CHAPTER III - Shodhgangashodhganga.inflibnet.ac.in/bitstream/10603/22763/11/11_chapter3.pdf · social development indices,5 attained by State as a global role model (CDS - UN 1975)

CHAPTER III

SMALL SCALE INDUSTRIES

IN KERALA

57

SMALL SCALE INDUSTRIES IN KERALA

Kerala is a land that has surprised the masters of development as the State

scores the highest among all other Indian states on Human Development Index,4

(National Human Development Report, 2001, 2002) and have been pointed out the

social development indices,5 attained by State as a global role model (CDS - UN

1975). Moreover, at 25 per cent, number of people below the poverty line in the state

is significantly less than the national average of 35 per cent. Kerala cannot maintain

the social development unless it achieves progress in productive sectors. The sad

feature is that, the state is totally depending on neighbouring states for cereals,

vegetables and other food items. Currently, the manufacturing sector contributes

about 26.48 per cent to the gross state domestic product. Kerala economy is at

present in a state of industrial stagnation, with poor growth of industrial employment,

low industrial contribution to per capita income and living standards, and paltry

support to the revenues and the developmental resources of the state (Kerala

Development Report, 2008). The state has enough indications to the effect that the

state cannot continue to have a high level of social consumption due to the slow

growth of the economy, particularly in sectors like agriculture and industry, and

deteriorating financial health of the state (Jeromi, 2003).

----------------------------------------------------------------------------------------------------------------------------------------------------------

4 Human Development Index (HDI) is a composite index measuring average achievement in three basic dimensions of human

development: A long and healthy life, access to knowledge, and a decent standard of living. Countries that have achieved a HDI

of 0.9 or higher value are considered as developed and those having lesser value are considered as developing countries.

According to the HDI Report, 2009, India ranks 134 of 182 nations with a value of 0.612.

5 Kerala’s social development can be noticed in it’s high literacy rate, life expectancy, standard of living, political participation,

gender ratio, social welfare measures, etc. Such a pattern of development, defined by success in achieving a high quality of life

without much success in economic growth is mentioned by Amartya Sen in his survey of development experiences where he

mentioned “the Indian State of Kerala” together with Sri Lanka and pre-reform China as characterised by such a development

experience.

58

There is an increasing realisation in recent years that, the industrialisation

process should be stimulated in the state to solve the problems of slow growth and

worsening unemployment (Pillai, and Shanta, 2006). The government’s inability to

support developmental activities actively due to fiscal constraints has led to a change

in outlook towards private investment (Anilkumar, 1990). Obviously, a lot more

concerted effort is required to revive the industrial fortunes of Kerala (Kerala

Development Report, 2008).

It appears that under liberalisation of the 1990’s, industrial activities have

been spreading among small and tiny players indicating greater dispersal of the

industrial benefits of liberalisation (Kerala Development Report, 2008). In the

state’s manufacturing sector, the SSIs play an important role as large industrial units

are not feasible here (Kerala Development Report, 2008).

3.1 SSI in Kerala

In Kerala, small scale industrial units were extensively developed from the

nineteenth century onwards. Spinning and weaving, coconut oil making, cashew nut

processing, clay products making, etc. were the earlier industrial activities (Abraham,

1989). International migration of labour from Kerala and the resultant inflow of

foreign remittances and the familiarisation of Kerala youth to modern manufacturing

techniques and management resulted in setting up of a large number of small scale

units in the state in the early eighties (Human Development Report, Govt. of Kerala,

2005). However, due to inexperience, lack of entrepreneurial qualities, labour

agitations, trade union militancy and lack of proper industrial policy of the state

many of these units drastically failed within a short span. Since the Industrial policy

59

of 1991, the state government has taken several measures to improve investment

culture in the state.

As part of promotion, Kerala state industries development corporation

(KSIDC) was set up to support the industrial development efforts of the state through

lending assistance to identify investment projects in the state. Other state level

agencies also participate in industrial promotion and support activities in Kerala

include; Kerala Financial Corporation (K.F C), Kerala Industrial Infrastructure

Development Corporation (KINFRA), Kerala State Handloom Development

Corporation (HANVEEV), Kerala State Electronic Technology Park (TECHNO

PARK), Small Industries Development Corporation (SIDCO) and Small Industries

Service Institute (SISI).District Industries Centres (DICs) act essentially as the

district- level extensions for government support at the project level especially for

small enterprises. Further, there are various administrative arms of the government

having functions related to industries such as providing various approvals,

conducting inspections, and providing inputs such as electricity and water. All these

agencies are in need of thorough revamping (Kerala Development Report, 2008).

3.1.1 Size of SSI

The total number of registered units in the state in 2007–08 was 2.88 lakh. The small

scale sector in Kerala has achieved a moderate progress in terms of number of units.

60

Table- 3. 1

Number of newly registered units in Kerala from 1979 to 2008

YearNumber of newly registered units.

Cumulative total as on 31st March

Till 1979-80 13386 13386

1980-81 to 1984-85 18113 31499 (27.06)

1985-86 to1989-90 32199 63698 (20.44)

1990-91 to 1994-95 61545 125243 (19.32)

1996 - 97 to 1999 -2000 93613 218856 (14.95)

2000 -01 to 2004 - 05 60761 279617 (5.55)

2005-06 to 2007- 08 9252 288869 (1.103)

Source: Economic Review, (1979 to 2008), Kerala Planning Board

Figures in brackets show annual growth rate

Table 3.1 shows that the number of registered SSI units in Kerala was ever on

increase. Within a span of 28 years, the number of registered units increased more

than 21 times. It was during 1997-2000 period that the state witnessed the

registration of largest number of SSI units. However, the annual rate of growth (in

number of units registered) was the highest during 1980 to 1985. Though the growth

rate has declined thereafter, there is a steady increase in the number of registered

units in Kerala over the long period. It is seen from table 3.1 that the state is

performing well in terms of growth of number of registered SSI units. This inference

is also provided by various censuses .Diagram 3.1 shows this.

61

Diagram 3. 1

Number of registered units in Kerala

Source: First, Second and Third All India Census of SSIs (1972, 1988 and 2002)

Diagram 3.1 shows the number of registered units in Kerala during the

different census periods. It was 11427, 38030 and 221820 for the periods 1972, 1988

and 2002 respectively. Diagram 3.1 also reveals the fact that Kerala is making a

moderate progress in terms of number of registered small enterprises in the state

(Economic Review, 2008). When compared with other states also, Kerala’s position

is shown in table 3.2

0

50000

100000

150000

200000

250000

I census II census III census

Census periods

Num

ber

ofre

gist

ered

units

62

Table- 3.2

Share of selected states in the number of SSI units to total India

Sl.No. StateRegistered SSI units

Unregistered SSI units

Total number of SSI units

1 Kerala 10.69 3.34 4.30

2 Rajasthan 3.13 4.36 4.20

3 Punjab 4.72 3.41 3.58

4 Haryana 2.87 2.01 2.12

5 Uttar Pradesh 11.85 16.89 16.23

6 Bihar 3.78 5.11 4.94

7 Assam 1.05 1.97 1.85

8 West Bengal 3.065 7.97 7.33

9 Orissa 0.899 4.11 3.69

10 Jharkhand 1.33 1.25 1.26

11 Chhattisgarh 2.466 2.51 2.51

12 Madhya Pradesh 7.41 7.56 7.54

13 Gujarat 10.07 4.28 5.04

14 Maharashtra 6.04 7.88 7.64

15 Andhra Pradesh 4.57 8.88 8.32

16 Karnataka 8.03 6.00 6.26

17 Tamil Nadu 13.09 6.65 7.49

18 All India 100 100 100

Source: Third All India Census of SSIs, 2002

63

In terms of number of registered units, Kerala ranks third in all -India. The

share of Kerala to the total registered units in India is 10.69 per cent. However, when

the unregistered units are also included, the contribution of Kerala in terms of

number of units is tenth position (Third All India census of SSIs, 2002). As

compared to the All India figures, Kerala has lesser proportion of unregistered units

to the total. While the registered units comprise only 19.2 per cent of the total units

in India, the concerned figure is 42 per cent in Kerala. This is a positive aspect

which is mainly the result of high social development in the state (State level report

on third all India census of SSIs, 2002).

3.1.2 Nature of activity

Table 3.3 shows the nature of activity as identified by the second and third All

India census of SSIs.

Table- 3.3: Structure / Nature of activities of SSI Units

Nature of activity Year All India Kerala

1988 5,60,470 (96.23) 24,703 (96.06)SSI

2001 9,01,291 (65.55) 2.06.000 (45.4)

1988 3029 (0.52) 97 (0.38)Ancillary among SSIS

2001 69848(5.08) 10,642(5.18)

1988 18869(3.24) 917(3.5)S.S.S.B.Es

2001 4,73,683 (34.45) 24,7000(54.6)

Source: Second and third all India Censuses of SSIs, 1988 and 2002

64

The share of SSIs in Kerala declined from 96.06 per cent to 45.4 per cent

during 1988-2002. This change at the all India level was from 96.23 per cent to

65.55 per cent. The dominance of the service sector in Kerala’s economic activity is

depicted in the small scale sector also. The share of SSSBEs, in Kerala has increased

from 3.5 per cent in 1988 to 54.6 per cent, in 2001. During the same period, the

change in SSSBEs at the national level was from 3.24 to 34.45 per cent. The

interesting point is that a large number of Kerala’s registered SSI units are engaged

in multiple product / services. Diagram 3.2 show this.

Diagram 3.2 Number of SSI units in India (registered) having multiple products


84.75

9.482.74 0.73

0.25

One product

Two product

Three product

Four product

Five product

Not recorded

65

Diagram 3.3 Number of SSI units in Kerala (registered) having multiple

product


Diagram 3.4 Number of SSI units in Tamil Nadu (registered) having multiple

products


93.3

3.95 0.59 0.09

1.06

one product

two product

three product

four product

five product

not recorded

77.83

13.78

5.35 1.53 1.06

one product

two product

three product

four product

five product

not recorded

0.45

66

Diagram 3.5 Number of SSI units in Karnataka (registered) having multiple

products


The above diagrams show that as compared to all India, Kerala’s registered SSI

units are engaged in multiple product / services.

82.47

12.293.17 0.65 0.27

1.15

One product

Two product

Three product

Four product

Five product

Not recorded

67

3.1.3 Form of organisation

Diagram 3.6 depicts the form organisation.

Diagram 3.6 Form of organisation of SSIs in Kerala

Source: Second and third all India censuses of SSIs (1988 and 2002)

Majority of SSI units in Kerala are organised as sole proprietorships. The

share of sole proprietorships has increased from 82.44 per cent to 92.87 per cent

during 1988 to 2002 periods. During the same periods, the share of partnerships and

Private Ltd. Company has declined. It is in the order of 88.85 per cent 7.21 per cent

and 2.42 per cent at all-India in 2002 (Third all India census of SSIs, 2002).

82.44

14.73

1.15 1.17 0.51

92.87

4.730.71 0.89 0.8

0

10

20

30

40

50

60

70

80

90

100

Proprietorship Partnership Pvt. Ltd. Company

Co-operative Others

Form of organisation

Per

cen

t o

f u

nit

s

III Census

IIII Census

68

3.1.4 Location

The location of enterprises is presented in the diagrams 3.6 a, b and c.

Diagram 3.7 Location of units in Kerala as per the findings of different censuses

of SSIs

First Census

46

54

Rural

Urban

Second Census

5050

Rural

Urban

69

Source: First, second and third all India censuses of SSIs (1972,1988, 2002)

The share of SSI units located in the rural areas is on a continuous increase

both at all India and in Kerala. However, Kerala has larger share of rural industries.

Only 44.33 per cent of units are located in rural areas at all – India, but the

corresponding figure is 66.8 per cent in Kerala (third all India census of SSIs, 2002).

This is due to better infrastructure facilities prevailing in the rural areas of Kerala.

3.2 Performance

Aspects like employment, investment, value of output, export etc have been

considered for evaluating the performance of SSIs in Kerala.

3.2.1 Employment

Table 3.4 provides information about employment.

Third Census

66.8

33.2

Rural

Urban

70

Table 3.4 Employment in SSIs of Kerala

Employment I st census II nd census III rd census

Total employment in numbers (registered

SSIs)126514 169309 540260

Per unit employment 20 7 4

Source: First, second and third All India Census of SSIs (1972, 1988 and 2002)

Though the total number of employment has increased in the SSI sector, the

average employment per enterprise has declined sharply. The ongoing economic

reforms are introduced to “promote efficiency, reduce the bias in favour of excessive

capital intensity and encourage employment oriented pattern of industriasation”

(Economic survey, 1992). The employment generation of the small enterprises in

Kerala has to be evaluated on this back ground. Perhaps, the higher average size in

terms of employment in Kerala could be seen as a bright facet, but the fact that the

average size in terms of employment declined from 20 persons in 1972-73 to 7

persons in 1987-88 in Kerala as against corresponding figures of 12.6 respectively at

all - India has to be noted (Subrahmanian and Pillai, 1994). The average size in terms

of employment in Kerala declined further to 4 persons in 2001-02 as against

corresponding figure of 4.48 at all – India (Third all India census of SSIs, 2002).

However, annual growth rate in employment creation by the SSI sector of Kerala

was highest during 1989 -1993 periods.

71

Table 3.5 Share of selected states to total SSI employment in India

Sl. No. State% share of employment by SSI units to total SSI

employment in India

1 Kerala 4.47

2 Rajasthan 3.48

3 Punjab 3.64

4 Haryana 2.22

5 Uttar Pradesh 16.05

6 Bihar 4.34

7 Assam 1.72

8 West Bengal 8.70

9 Orissa 3.70

10 Jharkhand 1.11

11 Chattisgarh 2.13

12 Madhya Pradesh 5.39

13 Gujarat 5.08

14 Maharashtra 8.23

15 Andhra Pradesh 8.58

16 Karnataka 6.57

17 Tamil Nadu 8.09

18 All India 100


72

The employment share of Kerala SSIs is 4.47 per cent to total all India. In

terms of the number of registered SSI units, Kerala nationally ranks third but in terms

of employment generation, the State is far below the national average. In this regard,

Kerala enjoys ninth position. This reveals the fact that the contribution of small

enterprises in the state in reducing the level of unemployment is not commendable.

3.2.2 Investment

The investment as per various censuses is reported in table 3.6.

Table 3. 6 Investment of SSIs in Kerala

InvestmentI st census

1972

II nd census

1988

III rd census

2002

Investment in fixed assets

in Rs. Lakh4408 38751 494328

Per unit investment in

fixed assets (Rs. Lakh)0.64 (0.75) 1.5 (1.6) 3.36 (6.68)

Investment in plant and

machinery (Rs. Lakh)2193 21120 163843

Per unit investment in

plant and machinery (Rs. Lakh)

0.41(0.38) 0.82 (0.95) 1.11 (2.21)

Source: First, second and third All India Census of SSIs, 1972, 1988 and 2002

Figures in brackets show all-India averages

73

Total investment and average investment per enterprise in fixed assets as well

as in plant and machinery among the small scale industries of Kerala has recorded a

noticeable increase in the past. However, as compared to all– India, per unit fixed

capital investment and per unit investment in plant and machinery of the small scale

units in Kerala through out the period from 1972 to the present was well below the

national level. The size (in terms of investment) of small enterprises in Kerala is also

very low as compared to the neighbouring states of Tamil Nadu and Karnataka

(Subrahmanian and Pillai, 1994). The relative share of Kerala in total fixed

investment is presented in table 3.7.

Though Kerala enjoys third position in number of registered units, it has only

ninth position in fixed capital investment (4.55%) of SSIs in all India. It is striking,

however, that the ‘tiny’ units still accounted for the largest share in number as well

as output of small sector in Kerala. Presumably, the predominance of ‘tiny’ units

could have in general exerted a depressing influence on technological progress and

productivity growth in Kerala, (Subrahmanian and Pillai, 1994).

74

Table 3.7 Share of selected states to the total fixed investment of SSIs in India

Sl.No. State% share of fixed investment to

total All India

1 Kerala 4.55

2 Rajasthan 4.27

3 Punjab 7.67

4 Haryana 5.17


6 Bihar 1.76

7 Assam 0.71

8 West Bengal 3.63

9 Orissa 1.24

10 Jharkhand 0.39

11 Chattisgarh 1.30


13 Gujarat 7.15

14 Maharashtra 18.13


16 Karnataka 5.46

17 Tamil Nadu 7.12

18 All India 100


75

3.2.3: Value of Output

The gross output of SSI sector in Kerala is given in table 3.8 .

Table 3.8 Output of SSIs in Kerala

Out putI st census

1972

II nd census

1988

III rd census

2002

Gross out put (Rs. Lakh)

11565 113691 645676

Per unit gross out put (Rs. Lakh)

1.66 (1.63) 4.42 (7.38) 4.39 (14.78)

Source: First, second and third All India Census of SSIs, 1972, 1988 and 2002

Figures in bracket show all - India value

Though gross output increased, per unit gross output of Kerala SSIs is not

remarkable and in fact it declined from Rs.4.42 lakh in 1988 to Rs.4.39 lakh during

in 2002. Per unit gross output produced by the SSIs in Kerala is far below the

national level. SSI output per unit of investment was 2.6 in Kerala in 1972 where as

the corresponding figure was 2.5 at all – India in the same period (first all India

census of SSIs, 1972). Kerala was producing more output per unit of investment than

the national average. However, during the second census period (1988) though

output per unit investment of the small enterprises in Kerala increased, this ratio

remained far below the national level. Output per unit of investment was 7.38 at all -

India and the state’s performance in terms of output per unit investment was only

4.62. In 2002 all-India output per unit investment was 6.7 and the corresponding

figure for Kerala was only 3.94 (first, second and third all India censuses of SSIs,

1972, 1988, and 2002). These indicate that the gross output produced by the small

76

enterprises in Kerala is absolutely and relatively low when we consider it in terms of

number of units and total investment. The relative share of state in gross output is

given in table 3.9.

Table 3.9 Share of selected states in their gross output to total all India

Sl.No. State% share of total gross output to all India total

1 Kerala 2.89

2 Rajasthan 4.84

3 Punjab 9.21

4 Haryana 7.08


6 Bihar 1.31

7 Assam 1.17

8 West Bengal 6.25

9 Orissa 1.86

10 Jharkhand 0.45

11 Chattisgarh 0.96


13 Gujarat 4.70

14 Maharashtra 14.53


16 Karnataka 4.37

17 Tamil Nadu 6.47

18 All India 100


77

The performance of SSI s in Kerala in their value of goods produced is poor.

Kerala has got only twelfth position in all India and it is far below the national

standard. The performance of the state is also poor compared to its neighbouring

states. The contribution of Kerala SSIs to total all India value of goods produced in

the SSIs, is only 2.89 per cent where as the share of Tamil Nadu is 6.47 per cent and

that of Karnataka is 4.37 per cent. Overall, the growth performance of small industry

in Kerala is poor as compared to its counterpart in the neighboring states of Tamil

Nadu and Karnataka and at all-India. In particular, the average size of the units and

factor productivity is lower with the result that its contribution to income generation

is the least in Kerala (Subrahmanian and Pillai, 1994).

3.2.4 Exports

There are 2181 exporting units in SSI sector in the state accounting for

exports to the tune of Rs. 74,014 lakh. The value of exports is only 9.13 per cent of

gross out put. The registered SSI sector accounted for 99.40 per cent of total value

of exports with only 21.73 per cent of the exporting units (Third All India Census of

SSIs, 2002).

78

Table 3.10 Percentage share of export value of SSIs of selected states to total of

all India

Sl.no State% share of value of exports to total

All India Exports

1 Kerala 5.21

2 Rajasthan 4.16

3 Punjab 19.68

4 Haryana 10.06


6 Bihar 0.04

7 Assam 0.01

8 West Bengal 4.00

9 Orissa 2.03

10 Jharkhand 0.19

11 Chattisgarh 0.06


13 Gujarat 0.14

14 Maharashtra 9.19


16 Karnataka 3.67

17 Tamil Nadu 15.66

18 All India 100


79

Kerala occupies fifth position in terms of value of exports by the SSI units

when compared with other states to all India. The performance of the SSIs in the

state in terms of their export earnings is commendable. Kerala’s percentage share in

value of exports (by SSI units) in the first census was 24.75 to that of the total all-

India export by the SSIs. It sharply declined to 6.7 per cent in the Second All India

census of SSIs. Kerala SSI’s share of export to all India SSI’s total further declined

to 5.2 per cent in the third All India Census of SSIs period of 2001–02.

A brief summary of the performance of SSIs in Kerala is shown in table 3.11.

80

Table 3.11 Performance of SSIs in terms of selected variables

ALL INDIA KERALA

Attributes1 Census II Census III Census 1 Census

II Census

III Census

Registered units

2,57,791 9,86,861 22,62401 11,427 38,030 2,21,820

Unregistered Units

Not estimated

Not estimated 91,46,216

Not estimated

Not estimated

305838

Production (Rs. Lakh)

2,60,274 42,97,205 2,03,25,462 11,452 1,13691 645676

Per unit production (Rs. Lakh)

1.63 7.38 14.78 1.66 4.42 4.39

Exporting units

- 4554 7344 - 195 474

Value of exports (Rs. Lakh)

15049 2,49902 12,30,826 3725 16,738 73571

Total fixed investment (Rs. lakh)

1,05,468 9,29,603 91,79,207 4,408 38,751 4,94,328

Per unit fixed investment (Rs. lakh)

0.57 1.6 6.68 0.638 1.51 3.36

Investment in plant and machinery (Rs. lakh)

53,696 5,54,258 30,32,868 2829 21,120 163843

Per unit in P&M (Rs. lakh)

0.38 0.95 2.21 0.41 0.82 1.11

Employment (Nos)

16,53,178 36,65,810 61,63,479 1,26,514 1,69309 5,40260

Per unit Employment (Nos)

12 6.29 4.48 20 6.6 3.68

Percentage of registered units to the total units

19.8 42

Source: First, second and third all India censuses of SSIs, second and third state

level reports of the censuses, 1972, 1988 and 2002

81

Table 3.11 shows the position of Kerala in comparison with all India figures

as is revealed in the three all India Census of SSIs with respect to certain important

economic indicators. The growth rate in the number of registered SSI units in Kerala

is higher as compared to that of all India growth rate. But the performance in terms

of production, investment and employment generation is well below the national

performance. The production per unit at constant prices experienced a sharp decline

in Kerala in the last few years. This reflects inefficiency and poor performance of

this sector. The production capacity utilisation level of Kerala is also below the

national level. Capacity utilisation is only 42.62 per cent in Kerala while it was 51

per cent at the national level (Second census). Per unit, investment made a

tremendous progress at the all - India level. However, in Kerala, per unit investment

in the SSI sector remains low and it did not experience much progress and it is far

below the national average. The per unit employment also declined sharply in

Kerala and now it is far below the all-India average. The reason for a sharp decline in

per unit employment from 20 to 6.6 during 1972 – 2002 is yet to be analysed.

Decline in employment generation cannot be attributed to any technical progress or

mechanisation because our unit investment is well below the all-India average. This

is substantiated by the status of technical know how reported in table 3.12.

82

Table 3.12 Technical know how in the registered SSI sector (Percentage wise)

AbroadDomestic

collaborating company/unit

Domestic R&D institutional

agencyNone Total

All India 0.97 7.54 6.11 85.38 100

Kerala 0.36 7.32 8.19 84.13 100

Tamil Nadu 0.46 6.69 5.27 87.57 100

Karnataka 0.91 6.22 4.64 88.22 100

Source: Third all India census of SSIs, 2002.

Table 3.12 shows the technical know -how in the registered SS1 sector in

Kerala in comparison with the all India, Karnataka and Tamil Nadu. Only a very few

units (0.36 per cent) in Kerala depend on technical know how from abroad. At the

all India level 0.97 per cent units gain from foreign technical know-how. 85 per

cent, at the all India level and 84.13 per cent units in Kerala depended on their own

traditional knowledge and skill. The prevailing low technology in the Kerala SSI

sector might be the reason for its low productivity both in terms of capital and

labour.

All these facts reveal that while the performance of small scale units at all-

India level is steadily improving, the performance of this sector in the state is

deteriorating.

83

3.3 Reflections of poor Performance

The poor performance of SSIs in Kerala, like India, has reflections on

sickness and closure of units.

3.3.1 Sickness / incipient sickness in Kerala

The most alarming feature of Kerala’s SSI sector is the prevalence of high

rate of sickness / incipient sickness6 in this sector. Kerala’s share of sickness among

registered SSI sector to that of All India is 19.65 per cent (Third all India census of

SSIs, 2002). The share of Kerala in incipient sickness to all India is 32 per cent

(Third all India census of SSIs, 2002). Taking together, sickness/incipient sickness is

28.5 per cent (Third all India census of SSIs, 2002) but, Kerala’s share in number of

registered units to all India is only 10.69 per cent.

Taking in to account both registered and unregistered units, Kerala’s share in

number of units to total all India is only 4.3 per cent. But our share in sickness is

14.63 per cent and our share in incipient sickness is 18.6 per cent and Kerala’s share

in sickness/incipient sickness is 17.74 per cent. These figures explicitly depict the

gravity of the problem in the Kerala’s SSI Sector. The problem of sickness is a

severe concern in India and definitely it is all the more so in Kerala.

------------------------------------------------------------------------------------------------------

6 A small scale industrial unit is considered as sick when there is an erosion of net worth by more than 50 per cent or delay in

repayment of institutional loan by more than 12 months. Incipient sickness is measured in terms of continuous decline in gross

output over three consecutive years (Kohli committee, 2002).

84

Table 3.13 Sickness, incipient sickness and sickness/incipient sickness among

SSIs of Kerala.

Characteristic Total SSIRegistered

SSIsUnregistered

SSIs

No. of sick units 15334 9125 (59.51) 6209 (40.49)

Per cent of sickness to total successful units in Kerala

3.39 - -

No. of incipient sick units 139722 50582 (36.10) 59140 (63.8)

Per cent of incipient sickness to total successful units in Kerala

30.86

No. of sickness/incipient sickness

145996 - -

Percentage of sickness / incipient sickness to total successful units in Kerala 32.24

- -

Source : Third all India census of SSIs -State level report, 2002

It is indeed alarming to note that a state with so much social and economic

development is facing sickness/incipient sickness to the tune of 32.24 per cent of the

total successful units. It is indeed the highest rate in India and Kerala has the largest

share of sickness/incipient sickness to all India figure. R.B.I. while limiting the

universe to units having outstanding loan with institutional sources 70555 in number,

it was found that about 13055 (18.47 per cent) were sick in Kerala. The relative

position in respect of sickness/ incipient can be gathered from table 3.14.

85

Table 3.14 Percentage of sick/incipient sick units of selected states to total

Sl.No. State% share of sick/incipient sick units

to total All India

1 Kerala 17.80

2 Rajasthan 4.80

3 Punjab 5.28

4 Haryana 2.07


6 Bihar 2.50

7 Assam 1.02

8 West Bengal 6.92

9 Orissa 2.42

10 Jharkhand 0.60

11 Chattisgarh 1.48


13 Gujarat 4.98

14 Maharashtra 7.31


16 Karnataka 9.07

17 Tamil Nadu 10.84

18 All India 100

Source: Third all India Census of SSIs, 2002

Kerala ranks top in terms of sick/incipient sick units at all India level. The

major reason for sickness and incipient sickness among the SSI units in Kerala is the

lack of demand where more than three-fourth of the sick units are severely affected

86

by this (Third Census, 2002). The problem of lack of demand will become more

severe in the future due to tough international competition. More than one-third of

the sick units are affected by either shortage of working capital or marketing problem

or both. Non-availability of raw material became the cause of sickness to 15 per cent

of the sick units in Kerala. Labour problem is not a major reason for sickness in

Kerala’s SSIs. Only about three per cent of the sick units in Kerala are caused due to

labour problems. It is below the national level where five per cent of the units

affected by sickness is caused due to labour problems.

3.3.2 Closure of units

Table 3.15 contains the details of successful and closed units in Kerala.

Table 3.15 Successful units and closed units

Source: First, second and third all India censuses of SSIs (1972,1988 and 2002)

KERALA

Attributes 1st Census IInd Census IIIrd Census

Total number of registered units 11,427 38,030 2,21,820

Total number of registered units Not estimated Not estimated 305838

Registered successful units 6902 25717 146988

% of successful units to total

registered60.4 67.6 66.2

No of closed units registered 3,885 11,763 74832

87

The percentage of working to total units in the state has declined from 67.6 to

66.2 during 1988-2002 periods. This reveals that the various measures adopted by

the state government machinery to support and revive the weak units have not found

any fruitful result.

Table 3.16 Distribution of closed units by the year of closure

Year Number Per cent

Up to 1991 7592 10.15

1992 2621 3.50

1993 1945 2.60

1994 3309 4.42

1995 5358 7.16

1996 6159 8.23

1997 7984 10.66

1998 12495 16.70

1999 13245 17.70

2000 11680 15.61

2001 1478 2.00

Not entered 956 1.27

Total 74832 100.00

Source: Third all India census of SSIs, 2002

Above 60 per cent of the closure of SSI units occurred during 1998 to 2000.

The percentage of failure in rural areas is found to be 66.3 per cent and it is 33.6 per

cent in urban areas (Second all India census of SSIs, 1988).

88

Table 3.17 Percentage of working and closed unit to the registered total of each

(selected) states in India, Third Census, 2002

StateTotal registered

units% of closed units

All India 2262401 39

Kerala 221820 34

Andhra Pradesh 101499 38

Assam 24791 42

Bihar 72632 28

Gujarat 177696 22

Haryana 67130 41

Karnataka 157098 30

Madhya Pradesh 167588 39

Maharashtra 137341 39

Orissa 22074 44

Punjab 147746 56

Rajasthan 79992 46

Tamil Nadu 307217 41

Uttar Pradesh 285220 43

West Bengal 68228 38

Source: Third all India census of SSIs, 2002

The percentage of closed units in Kerala is below the national average. But

still it is alarming that the present percentage share of closed units in Kerala is

greater when compared to the first and second census periods.

89

The table 3.18 shows the closure of SSI units in Kerala in terms of their

product groups.

Table 3.18 Productwise closure of units

Product No. of unit

closed% to total

closed

Food product 1678 14.26

Wood product 1592 13.59

Metal product 1396 11.86

Rubber and plastic products 1374 11.68

Chemical and Chemical products 1231 10.46

Non metallic mineral product 964 8.19

Beverage of tobacco 175 1.48

Cotton textiles 16 0.13

Wood, silk and Synth-fibre text 05 0.042

Jute, hemp and mesta textiles 02 0.017

Hosiery and Garments 829 7.047

Paper products and printing 687 5.84

Lathes leather products 173 1.47

Basic metal industries 141 1.198

Machinery and parts except elect. 420 3.57

Electrical machinery and apparatus 190 1.65

Transport equipments & parts 120 1.02

Miscellaneous manufacturing industries 141 1.198

Repairing services 529 4.497

Services not else classified 03 0.025

Other services 97 0.824

Total 11763 100.00

Source: Third all India census of SSIs, State level report of Kerala, 2002

90

Food industry, wood products, metal products, Rubber and plastic products,

chemical and chemical product industries are more in number of closed units. Tables

3.19 show the percentage wise share of Kerala and a few other important states to the

total all India figure of working and closed units in the first, second and third all

India census of SSIs.

Table 3.19 Percentage shares of selected states to all India closed SSI units

% share of registered SSI successful units to total successful units in

India

% share of closed units to total that of all

IndiaSl.no State

First Second Third First Second Third

1 Andhra Pradesh 5.65 6.73 4.57 8.2 4.86 4.35

2 Assam 1.09 0.76 1.05 0.5 0.57 1.16

3 Bihar 3.99 5.98 3.79 3.56 4.9 2.31

4 Gujarat 7.28 5.92 10.07 5.6 6.3 4.41

5 Haryana 3.36 4.01 2.87 3.4 6.88 3.10

6 Karnataka 4.43 6.96 8.03 4.01 4.8 5.25

7 Kerala 4.45 4.42 10.69 4.6 3.9 8.43

8 Madhya Pradesh 5.47 12.69 7.41 5.68 11.63 7.40

9 Maharashtra 10.88 5.13 6.04 10.7 3.6 6.11

10 Orissa 1.36 1.42 0.899 1.5 1.2 1.09

11 Punjab 9.3 7.79 4.27 8.6 7.8 9.32

12 Rajasthan 5.05 4.99 3.13 4.95 5.9 4.15

13 Tamil Nadu 11.64 9.82 13.09 10.52 8.14 14.33

14 Uttar Pradesh 8.74 9.15 11.85 11.9 12.2 13.78

15 West Bengal 10.6 7.89 3.065 9.76 12.23 2.94

16 All India 100 100 100 100 100 100

Source : First, Second and Third all India Census of SSI, 1972, 1988 & 2002

91

The percentage share closed units to all India total figure was 4.6 per cent in

Kerala in the first census. Though the percentage share of closed units declined to 3.9

per cent in the second census, it again increased to 8.43 per cent in the third all India

Census of SSIs.

3.3.3 Reasons for closure of units

Table 3.20 highlights the major reasons for the closure of units in Kerala. Main

reasons for closure were marketing problem, finance problem and stiff competition

(Third all India census of SSIs, 2002). Globalisation and liberalisation and the

resultant competition might have seriously affected the weak and inefficient units.

This also recalls the fact that small enterprises in Kerala can survive only by

increasing efficiency, which necessitates modernisation.

Table 3.20 Reasons for Closure

Sl. No

Reason for closureNumber of units

closedPer cent to total

closed.

1 Labour problems 371 3.15

2 Dispute amongst owners 186 1.58

3 Raw material problem 441 3.75

4 Finance problem 7244 61.6

5 Marketing problem 1043 7.9

6 Natural calamity 60 0.5

7 More than one reasons combined

1185 10.07

8 others 1233 10.5

Total 11763 100.00

Source : Second all India census of SSIs. Kerala state level Report, 1988

92

The major reason for the closure of units in Kerala was finance problem. The

other major problems that had to the closure of units were marketing problem, raw

materials problems, and labour problems. The third all India Census of SSI (2002)

also identified the same reasons for closure of SSI units in the state.The wider spread

closure of the SSI units is a threat to the peaceful economic, political and social

climate prevailing in the state. It is already seen that the performance of the SSI

units in Kerala in terms of productivity, investment, export earnings, etc are

deteriorating in the recent years. The situation becomes still grave since the closure

rate of SSI units in Kerala is increasing in recent years.

To conclude, one cannot deny the role of SSI sector in Kerala’s development

especially in terms of generation of employment and foreign exchange earnings. But

their performance in general and in comparison to the national level or to our

neighboring states is really disappointing. The per unit productivity, investment,

employment and the productive capacity is very low compared to all India level and

compared to neighboring states. Unless the SSI sector in Kerala manage to increase

productivity and improve the quality of the product they produce through

modernisation which definitely requires additional investment, the Kerala’s SSIs will

not be able to withstand the present day competition intensified by globalisation and

liberalisation policies.

3.4 SSIs across Regions

Having understood the structure and related aspects of SSI in Kerala, it is

necessary to examine whether there is any regional differences in these aspects in the

state.

93

3.4.1 Number of units

Table 3.21 has the details of number of units.

Table 3.21 Districtwise details of SSIs registered in Kerala

Sl.no

District 2003 2004 2005 2006 2007 2008

1Thiruvananthapuram

28918

(10.69)

2937

(10.66)

29837

(10.63)

30428

(10.63)

21786

(11.11)

30705

(10.63)

2 Kollam26157

(9.67)

26882

(9.75)

27397

(9.76)

28371

(9.9)

16128

(8.23)

28732

(9.94)

3 Pathanamthitta13112

(4.85)

13415

(4.86)

13615

(4.85)

13898

(4.85)

9170

(4.68)

13958

(4.83)

4 Alappuzha24491

(9.05)

24975

(9.06)

25528

(9.09)

26194

(9.14)

18153

(9.26)

26571

(9.2)

5 Kottayam27741

(10.26)

28156

(10.21)

28519

(10.16)

28931

(10.10)

19880

(10.19)

29090

(10.67)

6 Idukki7081

(2.6)

7305

(2.65)

7509

(2.67)

7700

(2.69)

5082

(2.59)

7804

(2.7)

7 Ernakulam35183

(13.01)

35609

(12.9)

36062

(12.85)

36690

(12.82)

24716

(12.6)

36992

(12.8)

8 Thrissur28272

(10.45)

29073

(10.54)

29774

(10.61)

30379

(10.61)

22468

(11.46)

30776

(10.65)

9 Palakkad21516

(7.95)

21630

(7.84)

21865

(7.79)

22126

(7.73)

14608

(7.45)

22302

(7.72)

10 Malappuram12724

(4.7)

12972

(4.7)

13201

(4.7)

13411

(4.68)

10119

(5.16)

13516

(4.67)

11 Kozhikode19895

(7.35)

20372

(7.39)

20820

(7.4)

21092

(7.36)

16000

(8.16)

21205

(7.34)

12 Wayanad4552

(1.68)

4586

(1.66)

4610

(1.63)

4652

(1.62)

2872

(1.46)

4676

(1.6)

13 Kannur13780

(5.09)

14212

(5.15)

14687

(5.25)

15032

(5.25)

9959

(5.08)

15164

(5.24)

14 Kasargod6922

(2.56)

7065

(2.56)

7366

(2.56)

7366

(2.56)

5019

(2.56)

7377

(2.55)

15 Total 270344 275649 286210 286210 195960 288869

Source: Economic review, (1979 to 2008), Kerala Planning Board.

Figures in brackets show percentage share of each district to the state total

94

In terms of number of units, Ernakulam district is having the largest share of

SSI units and Wayanad is having the lowest share. After Ernakulam, it is Thrissur

Thiruvananthapuram, and Kottayam districts having larger number of registered

units. Ernakulam is having 12.8 per cent of total SSIs in the state. This shows that the

performance of the district in terms of number of units is tremendous. Ernakulam

district is bestowed with all the geographical factors which help the development of

industry and it is the forefront of all other districts in Kerala in the field of industry

(Government of Kerala, Ernakulam district Official web site).

3.4.2 Employment

District wise employment in SSI is given in table 3.22.

The districtwise employment created by the SSIs reveal that Ernakulam and

Kollam have comparatively larger contribution. Wayanad is having the least share.

95

Table 3. 22 Districtwise employment created by SSIs in Kerala

Sl no

District 2003 2004 2005 2006 2007 2008

1Thiruvanantha

puram

114286

(9.4)

116570

(9.42)

118917

( 9.43 )

122226

( 9.48 )

84494

(9.68 )

123658

(9.5 )

2 Kollam167751

(13.8)

170367

(13.76)

172364

(13.67 )

176380

( 13.69)

72087

( 11.47)

177850

(13.67 )

3 Pathanamthitta43999

(3.6)

44922

(3.63)

45634

(3.62 )

46421

(3.6 )

23486

( 3.24 )

46655

( 3.58)

4 Alappuzha112768

(9.27)

114999

( 9.29 )

117606

( 9.33 )

122953

( 9.54 )

70617

( 9.36 )

124308

( 9.55 )

5 Kottayam91248

(7.5)

93003

( 7.5 )

94284

( 7.48 )

95921

( 7.45)

57593

( 7.36 )

96681

( 7.43 )

6 Idukki24976

(2.05)

25859

( 2.08)

26995

(2.14 )

27550

( 2.13 )

15877

(2.19)

27907

( 2.14 )

7 Ernakulam164356

(13.52)

167148

(13.5 )

170265

(13.51 )

174175

(13.52 )

104502

( 13.6 )

175834

(13.52 )

8 Thrissur114594

(9.42)

117462

( 9.49 )

120533

(9.58 )

123593

( 9.59 )

84597

( 9.5 )

125473

( 9.64 )

9 Palakkad99671

(8.2)

100153

( 8.09)

101325

( 9.57 )

102512

( 7.95 )

46626

( 6.45 )

103351

( 7.9 )

10 Malappuram50563

(4.15)

51643

(4.17 )

52797

( 4.2 )

53801

( 4.12 )

34404

( 4.75 )

54493

( 4.19 )

11 Kozhikode83694

(6.88)

85493

( 6.9 )

87166

( 6.91 )

88152

( 6.84 )

58298

( 7.86 )

88679

( 6.8)

12 Wayanad16613

(1.36)

16863

(1.36 )

16982

( 1.34 )

17198

( 1.33 )

10030

(1.38 )

17352

( 1.33 )

13 Kannur93278

(7.67)

94615

(7.64 )

96361

( 7.64 )

97780

( 7.59 )

36030

(7.58 )

98442

( 7.56 )

14 Kasargod37741

(3.1)

38325

( 3.09 )

38775

( 3.07 )

39473

( 3.06)

24219

( 3.05 )

39804

( 3.06 )

15 Total 1215532 1237422 1260007 1288135 732860 1300487

Source: Economic review, (2003 to 2008), Kerala Planning Board

Figures in brackets show the share of each district to the state total.

96

3.4.3 Investment

Table 3.23 depicts the districtwise investment.

Table 3.23 Districtwise investment of SSIs in Kerala

District 2003 2004 2005 2006 2007 2008

Thiruvananthapuram

32626.58

(8.34)

34208.3

(8.49)

35580.5

(8.41)

37696.5

(8.49)

49894.94

(8.31)

38454.5

(8.49)

Kollam33360.59

(8.53)

34472.38

(8.55)35718.28

(8.44)37361.28

(8.41)34000.81

(5.66)

37977.28

(8.38)

Pathanam-thitta

11978.4

(3.06)

12665.4

(3.14)13125.84

(3.10)13576.84

(3.06)15914.49

(2.65)

13774.84

(3.04)

Alappuzha26912.3

(6.88)

27720.81

(6.88)29383.34

(6.95)30587.34

(6.89)49886.78

(8.31)

31041.34

(6.85)

Kottayam315341.1

(8.06)

32389.97

(8.03)

34916.8

(8.25)

36196.8

(8.15)

61053.26

(10.17)

36560.8

(8.07)

Idukki8821.48

(2.26)

9128.56

(2.26)

9159.91

(2.17)

9548.91

(2.15)

21584.56

(3.59)

9759.91

(2.15)

Ernakulam87225.59

(22.30)

88210.68

(21.88)

93826.85

(22.18)

100528.85

(22.63)

106570.76

(17.75)

102965.85

(22.73)

Thrissur52880.04

(13.52)

54610.61

(13.55)

56724.53

(13.41)

58361.53

(13.12)

72199.05

(12.03)

59610.53

(13.16)

Palakkad30664.02

(7.84)

31377.16

(7.78)

32484.72

(7.68)

33801.72

(7.60)

48726.55

(8.12)

34351.72

(7.58)

Malappuram20530.13

(5.25)

21328.33

(5.29)

22292.41

(5.27)

23360.41

(5.25)

34890.66

(5.81)

24173.41

(5.34)

Kozhikode21531.36

(5.51)

22700.25

(5.63)

23758.97

(5.62)

24478.97

(5.50)

55570.82

(9.26)

24819.97

(1.36)

Wayanad5194.33

(1.33)

5377.14

(1.33)

5703.11

(1.35 )

5973.11

(1.34)

7440.29

(1.24)

6162.11

(1.36)

Kannur19430.33

(4.97)

19931.67

(4.94)

20914.44

(5.18)

22252.44

(5.00)

28988.51

(4.83)

22619.44

(4.99)

Kasargod8429.33

(2.16)

9018.41

(2.24)

9413.39

(2.22)

10448.39

(2.35)

13533.17

(2.25)

10715.39

(2.37)

Total 391118.53 403139.72 423003.13 444173.13 600254.65 452988.13

Source: Economic Review, (2003 to 2008), Kerala, Planning Board

Figures in brackets show the share of each district to total

97

Ernakulam district is having the largest share (22.73%) of the total fixed

capital investment of SSIs in the state. The smallest proportion of fixed capital

investment (1.36%) is shown by Wayanad district. As compared to other districts in

Kerala, the SSI units in Ernakulam are fairly larger in size.

3.4.4 Output

The districtwise output is presented in table 3.24.

In terms of value of goods produced, Ernakulam district ranks top. It is

producing 32.62 per cent of total output produced in the state. After Ernakulam, it is

Thrissur, Thiruvananthapuram, Alappuzha, Kannur and Kozhikode dstricts that

contribute more in terms of value of products. Wayanad again contributes the lowest

share in value of output.

98

Table 3.24 Districtwise values of goods and services produced (Rs. Lakh)

District 2003 2004 2005 2006 2007 2008

Thiruvana-nthapuram

111356.6

(7.90)

121233.24

(8.33)

150283.38

(9.56)

158972.38

(9.50)106990.86(8.51)

165696.38

(9.68)

Kollam82645.89

(5.87)

87252.98

(6.00)

91770.24

(5.84)

95644.24

(5.72)

65811.77

(5.23)

97159.24

(5.68)

Pathanam-

thitta

26629.49

(1.89)

29692.49

(2.04)

31003.49

(1.97)

31332.49

(1.87)

18826.28

(1.50)

31915.46

(1.86)

Alapuzha100125.78

(7.11)

104608.72

(7.19)

110945.68

(7.06)

115890.68

(6.93)

107744.89

(8.57)

119361.68

(6.97)

Kottayam69863.64

(4.96)

73868.74

(5.08)

91815.15

(5.84)

98046.15

(5.86)

104334.51

(8.29)

100023.15

(5.84)

Idukki25608.75

(1.82)

26810.53

(1.84)

28179.44

(1.79)

29999.44

(1.79)

25.66.69

(1.99)

31046.44

(1.81)

Ernakulam481061.7

(34.16)

482477.3

(33.16)

508391.62

(32.35)

546611.62

(32.69)

388212.01

(30.86)

558488.62

(32.62)

Thrissur158060.7

(11.22)

163776.04

(11.26)

171994.56

(10.95)

179864.56

(10.76)

122263.6

(9.72)

183609.56

(10.72)

Palakkad58832.09

(4.18)

59955.95

(4.12)

62234.93

(3.96)

70752.93

(4.23)

65430.9

(5.20)

72276.93

(4.22)

Malappuram74285.49

(5.27)

77994.93

(5.36)

85796.65

(5.46)

90100.65

(5.39)

66905.02

(5.32)

92467.65

(5.40)

Kozhikode85510.42

(6.07)

89972.0

(6.18)

94390.18

(6.00)

102921.18

(6.15)

97023.04

(7.71)

104704.18

(6.12)

Wayanad10630.77

(0.75)

10673.73

(0.73)

10699.91

(0.68)

10737.91

(0.64)

8112.58

(0.64)

11027.91

(0.64)

Kannur101044.86

(7.17)

102896.27

(7.07)

108507.18

(6.91)

113361.18

(6.78)

59693.97

(4.75)

115395.18

(6.74)

Kasargod22715.51

(1.61)

23830.62

(1.64)

25397.16

(1.62)

27942.16

(1.67)

21483.18

(1.71)

28876.16

(1.69)

Total 1408372.69 1455043.54 1571409.57 1672177.6 1257899.3 1712048.57

Source: Economic review, (2003 to 2008), Kerala Planning Board

Figures in brackets show the share of each district to total

99

3.4.5 Export

The export details are shown in table 3.25.

Table 3.25 Districtwise exporting units and the value of export.

District % units to total % value of exports

1 Kasargod 46.81 0.89

2 Kannur 6.79 2.72

3 Wayanad 0.14 0.00

4 Kozhikode 4.31 4.78

5 Malappuram 1.10 0.24

6 Palakkad 0.83 0.56

7 Thrissur 2.66 2.94

8 Ernakulam 8.54 27.77

9 Idukki 0.46 0.06

10 Kottayam 2.75 1.49

11 Alapuzha 19.64 30.92

12 Pathanamthitta 2.30 0.63

13 Kollam 1.92 24.03

14 Thiruvananthapuram 2.25 2.98

15 Total 100 100.00

Source: Third all India Census of SSIs, 2002

100

In the case of value of exports Alappuzha contributes largest amount

(30.92%) followed by Ernakulam (27.77%). The Kasargod district’s contribution to

the total states SSI export is only 0.89 per cent. Alappuzha district has the highest

numbers of registered exporting units and this district has the highest share on the

states total value of exports i.e. 30.92 per cent. After Alappuzha the export earning is

the highest in Ernakulam followed by Kollam.

Thus, it can be inferred that the performance of the SSI units in Ernakulam

district in terms of their number, employment, investment and value of output is far

superior as compared all other districts in Kerala.

3.5 Reflections on Sickness and Closure

3.5.1 Closed SSI units in Ernakulam

Districtwise sick units are reported in table 3.26.

Table 3.26 shows the seriousness of the problem of sickness in the SSI sector

of Kerala. The various steps taken by the DICs to revive the sick units had only

limited success.

101

Table 3.26 Districtwise sick units of SSIs (as on 31st March)

Sl. No

District 2003 2004 2005 2006 2007 2008

1 Thiruvananthapuram 498 (8.38)

506

(7.81)

510

(7.46)

519

(7.35)

643

(8.48)

643

(8.31)

2 Kollam 511

(8.60)

531

(8.20)

539

(7.89)

539

(7.63)

539

(7.11)

543

(7.02)

3 Pathanamthitta 244

(4.11)

266

(4.11)

271

(4.11)

277

(3.92)

277

(3.92)

278

(3.59)

4 Alappuzha 468

(7.88)

482

(7.44)

489

(7.85)

502

((7.11)

531

(7.00)

532

(6.88)

5 Kottayam 621

(10.45)

640

(9.88)

661

(9.67)

663

(9.39)

670

(2.72)

671

(8.67)

6 Idukki 130

(2.19)

172

(2.66)

204

(2.98)

243

(3.43)

245

(3.23)

254

(3.28)

7 Ernakulam 1641

(27.62)

1761

(27.19)

1823

(26.67)

1914

(27.10)

2136

(28.16)

2182

(28.20)

8 Thrissur 470

(7.91)

539

(8.32)

586

(8.56)

600

(8.49)

644

(8.49_

691

(8.93)

9 Palakkad 301

(5.07)

393

(6.07)

494

(7.23)

530

(7.50)

553

(7.29)

555

(7.17)

10 Malappuram 225

(3.79)

267

(4.12)

291

(4.26)

297

(4.2)

324

(4.27)

350

(4.52)

11 Kozhikode 402

(6.77)

440

(6.79)

470

(6.88)

479

(6.78)

510

(6.72)

512

(6.62)

12 Wayanad 80

(1.35)

86

(4.12)

88

(1.29)

90

(1.27)

101

(1.33)

105

(1.36)

13 Kannur 250

(4.21)

274

(4.23)

288

(4.21)

290

(4.11)

290

(4.11)

297

(3.84)

14 Kasargod 100

(1.68)

120

(1.85)

121

(1.77)

121

(1.71)

123

(1.62)

124

(1.60)

15 Total 5941 6477 6835 7064 7586 7737

Source: Economic Review (2003 to 2008), Kerala Planning Board

102

Table 3.27 Percentage distribution of sick/incipient sick units in the total SSI

sector in Kerala

Name of DistrictSick units

Incipient sick units

Sick/incipient sick units

Sick units as per R.B.I

criteria

1 Kasaragod 16.20 18.42 17.74 12.10

2 Kannur 8.33 7.39 7.62 8.82

3 Wayanad 2.46 3.96 3.88 2.77

4 Kozhikkod 8.15 6.31 6.31 8.63

5 Malappuram 1.80 4.90 4.79 1.94

6 Palakkad 7.17 6.38 6.49 8.18

7 Thrissur 9.55 12.48 12.40 10.23

8 Ernakulam 5.14 6.69 6.63 5.42

9 Idukki 7.26 3.76 4.03 8.31

10 Kottayam 8.11 6.76 6.81 7.65

11 Alappuzha 9.80 7.93 8.08 10.84

12 Pathanamthitta 1.56 3.35 3.28 1.57

13 Kollam 2.51 2.67 2.67 2.75

14 Thiruvananthapuram 11.95 8.99 9.27 10.78

Total 100 100 100 100

Source : Third all India census of SSIs Kerala, state level Report, 2002

Table 3.27 shows district wise percentage of sickness to that of total sickness

in Kerala. Kasargod district (16.20) has the largest share of sickness, incipient

sickness and sickness/incipient sickness and it is mainly due to the presence of large

103

number of unregistered units. After Kasargod, Thrissur has the largest share of

incipient sickness followed by Thiruvananthapuram and Kannur. As per R.B.I.

criteria, largest number of sick units was in Kasargod, followed by

Thiruvananthapuram, Thrissur, Kannur and Kozhikode.

Data relating to working and closed units are shown in table 3.28.

Table 3.28 Percentage distribution of working / closed unit in district wise

Sl. No

DistrictTotal

registered unit

Successful units

Closed units

% of successful units

% of closed units

1 Kasargod 5703 3762 1941 65.0 34

2 Kannur 9575 6997 2578 73.0 27

3 Wayanad 3615 2334 1281 64.6 35.4

4 Kozhikkode 17083 12624 4459 73.9 26.1

5 Malappuram 11138 7937 3201 71.26 28.74

6 Palakkad 17362 11374 5988 65.5 34.5

7 Thrissur 24292 16752 7540 69 31.00

8 Ernakulam 30352 19220 11132 63.3 36.7

9 Idukki 5759 3818 1941 66.3 33.7

10 Kottayam 23883 15504 8379 65 35

11 Alappuzha 19626 13463 6163 68.6 31.4

12 Pathanamthitta 10238 6599 3639 64.45 35.54

13 Kollam 16280 9868 6412 60.6 39.4

14 Thiruvanthapuram 26914 16736 10178 62.2 37.8

15 All Kerala total 2,21,820 1,46,958 74,832 66.26 33.74

Source: Third all India senses of SSIs, 2002

The table 3.28 shows the percentage distribution of working and closed unit

in the registered SSI sector in district wise. Kollam has the highest percentage of

closed units as compared to the total units registered in the district. 39.4 per cent of

104

the registered units in Kollam are found closed during the survey of 3rd All India

census of SSIs. In Thiruvananthapuram 37.8 per cent of the registered units are

found closed. In Ernakulam 36.7 per cent of the registered units were found closed.

Table 3.29 Distribution of closed units in each district and their percentage to

the state total

Name of District No. of closed units per cent to total

Kasargod 1941 2.59

Kannur 2578 3.44

Wayanad 1281 1.71

Kozhikkode 4459 5.96

Malappuram 3201 4.28

Palakkad 5988 8.00

Thrissur 7540 10.80

Ernakulam 11132 14.88

Idukki 1941 2.59

Kottayam 8379 11.20

Alappuzha 6163 8.24

Pathanamthitta 3639 4.86

Kollam 6412 8.57

Thiruvananthapuram 10128 13.60

Total 74832 100.00

Source: Third all India senses of SSIs, 2002

105

Table 3.29 shows that Ernakulam district ranks top with a share of 14.88 per

cent of the total closed units in the state. Thiruvananthapuram district has a share of

13.6 per cent and Kottayam has 11.2 per cent of the total closed units in the state. In

the food industry group the highest closure was in Ernakulam District (19.4 per cent)

followed by Kollam (16.3. per cent). In the wood product group the highest closure

was in Kollam (15.5 per cent) followed by Ernakulam (14 per cent), Kannur and

Thiruvananthapuram (12.2 per cent each). Under metal product group closure was

the highest in Ernakulam District (28.1 per cent) followed by Thrissur (11.4 per

cent).

To conclude, it can be found that the performance of the SSI units in Kerala

in terms of their productive efficiency, investment size and employment creation are

absolutely and relatively low. Ernakulam is having a leading hand in number of SSI

units in the state. The performance of SSI units in Ernakulam as compared to other

districts is in a better position. But this is only a relative position as compared to

other districts in the state. The productive efficiency, employment and investment

size of the SSI units in Ernakulam in its absolute terms and compared to all-India

level is not satisfactory and is well below the potential. The high closure rate as well

as sickness rate among the small enterprises in the district is a very severe economic

and social problem. To understand the reasons leading to success, sickness and

failure of small enterprises one has to consider the nature of entrepreneurs and their

entrepreneurial background as well as the nature and structure of industrial

establishments. The next chapter is an attempt to identify the nature of success,

sickness and failure of small enterprises in the district.

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