, this industry has performed well in all the states (except, Chhattisgarh, Assam, Orissa, Tamil Nadu and Rajasthan) in India. Overall growth rate in this industry stood high at 10.55 percent. On the whole, manufacture of grain mill products, starches and starch products, and prepared animal feeds industry has shown a good potential in expending amount for the workers in all Indian states.

Two industries namely tanning and dressing of leather, manufacture of luggage handbags, saddlery & harness (191) and manufacture of paper and paper products (210) have shown a negative growth in terms of capital invested per factory during the years 2003-04 and 2007-08 (table 3). Other industries that have shown a low growth rate in this industry include manufacture of beverages (155), manufacture of other food products (160) and Manufacture of dairy products (152). However, none of the latter three industries figure in the list of dismal industries in tables 1 and 2 respectively. But the former two industries i.e. manufacture of luggage handbags, saddlery & harness (191) and manufacture of paper and paper product (210) figured in the list of laggard industries commonly in tables 1, 2 and 3 respectively. Thus, the development of these to industries should be carried out carefully and only in those states where they have performed well in the recent time period.

SECTION V

CONCLUSION

As an economy develops, some major structural changes takes place and the share of primary sector declines. However, a recent study (World Bank, 2008) views agriculture as a supporting industry in the emergence and growth of the industrial sector. Specifically, as the income of people rises in an economy, agribusiness sector, including all the services and activities linked to agriculture assumes greater importance than agriculture. The present study has shows the growth of agro processing industries in terms of output per factory, wages per factory and capital invested per factory in the recent past in India. The study points out that three industries i.e. manufacture of products of wood, cork, straw and plaiting materials, printing and service activities related to printing, manufacture of knitted and crocheted fabrics and articles have performed well in all the three lists. One industry manufacture of wearing apparel has performed well in terms of growth in wages per factory and invested capital per factory. Thus, four agro


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based industries have exhibited a genuinely good growth rate in almost all the states in the economy. The industries which could not excel in the time period studied constitutes tanning and dressing of leather, manufacture of luggage handbags, saddlery & harness and manufacture of paper and paper products. These industries have shown a negative growth in terms of capital invested per factory during the years 2003-04 and 2007-08. But the development of these industries in the union cannot be brought to a stand still as these industries have also shown a reasonably good performance in the some states in the recent time period.

REFERENCES

1. Ahluwalia, I. J. and C. Rangarajan (1987), “Interdependence of Agriculture and Industry: A study of Indian experience”, in R. K. Sinha (ed.) Economic Development Since independence: Forty Years of India’s Development Experience, Deep and Deep Publications, New Delhi.

2. Clark, C (1957), The Condition of Economic progress, Macmillan Ltd., Third edition, London.

3. Desai, Bhupat. M. and N.V. Namboodri. (1992), “Development of Food Processing Industries”, Economic and Political weekly, Vol. 26, No.13, pp. A38 - A42.

4. Government of India (1993), Indian Agriculture in Brief, Ministry of Agriculture, 24th edition, p. 84.

5. Grewal, Naveen S. (2003), “Farmers are willing, but where is the guidance”, The Tribune, November, 24.

6. Johl, S. S. (2011), “Sustainable inclusive growth: Need to focus on rural economy”, The Tribune, January, 30.

7. Kachru, R. P. (2006), www.agricoop.nic.in/Farm%20Mech.%20PDF/05024-06.pdf

8. Mahadevan, R. (2003), “Productivity Growth in Indian Agriculture: The Role of Globalization and Economic Reform”, Asia Pacific Journal of Management, Vol. 10, No. 2, pp. 57-72.

9. Ministry of Food processing Industry (2006), www.mofpi.nic.in.

10. Naik, A. G. (1993), Processed Fruits and Vegetables – Indian can be on World Map soon, National Symposium on Food Processing Industry (Mimeo), New Delhi.

11. Singh, Sukhpal and V. Vyasulu, (1990), “Growth and Structure of Food Processing Industry in Punjab in the Eighties”, Indian Journal of Agricultural Economics, Vol. 45, No. 4, pp. 457-467.


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12. Sutcliffe, R. B. (1971), Industry and Underdevelopment, Addison Wesley Publishing Company, London.

13. Vellaichamy, K. (1993), Status of Food Processing Industry in the North Eastern Region, Problems and Prospects, National Symposium on Food Processing Industry (Mimeo), Feb 1993.

14. World Bank (2008), “Agriculture for Development”, World Development Report, Washington, DC.

15. Zuvekas, C. (1979), Economic Development: An Introduction, New York: Macmillan Co.

APPENDIX

Industry No. NAME OF THE INDUSTRY

151 Production, processing and preservation of meat, fish, fruit, vegetables, oils and fats.

152 Manufacture of dairy product

153 Manufacture of grain mill products, starches and starch products, and prepared animal feeds

154 Manufacture of other food products

155 Manufacture of beverages

160 Manufacture of tobacco products

171 Spinning, weaving and finishing of textiles.

172 Manufacture of other textiles

173 Manufacture of knitted and crocheted fabrics and articles

181 Manufacture of wearing apparel, except fur apparel

182 Dressing and dyeing of fur; manufacture of articles of fur

191 Tanning and dressing of leather, manufacture of luggage handbags, saddlery & harness.

192 Manufacture of footwear


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201 Saw milling and planing of wood

202 Manufacture of products of wood, cork, straw and plaiting materials

210 Manufacture of paper and paper product

221 Publishing

222 Printing and service activities related to printing

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ASIAN JOURNAL OF RESEARCH IN BUSINESS ... KHOSLA*; DR. MANOJ SHARMA** *Associate Professor and Head, Chandigarh Business School, Gharuan. **Professor of Economics, University Business