Module 417

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RECENT TRENDS IN

INDUSTRIALISATION AND
URBANISATION
INDUSTRIALISATION
The blue print for industrial development was made through the Industrial Policy
Resolution (IPR) in 1956.
The 1956 policy emphasized on establishment of heavy industries
with public sector taking the lead in this area.
Adoption of heavy or basic industries strategy was justified on the ground that it
will reduce the burden on agriculture, enable growth in the production of consumer
goods industries as well as small industries that are helpful for employment
generation and achieving self reliance.
After 1956 there was tremendous growth in industrialization during the second and
third plan periods i.e. 1956-61 and 1961-66.
Public sector contributed maximum to this growth.
towards the end of 1960s, investment in industries was reduced which adversely
affected its growth rate.
1980s, this trend was reversed and investment in industries was increased by
making the infrastructure base such as power, coal, rail much stronger
1990s it was found that the public sector undertakings were not performing upto
expectation
1991 the government of Indian decided to encourage the role of private sector in
industrial development, remove the rigid licence system which is known as
liberalization and allow international players to compete in the domestic country as
well as domestic players to explore foreign territories. a model of industrial
development is called Liberalization, Privatization and Globalization (LPG) model.
towards the end of 1990s the growth rate slowed down due to stiff competition
from international companies, inadequate infrastructure support etc. However, in the
beginning of the new millennium, between 2002-08 there was again some recovery
due to increase in saving rate from 23.5 percent in 2001-2 to 37.4 percent in 2007-
08.
competition from the foreign companies helped during this phase as the domestic companies
could create enough internal strength in term of quality control, finance and customer care etc.
to withstand the competition. However after 2008-09 there was some slow down in industrial
growth due to rise in petroleum price, interest rate and borrowings from abroad which has
created lot of liabilities for the domestic companies
MARKET SIZE
The sector’s gross value added (GVA) at current prices was estimated at US$ 348.53 billion as
per the second advanced estimates of FY21
The manufacturing GVA accounts for 19% of the country’s real gross value added.
The IHS Markit India Manufacturing Purchasing Managers Index (PMI) reached 55.5 in April
2021 from 55.4 in March 2021
capacity utilisation in India’s manufacturing sector stood at 66.6% in the third quarter of
FY21.
India’s industrial output measured by the Index of Industrial Production (IPI) stood at 143.4 in
March 2021.
The industrial production index (IPI) measures levels of production and capacity in the manufacturing, mining,
electric, and gas industries, relative to a base year. The Federal Reserve Board (FRB) publishes the IPI in the middle of
every month, and revisions to previous estimates at the end of every March .
 Mining, manufacturing and electricity recorded growth of 19.5%, 10.5% and 11.1%, respectively, albeit
driven by favourable base effect.
 The country's output of the eight core sectors - also known as the infrastructural output, grew 9.4% in
July 2021.
 The index substantially bridged the gap with the pre-pandemic level and remained only marginally
lower than the July 2019 mark, suggesting a graded pick-up in industrial activities with the easing of
curbs in key states as the Second Covid Wave waned.
 This recovery is owing to the result of the Base Effect due to the Covid-19 lockdown that affected
economic activity in 2020.

 The base effect refers to the effect that the choice of a basis of comparison or reference can have on the result of the comparison between data
points.
RECENT TRENDS IN INVESTMENTS
India’s market of more than a billion consumers and an increasing purchasing power.
In May 2020
Make in India drive has led hitech manufacturing global giants like GE, Siemens, Toshiba and
Boeing to set up plants.
In FY21, India received a total foreign direct investment (FDI) inflow of US$ 81.72 billion, a
10% increase YoY.
Other key investments in 2021:
 Amazon India announced to start manufacturing electronic products in India, starting first with Amazon Fire TV stick
manufacturing. The company plans to start manufacturing with contract manufacturer Cloud Network Technology, a
subsidiary of Foxconn in Chennai by end-2021.
 Samsung started manufacturing mobile display panels at its Noida plant and plans to ramp up manufacturing IT display
panels soon.
 Samsung Display Noida, which has invested Rs. 4,825 crore (US$ 650.42 million) to move its mobile and IT display
manufacturing plant from China to Uttar Pradesh, has received special incentives from the state government.
 Bharti Enterprises Ltd. and Dixon Technologies (India) Ltd., formed a joint venture to take advantage of the
government’s PLI scheme for the manufacturing of telecom and networking products.
 Godrej Appliances launched a range of Made-in-India air conditioners (AC). The company plans to invest Rs. 100
crore (US$ 13.48 million) in its
URBANISATION IN INDIA
Significance of Urban Living
Easier Access to Facilities: Urban living is linked with higher levels of literacy and
education, better health, longer life expectancy, greater access to social services and
enhanced opportunities for cultural and political participation.
 Urbanisation is associated with easier access to hospitals, clinics and health services in general.
 Living in proximity to these services results in improved emergency care and general health.

Access to Information: There are also benefits from easier access to sources of
information such as radio and television which may be used to communicate information
about health to the general public.
 For instance, women living in towns and cities are more likely to be informed about family planning which
results in reduction in family size and less frequent childbirth.

Individualism: Multiplicity of opportunities, social diversity, lack of familial and social


control over decision making leads to more self interest and facilitates decision-
making by an individual and choosing one’s career and actions by oneself.
 The World Urbanization Prospects, 2018 report produced by the
UN Department of Economic and Social Affairs (UN DESA) notes that
future increases in the size of the world’s urban population are expected to
be highly concentrated in just a few countries.

 Together, India, China and Nigeria will account for 35% of the
projected growth of the world’s urban population between 2018 and
2050.
By 2050, it is projected that India will have added 416 million urban
dwellers.
Currently, India’s urbanisation level is 31.1% (Census of India 2011).
STATE-WISE URBANIZATION SCENARIO
NUMBER OF PERSONS LIVING IN URBAN AREAS:
 Over 75% of the urban population of the country is in 10 States: Maharashtra, Uttar
Pradesh, Tamil Nadu, West Bengal, Andhra Pradesh, Gujarat, Karnataka, Madhya
Pradesh, Rajasthan, and Kerala.
 Maharashtra leads with 50.8 million persons (13.5% of the total urban population of the
country).
 Uttar Pradesh accounts for about 44.4 million, followed by Tamil Nadu at 34.9 million.
High-Scoring States: Goa is the most urbanised State with 62.2% urban population.

 Tamil Nadu, Kerala, Maharashtra, and Gujarat have attained over 40% urbanisation.
 Among the North-Eastern States, Mizoram is the most urbanised with 51.5% urban
population.
Low-Scoring States: Bihar, Odisha, Assam, and Uttar Pradesh continue to be at a lower
level of urbanisation than the national average.
Union Territories: The NCT of Delhi and the UT of Chandigarh are most
urbanized with 97.5% and 97.25% urban population respectively, followed by Daman and
Diu and Lakshadweep (both above 75% urbanisation).
Recently, the Economist Intelligence Unit (EIU) survey released a ranking of the
fastest-growing urban areas across the world w hich features three cities from Kerala among
the top 10. The list is based on data from the United Nations Population Division.
The Economist has listed the rate at which the populations of the UAs are expected to
increase between 2015 and 2020 and it provides a measure of the pace of urbanisation.
Unusual Findings: The rankings seem unusual because the total fertility rate (TFR, the
number of children a woman is likely to have in the childbearing age of 15-49) in Kerala
is 1.8 as per NITI Aayog data from 2016, below the replacement rate of 2.1.
From the period of 2015-2020, Malappuram had 44.1% change, Kozhikode had
34.5% change and Kollam had 31.1% change). These are the only places from India to
feature in the top 10 rankings.
Thrissur, Kerala is at 13th position with 30.2% jump between 2015 and 2020. Tiruppur,
Tamil Nadu is at 30th rank. Thiruvananthapuram is at 33rd position.

EIU is the research and analysis division of The Economist Group and the world leader in global
business intelligence. It was created in 1946.
The Kerala Case Study

Transformation of Villages to Town: Kerala has low fertility rate which means the increase in the
population of Malappuram and other cities is not because women are having more children but
because more villages are being transformed into towns and city borders are expanding.
 When a village becomes a census town, its population is included in the urban population of the district.
 Cities of Kerala are seeing rapid urbanisation and the main reason is the inclusion of new areas in the UA’s limits.

Effects of Migration: Kerala sees both emigration (migration from the state to other places)
and immigration (the migration of workers to the state)

The remittances that emigrants send allow the residents of villages to move away from agriculture,
which changes the status of a village to census town

Shift from Agriculture: In Kerala, urbanisation is driven by a move away from


agriculture, which leads to a change in a village’s Census classification status
INDIA’S GLOBAL COMMITMENTS REGARDING URBAN
DEVELOPMENT

 The SDGs Goal 11 promotes urban planning as one of the recommended methods for achieving sustainable development.
 The UN-Habitat’s New Urban Agenda was adopted at Habitat III in 2016.

 It puts forth principles for the planning, construction, development, management, and improvement of urban areas.
 The UN-Habitat (2020) suggests that the spatial conditions of a city can enhance its power to generate social, economic and
environmental value and well-being.
 Paris Agreement: India’s National Determined Contributions (NDCs) includes the goals to reduce the emission intensity of
the country's GDP by 33 to 35% by 2030 from 2005 level.

India’s Initiatives for Urbanisation:


 Schemes/Programmes Related to Urban Development:

 Smart Cities
 AMRUT Mission
 Swachh Bharat Mission-Urban
 HRIDAY
 Pradhan Mantri Awas Yojana-Urban
 Government Initiatives for Slum Dwellers/Urban Poor:

 Pradhan Mantri Garib Kalyan Yojana


 Atmanirbhar Bharat Abhiyan (self-reliant India)

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