agglomeration and external economiesshodhganga.inflibnet.ac.in/bitstream/10603/16929/10/10_chapter...
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CHAPTER-IV
AGGLOMERATION AND EXTERNAL ECONOMIES
In the previous chapter an overview was given about the structural
characteristics of the sample industrial estates situated in the National
Capital Region. These characteristics, while important in themselves as
indicator of the condition of Industrial Estates in the National Capital
Region, do not however, reveal the viability and the profitability of the
industrial units of the estates. To make an assessment of the relative
success or failure of the different industrial estates as well as the industrial
units within and outside these estates, it is necessary to compare the rate
of profit of industrial units located in them.
In this chapter, therefore, an attempt ts made to analyse the
viability of the industrial units located in different industrial estates in
the National Capital Region.
161
4.1 Theoretical and Methodological Issues
For an analysis of this kind we need comparable statistics for
the cost of identical industrial products manufactUred within and outside
the industrial estate, in factories which are not too different in size, use
similar methods and maintain the same degree of efficiency in their
organizational arrangement. 04
In this analysis we have attempted a case study of Okhla and
have divided the industrial estate into two Blocks, namely the Estate
Block or Primary Block and the Non~estate Block or the Secondary
Block. The Estate Block includes the industrial units within the industrial
estates and the Non-estate Block contains comparable units outside the
industrial estates. The Non-estate Block fulfills, as far as possible, the
canons of homogeneity and comparability with the Estate Block.
The data for this analysis were collected from Okhla industrial
estate and from the individual industrial units outside Okhla estate within
a radius of 3 Kilometers The location of Okhla industrial estate is shown
in Map 1.2. A survey was done of 79 industrial entrepreneurs, 48
working in the industrial estate and 3 I working outside the industrial
t::staie. An eiaborate questionnaire was administered personally in
1994-9 5. The questionnaire sought among other things detailed
infonnation about employment, capital, finance, inputs and outputs.
Alessondra Molinavi ( 1962), "Some Controversial Questions Concerning Industrial Estates" in Industrial Estates in Asia and the Far East, United nations, p.416, footnote 2.
162
In the two different Blocks, five types of industries65 were chosen
and 27 industrial units were identified (which were comparable in terms
of investment and products) both in the Estate Block and the Non-estate
Block This gave us roughly 5 industrial units for each of the five
industrial categories.
In the present chapter, we wish to analyse whether the industrial
estates effectively carry forward the objective for which they were
intended. The hypothesis we have put to test here is "Industrial estates lead
to agglomeration and extemal economies, hen.ce, ·profitability of industrial
units within them is higher than those of similar units outside them."
The central point of the whole study is to compare the viability of
the units in the different industrial estates. Any improvement in the
perfonnance of the units in the estate, invariably, means better economic
utilisation of materials and equipment and a movement towards
unifonn standardization in production. It is profitability that can make a
small industrial unit stand on its own feet. Fostering the development
of small industries which is the primary objective of industrial estates in
India means improvement in the economic performance of small industrial
units. Better economic performance of the industrial estates lies in
either producing more efficient small industrial units than would be
possible without them or the regeneration of small industrial units which
are incurring losses. The provision of conditions favourable to work
profitably, which is the avowed purpose of the. Industrial Estates
Programme m our country, has to be reflected m the supenor
economic strength of the units.
Five types of industries are: Chemical, Electrical, Mechanical, Garment and Plastic industry.
163
For an industrial estate to have pennanent impact on the regiOn, it
is important that its occupant units not only continue to work but also
expand. Profit being the main concern of the entrepreneurs, the
possibility of continuation and expansion of the units depend upon the
size of such income. High rate of profit would encourage and induce the
entrepreneurs to continue and to remain actively involved in their
respective activities with the greater possibility of future expansion .
. Low rate of profit on the other hand, would discourage the
entrepreneurs and might even force them to discontinue their activities.
One of the basic objective of industrial estates establishment was that
with the given facilities, the industrial units will perfonn better than
the industrial units existing outside.
In this context, it would be interesting to analyse the pattern of
profitability of units inside and outside the industrial estates and to
compare inter industrial estate profitability. In a very general way, the rate
of profit of a finn may be defined as the relation between its total output
and the quantity of all the factors of production used. The fundamental
concept in this approach is the relation between the value of given output
of specified quality and the cost of factor services for producing that
output. It is a simple but importai1t index of industrial viability based on
the fixed capital cost which includes Plant and Machinery and Land and
B "ld" (,(, m mg.·
66 The fixed capital was considered approximately equal to present value. During the interview the present resale value of the machines were asked. Moreover, the survey is a cross-sectional one, so the formula for finding out of depreciation is difficult to use.(Neither (I) straight line method nor (ii) mortality table based on methods could be used) Hence the estimated value of plant and machinery at the time of surveying was undertaken as a proxy for the book value Thus in case ofthe old machinery (more than three years) the value supplied by the firm has been accepted as the basis of our estimates. But in case ofthe new units (or less than three years old) the original book value was considered. The book value and current replacement cost did not differ significantly as the units analysed were not very old and as the
164
Although the fixed capital includes the furnitures and vehicles too.
but here it has not been included. In the small scale industry, it does not
have a perceptible share as it has in large scale industry. It is so because
the small units are invariably in a financial crunch. Moreover it was
difficult to estimate the resale value of these by the entrepreneurs even
in cases where they were there.
machines they bought were almost new. This method was used by N. Somasekhara also in his study. N. Somasekhara (1975), op.cit., p.47.
Profitability has been caJculated by the following method
Total Sales-Total Expenditure
ProfitabilitY = X 1 00
Total Capital Stock
Where,
Total sales = Total output + Change in stock capital (opening stock
closing stock)
Usually output and sales do not differ by a big margin for small units for
the following reasons:
(i) they can gear their production easily to market
requirements.
(ii) they do not operate at a high level of production as to
accumulate · stocks and most of them operate under
capacity, and
(iii) the little stocks they do accumulate, they can not afford
to hold for long for financial reasons.
Total expenditure = Total inputs + Sales promotion and
advertisement expenditure + Taxes on sales + Transport costs of
finished goods + Commission, Brokerage and Discount on sales.
Total capital stocks include both fixed capital67 as well as working
capital. Working capital is mainly required for purchase of raw materials,
payment of wages, power bill, subcontracts of works, transport
charges, stationary postage and packaging, commission and brokerage,
taxes and certain labour welfare measures in the day-to-day working of
the unit. Although, conceptually, working capital like fixed capital is
considered a better indicator of viability of small scale enterprises the
required data could not either be collected satisfactorily because of the
lack of adequate response from the entrepreneurs Data on working capital
obtained from non-institutional agencies like friends and relatives,
money lenders, indigenous bankers, personal and private services and
infonnation about self finance, cash in hand, cash with banks, investment
on securities credit and other liquidity were the most difficult to collect
in investigation. The questionnaires did contain these questions but the
response was not satisfactory and on cross checking the data seemed to
be inconsistent. These data therefore were not used.)
In some cases the fixed capital (land and factory buildings) were not owned by the entrepreneurs their own, but were. provided by the estate authority on hire-purchase base and their actual valuation has not yet been finalised. Capitalised value of land and buildings were calculated by multiplying the monthly rent by 150. This method of calculating the capitalised value of land and buildings has been adopted by the Small Industries Service Institute, West Bengal, in their survey of industrial estates in West Bengal.
4.2 Comparative Analysis of Estate Block and Non-estate
Block
In this section an attempt is made to assess the performance of
Estate and Non-estate Blocks.
4.2.1 Rate of Profit of Industrial Units : It is observed from Table 4.1
that out of the 300 sample industrial units there were 13 industrial units
which earned a profit which was less than 1 per cent. In Okhla alone there
were 7 industrial units which have eamed a profit of less than I per cent.
It is interesting to note that five units within the Estate Block and only
one unit in the Non-estate Block had a profit rate below I per cent.
More than 50 per cent of the sample units were earning profits
between I to 20 per cent. In Okhla 45 industrial units out of 79 units
were earning a profit between 1 to 20 per cent. Sixteen units in the
Non-estate Block and eight units in Estate Block were earning profits
between I to 20 per cent. The Non-estate Block has almost twice the
number of industrial units as compar;ed to Estate Block which is earning
profits between l to 20 per cent.
There are 70 industrial units in the total sample which have a
profit rate between 20 and 40 per cent. Only nine industrial units in the
Estate Block and three industrial units in the Non-estate Block have a
profit percentage rate as in the above group (Figure 4.1)
There are only 45 units in the total sample of 300 units where
profit earnings are more than or equal to 40 per cent. In Okhla there are
12 industrial units in this group. Non-estate Block has 7 units in this
group and Estate Block has 5 units. Thus it can be concluded that the
Non-estate Block have a higher percentage profit rate than the Estate
Block.
168
Table 4.1 Distribution of Industrial Units According to Rate of Profit (in Percentage)
Profit Okhla Okhla Okhla Okhla Rate (in% age) Inside Outside E.B
< 1 7 6 1 5
1-5 8 4 4 0
5-10 18 8 10 3
10-15 12 6 I 6 4
15-20 7 4 3 I
20-25 5 4 I 3
25-30 8 6 2 4
30-35 I I 0 0
35-40 I 1 0 2
40-511 5 4 I 0
50-100 7 4 3 5
TOTAL 79 48 31 27
Note : a. E.B = Estate Block and NE.B = Non-estate Block h.Protit Rate in Percentage
Okhla Okhla All NE.B E&NE.B Estates
1 6 13
1 I 28
7 10 68
5 9 40
3 4 36
I 4 28
2 6 23
0 0 9
0 0 10
I I 19
0 II 26
27 54 300
169
Profit Rate and Industrial Units (Okhla Industrial Estate)
80,----------------------------------------------------------------~-;
70
.... 0 30 1... a>
..0 E 20 ::J z
10
< I
Fig. 4.1
!i-10 10-15 15-lO 20-25 25-30 30-35 35-40 .4.0-{;0 50-100 Total F'rofit Rota Group Size (in F'arcantoga)
- Okhlo noida ··=· Okhlo E:.B
··• · a.hla Outside .... Okhla
•M• a.hla ~.B -•- Okhla E: & ~.B
4.2.2 Rate of Profit Based on Fixed Investment on Plant and
1\'Iachinery :The percentage profit rate eamed by all the sample
industrial units in the National Capital Region is 22.16 per cent where
as in Okhla (Inside) the profit rate is 21.79 per cent and Okhla (Outside)
the profit rate of 23.86 per cent. Both together have a profit rate of 23.86
per cent. Here, we observe that tmits in Okhla (Inside) are eaming lower
profit thari industrial units functioning outside the Okhla industrial estate.
For the sake of comprehension, when the percentage profit rates
are calculated for the Estate Block and the Non-estate Block (each has
the same number of units and similar types of industry), it is observed
that the general pattem is the same as observed earlier. Meaning thereby,
the Estate Block which is representing Okhla estate has perfonned not
as well as Non-estate Block representing the industrial units functioning
outside the Okhla estate. The Estate Block eamed an average profit of
23.19 per cent while the Non-estate Block 27.15 per cent and both
together 25.27 per cent. (see Table 4.2. and Figure 4.2.).
In Table 4.2. and Figure 4.3, it is observed that there are 19
industrial units in the Estate Block as well as in the Non-estate Block
which have an investment on Plan and Machinery between 20 and 40 lakhs
and there are two units in each case having an investment between 40 and
60 lakhs. There is not a single industrial unit in either case which has an
investment of more than 60 lakhs.
The total number of industrial units having investment less than 5
lakhs in the Estate Block is 10, while in Non-estate Block it is only one.
This causes the low profit margins of the Estate Block as compared to
the Non-estate Block. The other reason for this could be the lower
efficiency of the Estate Block as compared to the Non-estate Block.
171
Table 4.2 Distribution of Industrial Units and Profit Rate According to Investment in Plant and Machinery
Investment Okhla Okhla Okhla Okhla Okhla Okhla AU (Lakhs Rs.) Inside Outside E.B NE.B E&NE.B Estates
0-5 21(24.41) 20(25.07) 1(12.50) 10(19.11) 1(12.5) 11(18.51) 88(27 .78)
5-10 16(17.28) 9(19.13) 7(23.48) 6( 18.91) (31.67) 13(25.78) 63(20.77)
10-20 19(13.64) 8(20.76) 11(29.99) 3(38.61) 1(28.71) 14(30.83) 73(17.85)
20-30 12(21.75) 7(29.77) 5(35.14) 5(27.76) 4(28.11) 9(27.91) 26(19.47)
30-40 3(25.85) 1(-6.96) 2(23.89) 1(29.77) 2(23.89) 3(25.85) 20(19.70)
40-50 I ( -6.96) 1(32.52) 0(0.00) I( -6.96) 0(0.00) 1(-6.96) 11(2.92)
50-60 4(23.28) 2(0.00) 2(14.05) 1(44.12) 2(14.05) 3(24.07) 15( 16.32)
Above-60 3(7 .56) 0(0.00) 3(7.56) 0(0.00) 0(0.00) 0(0.00) 4(6.59)
TOTAL 79(23.86) 48(21.79) 31 (27.06) 27(23.19) 27(27.15) 54(25.27) 300(22.16)
Note : a. Figures,outside parenthesis show number of industrial units and inside show profit rate in percentage.
b. E.B = Estate Block and NE.B = Non-estate Block
lBO
180 -CD 01 uo c
"E 120 Cl) 0 .... 100 CD
Q.
c: BO c ..! 80 c cr: 40 :;:::
20 0 .... Q.
0
-20
Fig. 4.2
Investment and Profit Rate (Okhlo lt'ldustrlol Estote)
045 5-10 10-20 20-30 3040 40450 50-80 :t.~>o...eo Total Investment Group Size (in Lokhs Rs.)
0 O<hla tA.Itaide ~ Okhla ezzJ Okhla 1-.E.B ~ Okhla E: & NE:.B
80
70 .£) ·c 80 ::J
1'i •;: 50 iii ::J
"0 40 _!;
.... 0 30 L.. Q)
.ll E 20 ::J z
10
0
Investment and Industrial Units (Okhl~ lndustrl~l E!tote)
····-··································································································································,'··· ....... .
0~ 5-10 10-20 20-30 30-40 40~0 50~0
Investment Gro~ Size (in Lakhs Rs.)
-~Ia Inside ··S· ~Ia E:.B
··•· ~Ia Outside .... ~~-~(J
•M• Okhla NE:.B -•- ~hlo E &: NE.B
Tala!
Fig. 4.3
4.2 .. 3 Rate of Profit Based on Fixed Investment on Plant &
Machinery and Land & Buildings
If lands and building along with plant and machinery are also
included as an investment then it is found that in the Non-estate Block, not
a single unit has an investment below 5 lakhs whereas in the Estate Block
there is only one such unit. (see Table 4.3). Even in the group of 60
lakhs and above, there are two industrial units in each case. The rate of
profit in the case 0f Non-estate Block in this group is lower (14.05 per
cent) than that in the Estate Bl<?ck (18.58 per cent). The overall profit
margin of the Non-estate Block over the Estate Block remains the same
(Figure 4.4. and 4.5.).
175
Table 4.3 Distribution of Industrial Units and Profit Rate According to Investment in Plant & Machinery and Land & Building
INDUSTRIAL ESTATES
Investment Okhla Okhla Okhla Okhla Okhla Okhla All (Lakhs Rs.) Inside Outo;ide Estate Block Non-estate Block E.B & NE.R Estates
11-5 4(40.82) 4(40.82) 0(0.00) 1(-20.00) 0(0.00) 1(-20.00) 20(35.75)
5-1 f) 14(28.21) 13(29.42) 1(12.50) 9(28.55) 1 (12.50) 10(20.95) 58(28.37)
1 0-211 19(9.49) 13(6.22) 6(25.57) 5(5.34) 6(26.13) 11(16.68) 93(19.92)
211-30 16(12.30) 4(18.91) 12(27.59) 3(22.32) 12(31.42) 15(29.60) 53(14.00)
311-411 12(23.57) 1 0(25.58) 2(43.49) 6(38.09) 2(50.75) 8(41.25) 22(18.39) . - --
411-50 5(30.36) 1(29.77) 4(30.51) 1(29.77) 3(14. 75) 4(18.50) 16(31.54)
50-60 1(18.18) 0(0.00) 1(18.18) 0(0.00) 1(18.18) 1(18.18) 12(9.01)
Above-60 8(13.61) 3(19.36) 5(10.15) 2(18.58) 2(14.05) 4(16.32) 26(11.01)
TOTAL 79(23.86) 48(21.79) 31(27.06) 27(23.19) 27(27.15) 54(25.27) 300(22.16)
Note : a. E.B = Estate Block and NE.B = Non-estate Block h. Figures,outside parenthesis show number of industrial units and inside parenthesis show protit rate in percentage
BO
70
~ ·c: 80 ~
c ·c so ~
:::J , 40 .£
..... 0 30 1... Ql ~
E 20 :::J z
10
Investment and Industrial Units (Okhlo lt"'dustrlol E!tote)
. .. ·····················································································································-···················l·········
······································································································································-·-:-··········
f ~ ······································································································································:-····c·······
S-10 10-20 20~0 3040 4o~o so-ao lnvssment GroL.P Sizs (in Lakhs Rs.)
-~Ia Inside ··e· i)(hla E:.B
··•· ~Ia OJtaide ,.,, i)(l-la
·~· Okhla NE:.B -•- Okl-la E & NE.B
; I : I
Total
Fig. 4.4
4.2.4 Rate of Profit of Industrial Groups: Though the Non-estate
Block has a higher rate of profit overall, but when the average rate of
profit is compared vis-a-vis different industrial groups (based on the
nature of the products) then we find inter-industrial group variations. In
the Chemical industry, it is Estate Block which has average profit rate
higher than the Non-estate Block. The average profit of the Estate
Block is 53.90 per cent while that of Non-estate Block is 15-20 per cent
i.e., the Estate Block has a lead of more than three and a half times over
the Non-estate Block. This lead, however, is not fatmd in the other
industrial groups. In Electrical, Gannent, Mechanical and Packing
industry the Non-estate Block leads over the Estate Block The details of
each block is given in Table 4.4. and Figure 4.6. & 4.7. respectively. In
the case of Mechanical industry, the Non-estate Block has an average
percentage profit rates of more than tvvelve times ( 12.15) than that in the
Estate Block. In tenns of absolute difference between the Estate Block
and Non-estate Block, Chemical industry had the highest difference of
38.70 per cent i.e. 3.85 times (Figure4.8.).
Though, on an average, the profit rate is positive in each b1foup of
industries, it is not so for individual units. One unit eamed no profit at all
in 1994 '.vhile four industria! units incurred losses by the end of 1994 in
the Estate Block. There were two such units of Mechanical industry
and one each of Gannent and Packing industry.
The loss-making industrial units not only exist in the Estate Block
but in the Non-estate Block as well. There was one industrial unit in the
Non-estate Block \vhich incutTed losses in 1994. Though the Non-estate
Block was not without loss-making units but the number of industrial
units incuning loss was only one. Moreover the intensity of incun·ing
losses is much higher in case of Estate Block than in the Non-estate ~
Block. For example, in the Gannent industry, the loss incurred by one
179
00 0
Table 4.4 Percentage Distribution of Profit Rate in Different Industrial Categories (in Estate and Non-estate Block)
ESTATE BLOCK NON- ESTATE
SAMPLE Chemkal Eledrkal (;armemt Mechanil:al Packing Chemil:al Electrical Garment UNITS
I. (10. I I 80.13 44.12 1lJ.30 12.18 29.60 XlJ.4S 13.33
") 79,4t) 30.00 28.57 8.33 10.00 I 8.18 13.04 12.50
3. 40.86 29.26 -6.96 -30.31 0.00 9.76 17.65 -1.39
-l. 75.13 22.43 10.00 -37.97 55.85 5.Y3 25.08 17.65 -
5. 13.91 24.82 12.50 22.93 -20.00 12.50 70.58 64.91
6. () .00 11.65 0.00 29.77 0.00 0.00 12.50 0.00
Average o/c 53.YO 33.05 17.65 2.01 11.61 15.20 38.06 21.40
Note : Profit Rate in percentage
BLOCK
Medwnintl Packing
22.22 S.RO
5.88 61.15
64.00 lJ.09
4.88 6.82
7.75 95.00
41.93 0.00
24.44 36.17
00
Pcoicfl\l
Ill a> 1.4~ocl ·;:: 0 Ol a> c
U Garn'W>I>
1'l ·c Iii :J ., <l...trlaal
..!;
Clwoi<>.,l
Industrial Category-wise Profit Rate (Okhlc Estcte Block)
J5((((((((:~(/((((((;;c((((((((:b
.to Profit Rats (in Percentage)
Fig. 4.6
00 N
' Industrial Category-wise Profit Rate (Okhl~ N"'on-ed~te Block)
Pa.:ki~Q r:::.:::::::::::::::::::.:::::::::?TIS:r::::::•::::::::;:::::::::::•:•:::::::::::::::::::::::::::•:::l36.17
-~ t.lecllel'll~l r ::::::::::::::: ... :· : :::: ':': :•:.> . : : :•:. :: ::1J:U.44 0 I
0 ID
0 . U Garme~lt I··;· .·.·.·.· ;-;-; ·.· .. ;·r 0 I
"i: 1i i Elt~~trl~l 1:):::: :::•:::;::::::::::::::::::::::::•::::::::;•::;•:::::•::::::•:::::::::::;:::::::::::::::;::::::::::::::::::::::l!lll3B.tl6
C~emleal l}}<<<<>>:}):;::;>;llll1 5.20
0 5 10 15 20 25 30 35 40 F'rofif Rate (in F'ercentage)
Fig. 4.7
00 w
80
-70 Ill ., 0 so c Ill
~ so Ill
Cl..
c 40 .::;,
.! :so 0 ~
~ 20 0
1...
Cl.. 10
Industrial Category-wise Profit Rate (Okhlo lndustrlol Estote)
0 r r'''''Y ( ''''''Y ( "''''V f l'''''Y ( '''''>r ( ~Nml~ E!m:!rfce~l Clo31'~6~1• I.WN~Ieli PI2CI<I~
Industrial Calsgori&s
I ~E~tote Block -~ ~_:_esto+; Block-]
Fig. 4.8
unit was -6.96 per cent (Estate Block) but in the case of Non-estate Block,
it was lower and was only - 1.39 per cent. It means that the unit in the Estate
Block has incurred losses 5 times more than that in the Non-estate Block.
4.2.5 Size of Forms and Rate of Profit
It is evident from Table 4.5 & 4.66s, that industrial units employing
between 20 and 50 workers have a higher average profit rate i.e. 23.85 per
cent than units employing less than 20 persons and greater than 50
persons. Here the profit rates are 19.91 and 20.63 per cent respectively:· In
units inside Okhla the pattem is the same as mentioned above but in units
outside Okhla there is a deviation. In the industrial units outside Okhla
those employing less than 20 workers have the highest profit rate (39.25
per cent) which is much higher than that of units employing more workers
( 17.46 per cent). It means that larger units inside Okhla estate are eaming
more profit than those outside. On the other hand the smaller units outside
Okhla estate eam higher profits than the larger units (Figure 4.9 and 4.1 0).
When we consider the losses of Non-estate Block and Estate Block
units then we see the same position as was observed in units inside Okhla
and outside Okhla. Smaller size units in Non-estate Block eam higher
profits. than the Estate Block units. There are eleven industrial units in the
Non-estate Block (employing 20-50 Workers) which eam an average
profit of 39.05 per cent while in case of Estate Block there are six units
employing between 20 and 50 workers which have an average profit rate
of 52.7 5 per cent. Finally when the combined position of Non-estate and
Estate Block is considered than the pattem is the same as in Okhla
(combined). It means the industrial units employing between 20 and 50
workers have a higher profit rate (28.42 per cent) than those employing
Table 4.6 is derived from Table 4.5 and the detail figures are given in Appendix 4.4.
184
0
"
Table 4.5 Distribution of Industrial Units and Profit Rate According to Firm Size (Based on Number of Workers Employed)
INDUSTRIAL ESTATES
FIRM SIZE Okhla Okhla Okhla Okhla Okhla Okhla All (No.of Workers) Inside Outo;ide Estate Block Non-estate Block E.B & NE.H Estates
1-5 4(3.43) 4(3.43) 0(0.00) 1(-20.00) 0(0.00) 1(-20.00) 8(4.83)
5-111 10(23.1\6) 9(26.00) 1 (94 .o2 1 3(18.96) 1(95.00) 4(37.97) 58(22.23)
IU-15 I X( 14.60) 12(17.75) 6(8.31) 8(17.07) 6(8.31) 14(13.31) 77(16.96)
15-20 I I (I 0.2lJ) 7(.lJ.41) 4(71.83) 5(5.67) 4(71.18) 9(34.79) 68(23.04)
20-25 9(20.56) 2:.4lJ .52) 7(12.28) 1(79.49) 7(12.28) 8(20.68) 30(26.35)
25-311 6(42.68) 4 ,56.()2) 2(15.99) 3(71.79) 2(15.99) 5(49.47) 13(24.83)
]0-40 II( l<dl8J 4U6.53l 7(15.83) 2(10.83) 5(32.03) 7(25.97) 20( 19.48)
40-50 4(30.11) Ot.O.OOl 4(30.11) 0(0.00) 2(15.34) 2(15.34) 6(23.80)
so:wo 3(30.51 ) 3tJ0.51) 0(0.0()) 2(35.32) 0(0.00) 2(35.32) 15(23 .()9) --
A hove- HHI 3(12.84) 3(12.84) 0(0.00) 2(18.58) 0(0.00) 2(18.58) 5(13.26)
TOTAL 7Y(23.86) 48(21.79) 31(27.0)6 27(23.19) 27(27.15) 54(25.27) 300(22.16)
Note : a. E.B & NE.B = Estate Block and Non-estate Block h.Figurcs outside the parenthesis show number of units and inside the parenthesis show percentage profit rate
18
I~
Fig. 4.9
Firm Size and Industrial Units (Okhla Industrial Estate)
5-10 10-15 l'li-20 20-25 25-30 3040 40~0 50-100 Abo.,.IOO F'irm Size Group (Number of Workers)
- Okhla Inside ··o· Okhlo F:.B
··•· Okhlo Outside ,.,, Okh/o • .,., Okhlo NF:.B -•- Okhlo F: & NF:.B
Table 4.6 Distribution of Industrial Units and Profit Rate According to Firm Size (Based on Number of Workers Employed)
Firm Size Okhla Okhla Okhla Okhla Okhla Okhla All (No.of Workers) (Inside) ( 0 ul~icl e) (E.Bl (NE.B) (E.B & NE.B) Estates
Bclow-211 1-+ .o I I 6.46 YJ.25 II .R7 3tJ.05 22.55 I tJ .lJ I (·Bl (32) (I I ) ( 17) (II) (2!\) (211)
211-511 2·t62 3X.lJ2 17.46 52.75 llJJO 28.42 23.!\5' (3{)) (I()) ( 20) (6) (16) (22) (6tJ)
Ahon-511 21.6X 21.Mi () 00 2o.Y5 0.00 26.lJ5 20.63 (6) (ol (0) (4) (0) (4) (20)
TOTAL 2:Ui6 21.7l) 27.06 27. I tJ 27.15 25.27 22.16 ( 7l)) (4!\) Oil (27) (27) (54) (300)
Note : a. E.B = Estate Block and NE.B = Non-estate Block h. Figures.outsidc parenthesis show profit rate in percentae and inside parenthesis
numher of industrial units.
00 00
y
Firm Size and Profit Rate (Okhlc lndustrlcl Estote)
100~--------------------------------------------------------------------,
~ 90 Ol c c ~ !0 L.. Q)
0...
c "-0 c
..... :;:: 0
£ 01-~--~------------------------------------------~------~ .. .__.._~ ;:
t: ~0~~~----r-----r-----~----.------r-----.-----.-----.------r-~
5-10 10-15 15-20 20-25 25~0 3040 o4-0-50 50-100 Abova100 F'irm Size Croup (in Psrcsnlocs)
- Okhla Inside --•- Okhla Outside ""' Okhlo --s- Okhla E:.B • ~ • Okhla NE:.B - *- Okhlo E: & NE:. B
Fig. 4.10
below 20 workers (22.55 per cent) and those employing more than 50
workers (26.95 per cent).
Earlier studies have shown that the industrial units fimctioning
within the industrial estates are not as efficient as the industrial units
fimctioning outside them. In general the outside industries are more
efficient than the Estate industries in the sense that the outside industries
produce more output per unit of rupee invested and use less capital per unit
of labour engaged. 09
The comparison of relative efficiencies reveals that a greater number
of outside units are inore efficient than the inside units. The rate of surplus
on fixed capital, inclusive of value of land and buildings, is higher in
outside units in 41 out of 52 cases in our study. If calculated on the basis
of fixed capital, exclusive of value of land and buildings, the rate is higher
in 35 cases in outside units. It seems to be a common phenomenon of the
working of the industrial estates in the country that the estate units, in
general, are less efficient than similar units working outside. 70
Studies show that in general the less efficient units enter the
industrial· estates. The analvsis revealed that the industrial estates were a
scheme of protection for the less efficient small enterprises. In absolute
sense the units in the industrial estates were also efficient and they also
eamed profits. But relatively speaking, compared to their peers outside
they were less efficient and less viable. 71
The Intemational Perspective Planning Team assembled with the aid
of Ford Foundation. which made a study of small scale indListries in our
7tt Bandopadhyay, op cit. p 21 :'_ G.S Bhati ( 1976)Jndustrial Estates-An Evaluation", University of Bombay, Bombay. p.222. N. Somasekhara ( 1975), op.cit.., P.47.
189
country at the instance of the Govemment of India had come to a similar
conclusion about the industrial estates. It had observed tbat generally the
inefficient units had entered the industrial estates. 72 73
An important factor to be bome in mind while companng the
efficiency of Estate and Non-estate units, relates to the quality of
entrepreneurship. The entrepreneurs in the estate units have generally been
attracted towards the industrial estates primarily because of various
incentives offered by the Government~ and t_hey have sustained these units
with the active support and encouragement from the Government.
The outside entrepreneurs, on the other hand, have generally set up
their units almost entirely at as their own initiative and, therefore, have
tended to be more hard working and anxious for the success of their units.
Perhaps this individual initiative could explain the differences in the quality
of entrepreneurship. 74
Moreover the industrial units in the Estate Block are old enough and
thus no more eligible for extra facilities and incentives from the industrial
estates authorities and helping agencies. Thus profit of these units are
fm1her affected by the withdrawal of the incentives and facilities. Profit of
7'
7-1
Ministry of Industry ( 1963) Government of India, Report of the International Perspective Planning Team, p.I08, The Team was headed by Mr. Hans Gnmdstorm and Submitted its report in 1973. A K. Jain ( 1982), "Industrial Estate in Uttar Pradesh" with Special reference to l\·1eerut Region, Meerut University Meerut, p. 124. "The entrepreneurs did not give the impression ofbeing the dynamic personalities which one meets w·ithin economic theory. Instead of grabbing whatever opportunities were given to them; they inclined to be highly critical of
. Government policies. Most of them expected to be spoon-fed. Entrepreneurs moved by new ides and promoting "new combination" were conspicuous by their absence. There were same whose visits to their factories were few and far between .... It would seem that Industrial Estate has encouraged a form of absentee capitalism", S.P. Kashyap. Government Sponsored Industrial Growth: The Jaipur Industrial Estate-A case Study, The Economic Weekly, June 20, P. 1023.
190
the units m Non-estate Block are not at all affected by these
advantages/disadvantages and remained responsive to the expertise and
effort of the entrepreneurs.
191
4.3 Rate of Profit of Individual Industrial Estates
In the earlier section we have studied about the Estate and Non
estate Block of Okhla industrial estate only. In this section we will study
all the sample estates and compare the inter-estate performance based on
profit rate.
4.3.1 Profit Rates and Industrial units : There are 13 industrial units
which have a profit rate of less than I per cent and 172 units where profit
rate is between 1 to 20 per cent. Besides these two extremes, there are 70
and 45 units where profit rate is of 20 to 40 per cont and above 40 per cent
respectively (see Table 4. 7 and Figure 4.1 I)
Majority of the industrial units have profit rates between I to 20 per
cent. More than 70 per cent of the units (29 units) of Rohtak, 50 per cent
( 18 units) of Rozka Meo, 63 per cent ( 15 units) of Loni, 62 per cent (31
units) of Alwar and 53 per cent (42 units) of Okhla have profit rate
between I to 2Q per cent. In NOIDA there is not a single unit in which the
profit rate is below 1 per cent. There are only 20 units whose profit rate is
from 1 to 20 per cent. In NO IDA more than 70 per cent of the units (62
units) have a profit rate above 20 per cent.
In NOIDA 30 per cent of the units (33 units) have a profit rate
between 21 to 40 per cent which is more than the average of all sample
units (i.e. 23 per cent).NOIDA takes the lead as far as profit rates are
concemed. Here 33 per cent of the units (27 units) have a profit rate of
more than 40 per cent while in the total sample there are 15 per cent units
where profit rates are more than 40 per cent. In NOIDA the profit rate is
192
Table 4. 7 Distribution of Industrial Units in Different Groups of Profit Rate (Industrial Estate-wise)
Profit Rate Okhla NO IDA Rohtak AI war Rozka Loni All (in Percentage) Meo · Estates
<5 7 () 0 5 I 0 I3
5-10 I8 7 IS I7 7 4 68
10-15 I2 5 10 4 5 4 40
15-20 7 . 8 4 5 5 7 36
20-25 5 9 2 7 2 3 28
25-.'0 X 10 3 1 0 1 23
.'0-35 1 5 0 2 I 0 9
35-40 ' 9 0 0 0 0 10 I
40-50 5 10 1 2 0 I I9
50-1 00 7 17 1 () 2 1 26
Total 7() 82 40 50 25 24 300
18
1~
~ u ·c: :::l
15 12 ·c ~ 10 :J "0 .E .... 8 0 L Q)
..0 E :J z
< 5
Fig. 4.11
5-10
Profit Rate and Industrial Units (lndustrlol Estote-wlse)
····························································································:··················:"········
10-15 15-20 20-25 25-30 30-35 3540
-okHa ··e·· Alwcr
Profit Role (in F'ercenfcce)
··•··Noida oolll;llo ~ohtak
•.,. • ~ozkCl lilleo - *- Loni
:
40~0 50-100
\.
even higher than that of the Non-estate and Estate Block put together. This
we have already discussed in the first section of this chapter. Only 41 per
cent industrial units of Estate and Non-estate Block had a rate of profit
more than 20 per cent while 73 per cent of NOIDA units were ean1ing
more than 20 per cent.
4.3.2. Investment on Fixed Capital : In NO IDA 50 per cent of the units
are in the investment group of 5 to 20 lakhs and have a profit rate of more
than 36 per cent while in the total sample there are only 45 per cent units
( 136 units) vvhich have an investment between 5 to 20 lakhs and a profit
rate of 19.20 per cent (Table 4.8). Two units in Rohtak have an investment
between 40-50 lakhs on plant and machinery. These units have the highest
profit rate i.e. 44.84 per cent. One unit in the Estate Block also eams a
high rate of profit (44.12 per cent) in the investment group of 50 to 60
lakhs. Twenty five industrial units in NOIDA have an investment below 5
lakhs and a profit rate of 43.81 per cent (Figure 4.12 and 4.13 ).
When investment in land and Building is also included with the
plant and machinery then we observe that NO IDA which had 25 industrial
units investing belmv 5 lakhs has now only 5 units in the same group but
the profit eaming of this brroup is more than what we found in the earlier
case i.e. 52.60 per cent on an average against the 43.81 per cent, (Table
4.9). Earlier in the plant- and machinery brroup we have observed that these
were only 4 units in the investment group_ of more than 60 lakhs, but with
the inclusion of investment made on land and building there is not only an ..._, -
addition in the number of units but also in the profit eamings which almost
double from 6.59 to 11.0 I per cent average rate of profit (Figure 4.14 and
4.15).
195
Table 4.8 Distribution of Industrial Units and Profit Rate According to Investment in Plant and Machinery
Investment Okhla NO IDA Rohtak AI war Rozka Loni All (Lakhs Rs.) Meo Estates
0-5 21 25 9 13 8 12 88 (24.41) (43.81) (20.26) (23.35) (12.33) (20.89) (27.78)
5-10 16 15 9 9 8 6 63 (17.28) (36.68) (9.65) (13.35) (19.24) (20.14) (20.77)
10-20 19 26 12 11 4 1 73 (13.64) (29.95) (10.41) (7.59) (25.26) (5.56) (1)7.85
20-30 12 4 4 3 0 3 26 (21.75) (37.00) (7.60) (18.83) (0.00) (3.40) (19).47
30-40 3 7 3 6 0 1 20 (25.85) (35.56) (9.20) (4.33) (0.00) (13.93) (19.)70
40-50 1 0 2 6 1 1 11 (-6.96) (0.00) (44.84) ( 1.64) (9.72) (9.84) (2.92)
50-60 4 4 1 2 4 0 15 (23.28) (20.50) (26.41) (3.85) (8.88) (0.00) (16.32)
Ahove-60 3 1 0 0 0 0 4 (7.56) (3.67) (0.00) (0.00) (0.00) (0.00) (6.59)
TOTAL 79 82 40 50 25 24 300 (23.86) (35.45) (14.22) (12.15) (16.05) (17.79) (22.16)
Note : Figures, outside parenthesis show number of industrial units and inside parenthesis show profit rate in percentage.
30
Investment and Industrial Units (Industrial Estate-wise)
I m 2S
..... ,#
·c: .... : . . ..... ; . . ·-··-- ... I
:::J
""Ei 20 --~-'-:···············,-': ............. \ .................................................. ~ ............................. : ................ . ·;: iii ::l
"'C 15 £ .... 0 L 10 CD
..0 E ::l z s
5-10
Fig. 4.12
10-20 20-.30 30-40 -'0-60 Investment Gro~ Size (in Lakhs Rs.)
-okhb ··=·Aiw(]("
··•·· Noida .. _, Rohtak
• ~ • Rozka ~ao - •- Loni
Investment and Profit Rate (Industrial Estate-wise)
50~0
1 :]·······~·············~······ _: ............. ~ .... : .. ::::::::::::['·~···:·<·•····························' ~ ... : . ·~ 0..
c 20 c CD
0 ~ 10 -~ 0
~ 04-----------------------------.. HH~-.~~----~-,~----~----~
-10~--.--------.--------,,-------,,--------T,--------r, ~-----,,r-------,,--~ 0-6
4.13
5-10 10-20 20-.30 3040 ~0-60 S0-&0 Abav.BO
Investment Group Size (in Lakhs Rs.)
-okhla ··D· Alwor
··•·· Noido .. -. Rohtok
• ~ • Rozka Mao - • - Loni
197
Table 4.9 Distribution of Industrial Units and Profit Rate According to Investment in Plant & Machinery and Land & Building
Investment Okhla NO IDA Rohtak AI war Rozka Loni All (Lakhs Rs.) Meo Estates
0-5 4 5 0 4 I 6 20 (40.82) (52.60) (0.00) (31.79) (16.00) (24.25) (35.75)
5-10 I4 17 6 7 8 6 58 (28.21) (43.78) (21.49) (22.29) (14.48) (17.54) (28.37)
10-20 19 31 15 14 8 6 93 (9.49) (35.01) (10.44) ( 12.66) ( 16.60) (20.14) ( 19.92)
20-30 16 I4 9 8 3 3 53 (12.30) (24.26) ( 11.88) (5.85) (29.66) (4.35) (I4.00)
30-40 I2 I 4 4 0 I 22 (23.57) (41.29) (6.09) ( 13.35) (0.00) (2.73) ( 18.39)
40-50 5 7 2 2 () 0 16 (30.36) (44.39) ( 16.27) (4.81) (0.()0) (0.00) (3 1.54)
50-6() I 2 3 5 {) I 12 ( 18.I8) (17.52) (30.81) (5.70) (0.00) ( 13.93) (9.01)
Above-60 8 5 I 6 5 I 26 ( 13.61) (17.50) (26.41) (1.41) (9.05) (9.84) (11.01)
TOTAL 79 82 40 50 25 24 300 (23.86) (35.45) ( 14.22) (12.15) (16.05) (17.13) (22.16)
Note : Figures,outside Parenthesis show number of industrial units and inside parenthesis show profit rate in percentage
198
Investment and Industrial Units (Industrial ~tate-wise)
35,---------------------------------------------------------------. . . 30 ·························· ·················:··'.:····································································································
\ . . ~ 25 (I)
······ ......................... ······ ..... ········--·-~·-················-························ ... ····-·······-· .................................. . . . ..Y.
L 0 :s: 20 •••••••••••••••••••••••••••••••/••••••••••••••••••••••••• .. •••••••••••••oo•n•••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••
...... 0 L 1S (I)
..0 E ::I 10 z
Fig. 4.14
. .
S-10 10-20 20-30 30-40 -40~0
lnvastmsnt Gro~ Size (in Lakhs Rs.)
-akhlo ··•·· Noicb "-' Rohtak --e- Alwcr •N•Rozka ~90 -•- Loni
Investment and Profit Rate (Industrial Estate-wise)
50~0 Abovoi!O
50,--------------------------------------------------------------.
I::J••••••·~•••••·•••··•••••••••:••••~••·•••••••••••:c:_:::::::. (I) . • •
0 0::::
~ ·:> L
c..
0-5
Fig. 4.15
5-10 10-20 20-30 30-40 40-50 50-50 Above50 Investment Group Size (in Lakhs Rs.)
---- Okhla f --E3- A lwar
---Noicb --- Rohtak ---M-- Rozk12 hllao ___,..,_ Loni
199
4.3.3. Employment Size and Profit Rates : So far as the employment
size in the industrial unit is concemed, NOIDA is the unique industrial
estate where a11 the three groups eamed an average profit much higher
than that of the sample in their respective groups. In the less th!n 20 lakhs
group, Non-estate Block had the highest average profit rate i.e. 39.05 per
cent. If other estates are also included then it is observed that NOIDA
occupies the third place (35.7 per cent) in the same finn size (Appendix
4.5f5 0
In the next finn size group (20 to 50 workers) Estate Block has the
highest average profit rate (52. 75 per cent) in six units (Table 4.1 0) While
NOIDA's average again attains the third place with an average profit rate
of 32 per cent.
In the last b1foup of finn size en1ploying more than 50 workers, it is
observed that NOIDA occupies the first place in average profits (50.42
per cent) and Loni and Estate Block of Okhla, the second and the third
place (31.08 and 26.95 per cent respectively). There was not a single unit
of Rohtak and Non-estate Block in this group. Alwar has an unique
position. lt has five units in this b1fOup but they are all mtming under
marginal losses (-0.04 per cent).The other industrial tmits in Alwar are
closer to the average profit rate of the sample units.
NOIDA's overall perfonnance can be seen from Table 4.11 and
Figure 4.16 where the profit rates are the highest among al1 six sample
estates of the National Capital Region (35.45 per cent). The lowest profit
rates are eamed by Alwar industrial estate ( 12.15 per c~nt) which is almost
one third of the NOIDA industrial estate (35.45 per cent). The second
place is attained by the units outside Okhla (27.06 per cent). Out of total
75 Appendix 4.5 is derived from Appendix 4.4
200
t-J 0
Table 4.10 Distribution of Industrial Units and Profit Rate According to Firm Size (Based on Number of Workers Employed)
FIRM SIZE Okhla NO IDA Rohtak AI war Rozka Loni All Meo Estates
Below-20 14.61 35.71 14.23 14.25 16.03 17.04 19.91 (43) (57) (34) (42) (17) ( 18) (211)
20-50 24.62 32.49 14.07 2.74 14.24 10.58 23.69 (30) (22) (6) (3) (4) (4) (69)
Above-50 21.68 50.42 0.00 -0.04 17.34 31.08 20.63 (6) (3) (0) (5) (4) (2) (20)
TOTAL (23.86 35.45 14.22 12.15 16.05 17.13 22.15 (79) (82) (40) (50) (25) (24) (300)
Note : Figures, outside parenthesis show profit rate in percentage and inside parenthesis show number of industrial units
Table 4.11 Profit Rate in Different Sample Industrial Units (in Percentage)
Serial Industrial Number Profit No. Estates of Units Rate(in %)
1. Okhla 79 23.86
a. Okhla(lnside) 48 21.79
b.Okhla(Outside) 31 27.()6
A.Okhla(E.B) 27 23.19
B.Okhla(NE.B) 27 27.15
C.Okhla(EB & NE.B) 54 25.27
2. NO IDA R2 35.45
3. Rohtak 40 14.22
4. A! war 50 12.15
5. Rozka Meo 25 16.05
6. Loni 24 17.79
7. TOTAL 300 22.15
Note : E.B = Estate Block and NE.B = Non-estate Block
t-J 0 '..j
All E~late~
Lon!
... Cl)
0 Rotks Mel!> -" w -.:; AI war
:E ~ Ro~lok "0 .£
Nolda
Ok~la
Percentage Rate of Profit (lndustrlol Estcte-wlse)
I.I'.A.IVV...,...._W,VVWIVV'-""IVV""""W,VVWIVV...,...._W-.WIVV'-""IVV-..Illll3 5 .4.5
~ 0 5 10 15 20 25 30 35
Profit Rote (in Percentage)
Fig. 4.16
4.0
six sample estates there are four industrial estates namely Loni, Rozka
Mea, Rohtak and Alwar where profit rates are less than H1e profit rates of
the sample estate (22.16 per cent). In two estates, namely NOIDA and
Okhla the profit rates are more than the sample units.
204
4.4 CONCLUSIONS:
( 1) More than 50 per cent of industrial units ( 172 Units) of the total
sample in the National Capital Region eam a profit below 20 pet cent, 30
per cent Units (89 Units) eam a profit between 20 to 50 per cent and only
9 per cent Units (26 Units) eam profit of more than 50 per cent.
(2) The industrial Units which are outside the Okhla industrial
estate (Non-estate Block) have a higher profit rate (27 per cent) than that
of industrial Units functioning inside the Okhla industrial estate (Estate
Block) i.e. 23 per cent. The reason for this could be that less efficient
units get a shelter in the industrial estate. The total number of industrial
units with a profit rate lower than 20 pef cent is more in case of Estate
Block ( 10 units). Moreover, the Estate Block is harbouring units which
have incurred losses. This gives a low profit margin to Estate Block as
compared to the Non-estate Block.
(3) The overall average fixed capital investment on plants and
machinery is higher in the case of Non-estate Block. If we include the
value of land and buildings in the fixed capital investment, the average per
unit capital investment in the Non-estate Block is larger than that of the
Estate Block. (Except in Chemical based units).
(4) Though the Estate Block industrial units on an average have a
lower profit rate than the industrial units in the Non-estate Block, the same
is not true in case of Chemical and Electrical industry. Chemical industry
in the Estate Block eams a profit more than three and a half times higher
(54 per cent) than the Chemical industry in the Non-estate Block. The
Chemical units are perhaps doing better because they are older and larger
in size. Most of the industrial units inside the estate came into existence
prior to the banning of Chemical units in the Delhi. The Electrical industry
inside the estate has the advantage of agglomeration and the extemal
economies unlike the outside units which are scattered and unorganised.
All the other industrial groups namely, Gannent, Mechanical and Packing
industries of the Non-estate Block have a higher profit rate than the Estate
Block. Mechanical industry of the Non-estate block is eaming a profit
more than 12 times than that of the Estate Block. The plausible reasons for
this are given at the end of this section.
(5) The industrial units which employ between 20 to 50 workers
have the highest profit rate (24 per cent). Units which either employ less
than 20 workers or more than 50 workers have a profit rate of 20 per cent
and 21 per cent respectively. This is, however, true only in the case of the
Non-estate Block.
(6) NOIDA industrial estate has the highest profit rate amongst all
sample industrial estates. Its average profit rate is 35 per cent which is one
and a halftimes that of the sample's profit rate (22 per cent). Its profit rate
is even higher than that of the Estate and Non-estate Block of Okhla
industrial estate separately as well as taken together. NO IDA's high profit
rate is because of availability of required infrastmcture and lucrative
incentives.
(7) -In tenns of the fixed investment on plant and machinery two
units in Rohtak have the highest profit rate ( 45 per cent) with an
investment between 40 and 50 lakhs. The next place is attained by only
one unit in Okhla Estate Block ( 41 per cent) in the investment group of 50-
60 lakhs. When investment on the land and building is also included, then
206
it is the investment group below 5 Jakhs in NOIDA which has a high profit
rate.
(8) The Cement industry in Alwar, on an average, is incurring
marginal losses. The cause of this is that most of the Cement units are new
and facing competition from the open market. Those units which are old
and are supplying to govemment agencies are ,however, placed in a better
position and are ean1ing profits. The profit eamed by these two units are
however, sma11er than the losses of the other three units. The profits,
eamed by the Cement units are, therefore, not positive on the whole.
(9) The lowest profit is being eamed by the Alwar industrial estate
( 12 per cent). The plausible reason for this could be its location away from
Delhi and the change in the govemment policy towards Cement indtistry.
The industrial units of Non-estate Block eam a higher profit than the units
of the Estate Block.
(I 0) Though it 1s generally expected that, with the g1ven
infrastructural facilities, units within an industrial estate would petfonn
better than those functioning outside the industrial estate, but in the study
of Okhla this was not confinned. Here the Estate Block is neither
superseding nor eaming a profit equal to the Non-estate Block. There are
various reasons for this, such as:
(a) Cheap labours is available to the units of Non-estate Block.
Entrepreneurs do not have to spend on the legal liabilities of the workers.
(b) Labour Unions are not in existence in the Non-estate Block, hence, the
wages are not directed by the Union.
(c) Regular supply of electricity is available to the Non-estate units. Some
are located even in residential areas and are consuming electricity at non-
207
commercial rates. Sometimes the units are even getting electricity by
adopting illegal methods.
(d) The chances of tax evasion inside the estate are very low because
these tmits are monitored regularly.
(e) Non-estate units do not strictly follow the legal stipulations of
pollution control, sewage treatment etc.
(f) Most of the incentives and facilities which were earlier available to the
estate units are now not available. Some units are deprived of these
incentives/facilities because of the completion of the limited period for
which these incentives/facilities were provided or because they joined the
estates later and by that time the promotional incentives and facilities were
withdrawn because Delhi was already industrially over crowded.
(g) Units outside the industrial estates are more enterprising and have
more initiative than those which are inside. This is so because the outside
units have to manage everything by themselves whereas the units inside
the Estate are dependent on the Estate Authority for most of their
requirements.
These factors have resulted in a lower production cost in the Non-estate
Block. The Non-estate Block, hence, has perfonned better than the Estate
Block in the National Capital Region.
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