PM puzzled by industrial imbalances

New Delhi: Concerned over "persisting regional imbalance" in industrial development and urbanisation, Prime Minister Manmohan Singh said credible policy solutions were required to bring new regions under industrialisation process.

Making it clear that a few large industrial houses and capitalists cannot be merely looked upon to accelerate industrial growth, he said the employment intensive nature of the small and medium enterprises make them attractive options.

"I am puzzled by the persisting regional imbalance in industrial development and urbanisation in India," Singh who was inaugurating the new campus of the Institute for Studies in Industrial Development (ISID) said.

Credible policy solutions were needed to help reduce such imbalances, he said, adding industrial development must spread to new regions, especially in northern and eastern India.

Referring to a report in media that most of the billionaires among India's top business leaders operate in "oligopolistic" market and in sectors where the government had conferred special privileges on a few, Singh said "this sounds like crony (monopolistic) capitalism".

"Are we encouraging crony capitalism? Is this a necessary but transient phase in the development of modern capitalism? Are we doing enough to protect consumers and small businesses from the consequences of crony capitalism," Singh asked.

On the role of small and medium enterprise (SMEs), Singh said: "We cannot depend only on a few large industrial houses and capitalists for driving our industrialisation process. The employment intensive nature and the greater regional spread of SMEs makes them an attractive option for industrial growth."

He said the ISID could study the SME sector more intently and suggest policy initiatives for their expansion.

The Prime Minister said he wondered whether labour laws were inhibiting the growth of new businesses.

"If so, where and how? How do we create not just skilled jobs but unskilled ones to help agricultural workers make the transition to industry," he said.

Asserting that India was destined to emerge as an important industrial power, he said it was only through rapid industrialisation that the country can find meaningful solutions to the problems of unemployment and underemployment.

Singh said considering that nearly 70 per cent of India's population lives in rural areas, it was essential to lay adequate emphasis on increasing agricultural productivity. "Since the per capita availability of land is less than 1.5 hectares, there are severe limitations to expanding employment opportunities in agriculture," he said.