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Cottage industry has played an important role in strengthening the Indian economy, it not only provides employment to a large number of people, but also reduces the cost of their operation, but at present the condition of the cottage industry is very worrying, there are many problems in their operation. Due to which this industry is on the verge of closure, If immediate steps are not taken to remove the problems of cottage industries, then not only unemployment will increase but Indian economy will also suffer.

The review of views of different eminent authorities regarding cottage industries and economic development definitely proved helpful to set the line of action of the present study.

1. In the opinion of I. C. Dhingra, “Ultimate welfare of India is vested in the cottage industries.” This quotation was stated by Father of nation Mahatma Gandhi. Cottage industries are organized by individuals with private resources with no or little outside help, and are pursued as a part time or a full time occupation, the capital invested in these industries is nominal, just that which can be managed from a person’s own resources.

(Dhingra,I.C.;The Evolution of the Indian Economy; Sultan Chand &Sons Publishers; New  Delhi; 1995; P- 5 & 13.)

2. Dr. R. K. Agarwal,  stated that, “Development of cottage industries is a key to solve the problems of rural poverty and employment.” A cottage industry is one, which is run as full time or part time occupation mainly with the help of family members. Cottage industries use mainly labour intensive technique, which provides more and more employment with low capital investment. India is a country having abundant labour force but facing the lack of capital. Cottage industries are suitable to this structure because these industries require more labour and less capital. Local skills, talent and resources can be made use of only by the growth of cottage industries. So, these industries play a vital role in the development of rural areas of our country (India).

(Dr.,Agarwal,R.K.; Indian Economy; Vishal Publishers; Meerut; 1998; PP-296,297.)

Problems of Cottage Industries

India is the seventh largest and the second most populous country in the world. It is a rich country by natural resources inhabited by poor, where millions have to pass their nights without roofs on their heads, pass their days having one time meal and live without proper wearing. Not only this, a large number of youths are there who are in search of employment but finds their efforts fruitless. The main reason of this phenomenon is that about 70% of its total population resides in rural areas and agriculture is the main source of their livelihood which is totally uncertain due to dependence on nature. To provide subsidiary employment to these people, cottage industries are proved the best option before them. India is a country having abundant labour force but it has insufficient amount of capital with them. Undoubtedly cottage industries can play better role in uplifting the social and economic status of these people and to make them free from problems, which are the un-detachable part of their lives.

On focusing the eyes on these problems we find that one of the obstacle in the development of cottage industries is the scarcity of finance and credit facilities. The artisans or craftsmen who are running cottage industries generally run their business with their own capital, which proves very insufficient and they are forced to borrow money from their relatives and private money lenders who charge the interest from them at higher rates. The reason behind this phenomenon is that the banks and other financial institutions still hesitate in granting loans and advances to these industries.

Some cottage industries suffer from acute shortage of raw materials. They fail to procure sufficient raw materials to keep their production unit running. This problem of these industries is due to the lack of financial capacities for bulk purchasing in time or for paying advanced to the input suppliers. Some cottage industries like, ghee and butter making, sweet making, pickles making, village pottery etc. are very often facing the problem of shortage of raw material from time to time due to their seasonal nature. Moreover, all these industries consider capital shortage as an important problem as regards to raw materials.

A major complaint against cottage industries is that, the methods and techniques of production adopted by these industries are old and traditional. Actually, the artisans have not adequate technical knowledge and they learnt it form their forefathers and from their own experience. In fact, there is a very few number of technical institutions in our country which are not in a position to impart required technical know-how systematically in all these unskilled artisans.

One of the main problems faced by cottage industries lies in the field of marketing because of the lack of standardisation and proper gradation of their products. They do not have any proper marketing organisation to sell their outputs at remunerative prices. Machine-made products have created a marketing problem for these industries. Due to shortage of capital and financial resources, these industrial units do not have adequate storing capacity and are often forced to sell their products at non-remunerative prices.

Similarly, cottage industries also face a tough competition with large industries. These industries use out-dated technology and produce non-standardised goods of inferior quality. That is why; these small producers are not in a position to stand against them in the market. They have a very little finance and organisational network to popularise their product in the market, due to which cottage industries are bound to creep before these large industries.

Lack of efficient managerial knowledge is regarded as the biggest handicap to cottage industries. The poor artisans are not technically trained and they manage their unites in traditional manner. Most of the cottage industries are under 'Private Proprietorship' and managed by the owners themselves according to their personal experience, due to which these are run at higher cost and produce inferior quality goods which cannot be sold in the competitive markets of the country and abroad.

Likewise, lack of research facilities always act as a bottleneck in the development of cottage industries due to which it is extremely difficult to form a rational and meaningful idea of what is required to be done for the development of cottage industries. The poor artisans do not have enough money and facilities to open their research labs for innovating new techniques of production or for introducing new products.

Another problem faced by cottage industries is the establishment of fictitious units. The reason behind this phenomenon is that people take loan for the establishment of cottage industrial units but the borrowed money is used in some other activities with the connivance of loaning authorities.

Thus, it can be concluded that the above stated problems are affecting the development of cottage industries both in direct and indirect manners. Actually the policy for promoting cottage industries cannot really succeed unless it is incorporated in the overall framework of development policy for industrialisation in the country.

Contribution to Economic Development

Soon after independence, India adopted the path of planned economic development. For the balanced economic growth in the country, the era of economic planning started in India on April 1st, 1951, when the first five-year plans was launched. Since then, nine five year plans have been completed and the tenth five-year plan is in progress. All these plans have stressed upon balanced economic growth in all the sectors of economy. In the economic development of India, agriculture occupies an important place and is called the backbone of Indian economy. Though agriculture is the largest source of livelihood for the people in India yet only this source is not sufficient for development of the Indian economy. It has been observed that cultivators remain underemployed or unemployed for a major part of the year, especially during the periods when the crops are getting ready to be harvested. During this period they need such type of non-agricultural work, which they can accomplish without leaving their villages and this can be done only by promoting cottage industries in villages. It is believed that cottage industries can generate employment to the villagers and they can utilize their idle time and can be successful in improving their economic status.

Before independence the cottage industries were flourishing on a large scale, as large industries were not established during that period. People were habitual to depend on the products of cottage industries for satisfying their day-to-day needs. During that era this industry had provided high employment potentials to the people in the country. After independence, when large industries started, the growth of cottage industries started downward for a short period. But it doesn't mean that it lost its entity by roots. Even today cottage industry has an eminence importance in the economic development of India because in place of old rural cottage industries new types of small units took place and these are developing rapidly.

Cottage industry involves operations mostly by local hands, which are carried on primarily with the help of the members of the family. These are generally artisan-based and involve low investment and provide largely part-time employment. Cottage industry contributes a high employment and in result this enables a vast majority of people to share the fruits of economic development. Thus the problem of disguised unemployment is solved to a large extent with the establishment of cottage industries in the country and it can prove the boon to generate employment opportunities to the people of the country and thus, to raise their standard of living and ultimately the development of Indian economy.

Cottage industries require very little amount of capital and technical knowledge due to which a mass of rural population can run small units without much problem. In fact cottage industries can contribute a lot towards prosperity and economic well being of the people living in rural areas of India. As this industry is set up in rural areas, it can provide part-time job to the people engaged in agriculture and whole-time job to village artisans and craftsmen. Development of this industry offers a solution to all the problems of unemployment, poverty and economic oppression in India.

In most of the cases cottage industrial units are set up in residential houses and are run by the family members including women and children. With the help of these small units people get subsidiary income beside agriculture, which help in improving their standard of living.

It is a well-known fact that cottage industries also promote our culture and protect our National heritage. The hand made goods produced by Indian artisans and craftsmen are very popular in the national and international markets. During the survey it is observed that the foreign tourists like to purchase our artistic hand-made articles, which helps in earning foreign currency for the country. Thus these industries are also helpful in making the balance of payment favourable of our country.

Further, Cottage industries are the most significant segment of the Indian Economy as the expansion of such industry would increase the demand for rural labour. Recognising the importance of contribution of cottage industries in the Indian economy it can be said, "In a country like India, the workers have choice not between the high paid job and a low paid job but between a low paid job and no job at all. So even if cottage industries provide low paid jobs, these would be of vital importance in an economy like India where millions are in search of employment."

After engaging in the cottage industries the people have now started thinking about their needs and have the desire to satisfy them. Effective utilisation of manpower will undoubtedly generate income for their family and poverty and unemployment will be eliminated to a large extent.

These industries help in mobilizing the capital and entrepreneurial skills of the country where it remains unutilized. There is a large amount of concealed potential and untapped entrepreneurial skill in our country, which can be utilized by setting up cottage industries in rural areas of India. Hence, it can be said that cottage industries occupy an important place in the economic development of India.

The importance of cottage industries in the Indian economy is not hidden from anyone, but it is also a bitter truth that at present cottage industries are going through severe problems, due to which their contribution to the economy is directly decreasing, looking at the problems of cottage industries by the government. Continuous measures are being taken, we can hope that cottage industries will play an important role in the economy in the future.

Books 1. Anupum Agarwal; Indian Economy; Sahitya Bhawan Publications, Agra. 2. R. K. Agarwal; Indian Economics; Vishal Publications; Meerut. 3. Dutt Rudra & Sundram; Indian Economy; S. chand & Company Ltd.; New Delhi; 2010. 4. Narayana and Patodiya Satya; Rural Economics; Bankers Book Publishing House Pvt. Ltd.; Jaipur. 5. Survey of Indian Industry 2018 6. Uttaranchal and Uttar Pradesh At a Glance 2017. Journals 1. Kurushatra (Monthly), New Delhi. 2. Yojana (Monthly), New Delhi. News Papers 1. Hindustan Times, New Delhi. 2. The Times of India, New Dilhi.

1. (Dhingra,I.C.;The Evolution of the Indian Economy; Sultan Chand &Sons Publishers; New Delhi; 1995; P- 5 & 13.)
2. (Dr.,Agarwal,R.K.; Indian Economy; Vishal Publishers; Meerut; 1998; PP-296,297.)