The MOST Phase II website is available at: www.unesco.org/shs/most.
|
| You
are in the MOST Phase I website (1994-2003). The MOST Phase II website is available at: www.unesco.org/shs/most. |
| Management of Social Transformations - MOST
Discussion Paper No. 57 |
|
Industrial growth in small and medium towns and their vertical
integration:
the case of Gobindgarh, Punjab, India
by
Amitabh Kundu and Sutinder Bhatia
- Chapter 3 -
|
3. Gobindgarh in a historical and regional context The Town Planning Department of Punjab has divided the state into three regions viz. Northern, Central and Southern. Of these, Central Punjab is industrially developed which is due, by no small measure, to the GT road constituting the spine of the region, as discussed above. This region is also agriculturally developed and had recorded impressive growth in productivity during the period of the Green Revolution. The National Commission on Urbanisation (1988) had identified the Ludhiana-Khanna-Patiala region as a "spatial priority urbanisation region" (SPUR). The growth of Gobindgarh, a town located in this sub-region, which in turn constitutes a part of central Punjab, can be better understood in the context of the historic developments in the regional economy. The town is located on the GT Road, 270 km north-west of Delhi and 35 km from Rajpura, another industrial town in the state. As late as the 1930s, Gobindgarh was a small hamlet in the border area of the erstwhile state of Nabha, adjoining the then state of Patiala in Punjab. In order to promote the business of blacksmiths, spread over a large number of villages in Nabha, the king of the state offered a number of fiscal incentives in the early 1940s. He declared the township a free trade zone and made land available at nominal rates for installation of steel re-rolling units. This move led to establishment of a number of workshops by the blacksmiths of the region on both sides of the GT Road at Gobindgarh. The first unit was possibly was that of Ganga Ram – Asa Ram, set up before Independence. By 1959, there were 32 re-rolling units, the number going up to 40 in 1966. A rough estimate of investment up to the mid 1960s is Rs. 12 million (at prices of the time) with annual production level of 144 thousand tonnes. The blacksmiths who set up re-rolling units in and around Gobindgarh during the colonial period were small-scale entrepreneurs, producing a limited range of output. Their production level and range were restricted due to lack of capital resources. With the rise in demand, the capacity of the existing units was expanded through borrowings from institutional and non-institutional sources, and several new re-rolling units were set up. Its rapid economic growth can be attributed to various demand and supply linked factors. The demand push came from the high industrial growth in this region of Punjab, particularly in the engineering, construction and forging industries in the pre-Independence period. Projects like Bhakra Nangal Dam in the state of Punjab, which involved a lot of construction activity, added significantly to the demand for various types of steel products. This increased the profitability of the steel processing units at Gobindgarh leading to their sustained growth. Most of the entrepreneurs were keen to expand their business not only to meet the requirements in the region or the state of Punjab but for rest of the country. On the supply side, besides the freight equalisation policy for steel discussed above, the in-migration of skilled people with considerable financial resources – following the partition of India – was a positive factor. The emerging business opportunity in steel processing further attracted families of the Marwari community from Rajasthan and induced them to invest in this sector. The choice of this town by the entrepreneurs was partly due to its proximity to the economically prosperous state of Patiala, which ensured access to a larger steel market. Better infrastructure facilities and easier logistics in movement were added advantages. The increase in demand for steel during the Second World War, coupled with fiscal incentives provided by the government of India, boosted the steel processing activities. The rapid economic growth in state and region, as discussed in the preceding section, also had a positive impact on the economy of the town. The growth of steel processing industries in Gobindgarh during the 1950s and 1960s was partly due to the shortage of steel materials in the country. The primary large-scale producers were incapable of meeting demands due to their capacity constraints. These shortages led to the emergence of new units in the secondary sector. A number of re-rolling mills came up all over the country to meet the regional as well as national demand. Gobindgarh got a major share of these units, many of the mini plants coming up through the arc/induction route. Furthermore, the success of the units established in the early years gave boost to the process of growth. Most of the entrepreneurs were willing to invest a part of the profit for expansion of the industry. It is important to note that the primary producers of steel, who in a way were in competition with the smaller units for several products, did not threaten the existence of the latter. On the other hand, these helped the smaller units by providing scraps and other materials that had become a constraint for this sector. The town, thus, developed into a mini steel city through the location of a large number of new units undertaking re-rolling and processing activities and substantial expansion in the existing units. At a later stage, non-availability or inadequacy of re-rollable scrap prompted some of the entrepreneurs to set up induction and arc furnace units to manufacture pencil ingots out of steel scrap. Gobindgarh has strong forward linkages with the sub-region and beyond. The steel rolling industry imports raw materials from far away places like West Bengal, Bihar, Gujarat and even abroad. The furnace oil supply comes from oil depots at Ambala and Kandla port in Gujarat. It supplies a large part of its finished products to machine tools, bicycle and other metal-based industries in Ludhiana. Construction materials from here go to most of the large cities in Punjab, Haryana, Himachal Pradesh, Jammu and Kashmir, Rajasthan and Uttar Pradesh. Demographic and economic profile of Gobindgarh The town of Gobindgarh has experienced a sort of demographic explosion during the past four decades. The population has grown at an average rate of 6.2 percent annually during this period, which is phenomenal by all standards. This resulted in its population multiplying by a factor of 12 during 1951-91. The annual exponential growth rate was more than 7 percent per annum during the 1950s (Table 3.1 and Graph 3.1), which can be attributed to massive in-migration, as a consequence of rapid industrial growth in the town and the surrounding areas. As this in-migration was highly male selective, it resulted in decline in sex ratio (females per thousand males). It is important to note here that Gobindgarh has maintained a very low sex ratio during the entire four decades under consideration (Table 3.2). This is indicative of large influx of people from outside the district and the state, as discussed in the previous section. Despite some improvements in this ratio in recent years, it has remained below the district or the state average. The growth rate went down to less than 3 percent during the 1960s. This can be partly attributed to MC not expanding its limits to include the peripheral areas. The urban area for the town is noted to have remained 2.67 sq. km during 1961-71 (Table 3.2). The decline in the growth rate may also be attributed to deceleration in in-migration. This is confirmed by the fact that female-male ratio increased marginally during this period. The 1970s, once again, were characterised by rapid urban industrial growth in and around Gobindgarh. The rate of in-migration accelerated significantly resulting in the annual population growth touching all time record of 10.4 percent per annum (Table 3.1). The Municipal limits were expanded more than three-fold as recognition of the urban characteristics of the peripheral settlements. The impact of massive male selective in-migration can also be seen in the number of females per 1,000 males, which came down from 704 to 675 (Table 3.2). It may be noted that a large majority of them were poor illiterate migrants from Uttar Pradesh and Bihar. This decreased the literacy rate in the town from 53 percent to 49 percent (Table 3.3).
Table 3.1: Demographic profile of Gobindgarh, Patiala and Punjab
Figures in parentheses indicate the annual exponential growth rate of population The decade 1981-91 was a period of upheaval and socio-political unrest, which affected the entire urban system in Punjab, as discussed above. Gobindgarh was no exception to this although economically it did better than other towns. The population growth rate slumped to 4 percent as a consequence of a much slower rate of in-migration (Table 3.1). The female-male ratio improved substantially going up to 832, which is yet another indication of lower rate of in-migration (Table 3.2). It is significant that the growth rate recorded was low despite the area going up from 9.0 sq. km to 32.0 sq. km during this period. Comparing Gobindgarh with other towns of the Patiala district as well as all urban centres of Punjab, one would argue that the former has very low density of population. This is primarily because a large amount of urban space in the town is occupied by steel rolling mills.
Graph 3.1: Annual exponential growth rates of the population in the town of Gobindgarh, the Patiala District and the State of Punjab
Table 3.2: Area, density and sex ratio, 1961-91
Figures in parentheses are densities of population per square km.
Table 3.3: Literacy rate, 1961-91
It has been noted that the partial withdrawal of the freight equalisation scheme in 1992 has adversely affected the growth of the steel units at Gobindgarh – in fact in the whole of northern India. This is because it has to cope up with the freight differential – to the tune of about Rs.1,600/- per tonne, which was earlier absorbed by the public sector steel units as a part of government policy. Cost of inputs sold by integrated producers from their stockyards is further pushed up as excise duty has been levied on freight. Furthermore, with the secondary sector coming up in almost all regions of the country, the marketing of products, particularly to distant places, is becoming more competitive. Understandably, the re-rolling units at Gobindgarh are facing serious problems in marketing their products. The supply of the steel products has outstripped demand in recent years. The orders received by rolling mills are much less than their capacity. This lack of demand can be linked to slowing down of public sector investment. The latter has adversely affected the investment in the private sector as well. Further, a slump in the housing and construction industry has dampened the growth in demand for steel products. As a consequence of all these, many of the re-rolling units are being forced to reduce their margin of profits. The manufacturers, traders and brokers in the town are already operating on a thin margin, as discussed below. In the process of meeting this new challenge, it is understandable that many of the units are functioning only for a part of the week while a few have gone out of business. Workforce Structure An analysis of the distribution of the workforce based on the Census data confirms some of the observations made about the growth dynamics in the town, based on demographic data. The percentage of workforce going up from 34.8 percent to 38 percent during the 1970s and coming down substantially to 30.5 percent in the 1980s tells the story of growth and stagnation of steel industry (Table 3.4). The town’s workforce participation rate declining significantly to come at par with that of urban Punjab during 1981-91, bears the evidence of its industrial sickness. Non-household manufacturing claimed over 46 percent of the workforce in 1971 which is twice the figure of urban Punjab and three times that of urban Patiala (Table 3.4). This large share came about with a corresponding decline in the share of agriculture and other services that have a generally low level of productivity. The share of trade and commerce in Gobindgarh was as high as in the district or the state. Unfortunately, the data on workforce structure for 1981 are not available at the settlement level from the Population Census. Nonetheless, there is evidence to suggest that the share of the workforce in manufacturing increased substantially during 1971-81. The 1980s, however, showed a downhill trend – the share going down to 43.7 percent in 1991, whilst the corresponding figures for the district or the state remained stable. The share of workers in transport, storage and communication was very low viz. 5.9 percent in 1991 (Table 3.4 and Graph 3.2 and 3.3), which could be linked to the dampening of the process of industrialisation, as noted above. The corresponding increase in the share of agriculture, construction and trade and commerce seems to be largely poverty induced.
Table 3.4: Workforce structure in Gobindgarh, Patiala and Punjab
Graph 3.2: Distribution of workers across industrial categories, 1971
Graph 3.3: Distribution of Workers across Industrial Categories, 1991
© UNESCO 2001 The opinions expressed in this publication are those of the author and do not necessarily reflect the views of UNESCO. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
To MOST Clearing House Homepage
