Thursday, January 26, 2012: 10:15:14 PM

Machinist Poll Feature

Dualism impacting growth of manufacturing sector

The existence of dualism- the formal and informal sector, is harming the collective growth of the manufacturing sector

Is dualism existent in the Indian manufacturing sector, acting as a roadblock for its development? To find an answer to this question, Machinist360 conducted a poll asking respondents their views on the same. 50% of the respondents felt that dualism existed, whereas the remaining 50% could not express any specific opinion.

Formal, informal segments
It is not unknown that dualism is prevalent in Indian manufacturing space and it is also harming the collective growth of the sector. On one hand there is the formal segment, which is very modern, boasting of latest (and the best) technology. Workers employed in this segment are governed by well regulated conditions and are well paid. The workers also receive strong protection in court against dismissal and have such welfare facilities as gratuity and paid leaves.
However, it is conditions prevalent in the informal segment that are causes of worry. According to E T Jaichan, proprietor of Jaico Tools, a Bengaluru based small-sized cutting tools manufacturer, “The manufacturing industry, especially the machine tool manufacturing one, is ruled by SMEs. Therefore, it is not possible to give workers benefits that might be available in large-sized manufacturing companies.”
On similar lines, Sudhanshu Chakraborty, owner of Kolkata based Sandeep Enterprise, a small-sized railway equipment part manufacturing company, said, “Such are the conditions in the so called ‘informal’ sector that workers can be hired or fired at will. In a contrasting scenario, workers also leave at will, causing a stand-still or slowdown to operations.”
Recent estimates peg employees in the informal segment of the manufacturing sector to be as many as 80%. This implies that the overall productivity of the manufacturing sector would have been higher if the informal sector was smaller. India's high level of dualism is does not augur well for the manufacturing sector both from the point of view of efficiency and equity.
Priyanka Roy Chowdhury

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