“ROLE OF PROMOTIONAL AGENCIES AND INDUSTRIAL DEVELOPMENT A STUDY OF KARNATAKA STATE FINANCIAL CORPORATION IN GULBARGA DISTRICT”NEED FOR INDUSTRIAL DEVELOPMENT AND STATE INTERVENTION Industrial Development in India is at very slow rate and the significant feature of it is, it’s concentration in few regions/states and it leads to disparities in industrial development. So to attain economic progress and to solve the problems of regional disparties, poverty, unempolyment, disparties in industrial development and to promote equal distribution of income and wealth so far State should be intervention in promoting the industrial development such through promotional agencies setup by central and state. And to maintain the regional balance in the country and state intervention becomes an imperative to protect the interest of the society as a whole. Since industries constitute an important part of the economy. They are, therefore often put under severe regulations by government in every state. Hence the industrial concept is powerful strategy to remove the backwardness in the country so it is essential need for the industrial development in the country. I.INTRODUCTION The Karnataka State Financial Corporation [KSFC] was established in the year 1959 under the state financial corporation Act1951 for promoting industrial Entrepreneurship in the state of Karnataka. The KSFC is one among leading state financial corporation in the country. It is playing a vital role in industrial growth of our state in general and 1 645 units amounting to nearly Rs. Karnataka state financial corporation is one of the robust and professionally managed state financial corporations. It is also the proud privilege of 2 .karnaataka State Financial Corporation is moving in tandem. The Karnataka State Financial Corporation on ISO9001-2000 certified organization is proud to have played a major role in the industrial development of the state. Karnataka State Financial Corporation is one of the fast track term lending financial institutions in the country with assistance to over 1. Over the last 50 years in the state of Karnataka.60. while the state economy is making rapid strides in the global market.KSFC is fine tuned to fulfil the plans and aspirations of entrepreneurs by extending all possible assistance.9. It has contributed most significant for the growth of small scale industries [SSIs] back word area development and promotion of first generation entrepreneurs. Today.particularly in industrial backward regions like Hydrabad Karnataka region. It’s achievement in these areas is unparallel.101 crore out of which more than 50 percent is towards small scale industries. it’s concentration in few regions/states in the country. Therefore. STATEMENT OF THE PROBLEM Industrial development in India is at a very slow rate and the significant feature of it is. Raichur and Koppel the Northern most part of the state extremely backward in industrial development. The Hydra bad Karnataka region which includes Bidar. it is essential to analyse the spread of industrial development within backward region promoted by Karnataka State Financial Corporation. there are ‘inter-state’ and ‘intra-state’ disparities in industrial development.Karnataka State Financial Corporation to have assisted many industries that are internationally recognized like Info sis and Biocon. Gulbarga. Many industries are concentrated in and around Bangalore. II. The present study intends to analyse the functioning of KSFC in this backward region promoting industrial developments in backward region like Gulbarga. 3 . In this context. financial and other difficulties faced by them and to suggest the measures to overcome the difficulties. Most impotent of them related to widening the scope of Sec 2 (C) of SFCs Act 1951 to bring in some more industries within the definition of an ‘Industrial Concern’ enhancement of celling on barrowing.III. adding new types of business activity which SFCs can 4 .C. Reserve Bank of India had setup a working group in 1962 under the chairmanship of K. Few empirical studies on industrial location and regional development include God bole’s 1978 study’ which concentrates mainly on the industrial dispersal polices in Maharashtra state and their contribution to development of industries in the backward areas. The working group made 50 suggestions.Mittra to review the working of SFCs to evaluate their role in financing the industries and to study the organisational. REVIEW OF LITRATURE There are number of studies available on Finance and industrial development. The study has identified gaps in functioning of the promotional agencies in backward region. The National Committee on Development of Backward Areas [NCDBA] 1981 it also evaluates the impact of finance.transact. 5 . various schemes and concessions in promoting industrial development in backward areas. increasing the limit of advances. In 1976 IDBI Constituted an working group under the chairmanship of Sri V. equipping the SFCs with greater powers to improve collection from assisted units. .Bhinde to review the co-ordination between State Financial Corporations and Banks. Ramakrishna Sharma’s 1982 work on industrial development of Andhra Pradesh covering the period from 1960 to 1976 study analyses the role of various promotional agencies in the industrial development of the state.M. It suggests a growth centre approach to promote industrial development in backward areas. in 1978 another working group under the chairmanship of Phil Thomas was appointed which suggested a number of mergers to overcome the difficulties faced by the SFCs in recovering the debt and thereby to reduce the arrears. It also covers development of SMEs sectors and SFCs. It examines the regional disparities in Andhra Pradesh in industrial development. they suggested the organizational structure and disbursement of their loans and their recovery. Krishnamurthy’s 1990 study is on investigation into the industrial dispersal and regional development covering the period 1960 to 1981. A detailed observations of the financial 6 .The RBI appointed on 14th may 1981 a committee consisting of 11 members under the chairmanship of Sri T. Financing of Small and medium enterprises in India by Asok Kumar Mohanty and Durga Madhab Mahaputra the study deals with the evaluation and growth of development financial institutions and small and medium enterprises sector in India.Tiwari committee suggested a number of measures for the faster realisation of the arrears of the banks and financial institutions.Tiwari to examine the legal and other difficulties faced by the financial institutions in the rehabilitation of sick industrial undertakings and to suggest remedial including changes required in various laws. rendered by various state level promotional agencies as well as the various schemes of subsides concessions and incentives has been analysed. Continues to be industrially 7 . The study of industrial development pattern and industrial location in Bellary district by Prof. Major concentration of industries is around Bangalore metropolitan region. despite endowed richly with mineral resources Bellary district.prahlachar Institute for social and economic change (ISEAC) 1994 reveals that.assistance. industrial development in Karnataka is lopsided and imbalanced. investment and employment within the region. investment. And the structure consists of industries requiring low still and technological know.M. Hemalata Rao’s paper on industrial development and disparities in Karnataka 1985 revels that. The study of industrial development in Hyderabad Karnataka.B. on inter-regional and inter-district analysis by prof. employment. how major part of the state is still backward both in terms of magnitude and adqudity of industrial units.Seshadri. indicates that there are imbalances in forms of spread of units. All India financial institutions and a study of industrial development of Maharashtra by Malati Angol and A. JUSTIFICATION FOR THE STUDY There is dearth of studies pertaining to analysis of finance and industrial development in the backward regions.Swain. This study gives a brief review of development banks in India on industrial development in all India level. IV.therfore it is imperative to analyse the impact of Karnataka state financial corporation on industrial development in backward areas like Gulbarga district. 8 . Finance and industrial development concept is powerful strategy to remove the backwardness in the country.backward for want of exploitation of these for the purpose of industrial development. department of Bombay University. Hence it is essential to study the impact of Karnataka state financial corporation on industrial development in Gulbarga district.k. OBJECTIVES OF THE STUDY 1. To study about the contribution of KSFC’s for industrial development in Karnataka state and Gulbarga district 4. To examine the viability of industries sponsored by KSFC based on sample study in Gulbarga district. following hypotheses are for testing to arrive at some definite conclusions they are: • Supply of credit by KSFC in relation to requirement is adequate. 3. VI. 2.V. To study the pattern industrial development in Gulbarga district. To know the problems faced by the KSFC in financing industrial development. HYPOTHESIS On the basis of the Review of literature and objectives of this study. 6. Examine role of promotional agencies in industrial development focusing on KSFC. 5. to proceed in a systematic way. 9 . to offers suggestions based on analysis. SOURCE OF DATA The study is mainly based on secondary data as well as primary data. district at glance. The annual survey of industries [ASI] besides five year plans of Karnataka. METHODOLOGY The methodology of the present study can be outlined as under.• KSFC has promoted development of small medium entrepreneurs in Gulbarga district. studies will be 10 . annual reports of Karnataka state financial corporation will be used for collection of secondary data. 1. • The supply of credit by KSFC in relation to requirement of enterprises is adequate. Karnataka at glance. VI. • To examine the trends in financial assistance by KSFC in Gulbarga district. Further the unpublished reports. 2.collected. DATA ANALYSIS:To analysis the data statistical techniques like compound growth rate. 3. VII. Primary data will be collected from sample units based on questionnaire. regression analysis test statistic like t-teat will be used. PERIOD OF ANALYSIS: The study tentatively covers the period from 2000 to 2009. It is focused mainly on barrowers from a Karnataka state financial 11 . SCOPE OF THE STUDY The present study is confined to Gulbarga district only. The sample units which have three years of production will be included in the sample. its validity depends on the honesty of the respondents. The present study suffers from the following limitations. • • The study is confined to KSFC in Gulbarga district only.corporation. However analysis based on aggregate secondary will be made to develop the frame work for study. • Hence the conclusions drawn from the study have a limited applications and they may not be generalised the 12 . VIII. LIMITATION OF THE STUDY:- The study analyses the role of KSFC in industrial development Gulbarga district only. The information used for analysis collected from sample respondents. Scope and limitation. And fifth chapter is based on field study.limits are also set by the availability of data and the personal capacity of the researcher. Findings and suggestions. Third chapter deals with KSFC and industrial development in Karnataka and fourth chapter deals financial assistance by KSFC in Gulbarga district. review of literature. conclusion in sixth and final chapter. justification for the study objectives methodology. IX. 13 . The second chapter provides an over view of Karnataka state financial corporation. CHAPATER SECHEME:-The study is presented in the following chapters. first chapter deals with introduction consisting of statement of the problem. Development of Industrially areas. (1958). Holfmann Walter.Ltd.BIBLIOGRAPHY BOOKS: Bhattachary. BOMBAY. Development of small Scale Industries in Bihar.P. Capital Publishing House. (1981). Ashok Kumar Mehanthy and Durga Mahaputra. (1986). 14 . Serials Publications.N.NEW DELHI. DELHI. Manchester. Goyal.Himalya Publishing House. (1984). Akram.O.”Financing of Small and Medium entrepreneurs in India. S. the Growth of Industrial Economics.NEW DEHLI. Financial Institutions and economic growth of India.S. Metropolitan Book Company pvt. G. Industrial Development of Mysore.K. company BOMBAY Methodology and Techniques of social research . K. (1983). (1951). Jain. Shri Samata Students friend. Balakrishna. Industrial Problems of India. The Industrial Economy of India .R. (1944). (1967) Banking and Economic Growth. NEW DELHI. Chaitanya Publishing House .C.Himalaya Publishing House. Pandekar. Putta Swamaiah (1988) Economic Development of Karnataka vol-II oxford and IBH publishing co. Longman and Wilkinson and Bandarkar (1987). ALLHABAD.S. ALLHABAD. (1961) the Industrialisation of Backward Areas. DELHI.S.1940 Articles and Periodicals:- 15 . Kuchal. Banking in India. vora company publishing BOMBAY. Naidu .Bangalore Press. P. Basil Blackwell Publishing House.L. Mandelbaum.C. Rangarajan. industrialaization.”Central Banking and Economic Development” The Banker. July 1989. Series 12. J. REPORTS: Dr.Pp19-24. No.”Financing of Small and Medium entrepreneurs in India. organized by ISAEC Bangalore.C.C.81.M. the Indian Journal of industrial relations. No.”Banking Developments Since 1947. March (1990). Prahlad Achar.Rangarajan.Karan “Sickness in Small Industries” Yojana. Mithilish Kumar.6 Vol. Mishra and Anup. RBI Belletin. Hemalata Rao.37. Industrial Development of Karnataka and new industrial policy. Kyoko Inove. Dec1989. 1995. Ashok Kumar Mehanthy and Durga Mahaputra. socio-economic externalities and state policy. Journal 2010 Vol.R. Narasima.K. paper presented in a seminar sponsored by the government of Karnataka. P. 45.”Rolev of Banks Development” Tamilnadu Journal of Co-Oparative. 36. Dr.305-308. Indusrial Development pattern and location. 16 . vol. New Delhi.P. Jan1989.5. Achievements and challenges. P. Ksfc. s Annual Operational Statistics Reports. KSFC. (Www. Internet. 17 . KSFC website.in).