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, its 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
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particularly in industrial backward regions like Hydrabad Karnataka region. Today, while the state economy is making rapid strides in the global market.karnaataka State Financial Corporation is moving in tandem.KSFC is fine tuned to fulfil the plans and aspirations of entrepreneurs by extending all possible assistance. Karnataka State Financial Corporation is one of the fast track term lending financial institutions in the country with assistance to over 1,60,645 units amounting to nearly Rs,9,101 crore out of which more than 50 percent is towards small scale industries. Over the last 50 years in the state of Karnataka. Karnataka state financial corporation is one of the robust and professionally managed state financial corporations. It has contributed most significant for the growth of small scale industries [SSIs] back word area development and promotion of first generation entrepreneurs. Its achievement in these areas is unparallel.

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. It is also the proud privilege of

Karnataka State Financial Corporation to have assisted many industries that are internationally recognized like Info sis and Biocon.

II. STATEMENT OF THE PROBLEM Industrial development in India is at a very slow rate and the significant feature of it is, its concentration in few regions/states in the country. Therefore, there are inter-state and intra-state disparities in industrial development. Many industries are

concentrated in and around Bangalore. The Hydra bad Karnataka region which includes Bidar, Gulbarga, Raichur and Koppel the Northern most part of the state extremely backward in industrial development. In this context, it is essential to analyse the spread of industrial development within backward region promoted by

Karnataka State Financial Corporation. The present study intends to analyse the functioning of KSFC in this backward region promoting industrial developments in backward region like Gulbarga.

III. REVIEW OF LITRATURE

There are number of studies available on Finance and industrial development. Few empirical studies on industrial location and regional development include God boles 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 study has identified gaps in functioning of the promotional agencies in backward region.

Reserve Bank of India had setup a working group in 1962 under the chairmanship of K.C.Mittra to review the working of SFCs to evaluate their role in financing the industries and to study the organisational, financial and other difficulties faced by them and to suggest the measures to overcome the difficulties. The working group made 50 suggestions. 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, adding new types of business activity which SFCs can

transact, increasing the limit of advances, equipping the SFCs with greater powers to improve collection from assisted units.

The National Committee on Development of Backward Areas [NCDBA] 1981 it also evaluates the impact of finance, various schemes and concessions in promoting industrial development in backward areas. . It suggests a growth centre approach to promote industrial

development in backward areas.

Ramakrishna Sharmas 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.

In 1976 IDBI Constituted an working group under the chairmanship of Sri V.M.Bhinde to review the co-ordination between State Financial Corporations and Banks, 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.

The RBI appointed on 14th may 1981 a committee consisting of 11 members under the chairmanship of Sri T.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.Tiwari committee

suggested a number of measures for the faster realisation of the arrears of the banks and financial institutions.

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. It also covers development of SMEs sectors and SFCs; they suggested the organizational structure and disbursement of their loans and their recovery.

Krishnamurthys 1990 study is on investigation into the industrial dispersal and regional development covering the period 1960 to 1981. It examines the regional disparities in Andhra Pradesh in industrial development. A detailed observations of the financial

assistance, rendered by various state level promotional agencies as well as the various schemes of subsides concessions and incentives has been analysed.

Hemalata Raos paper on industrial development and disparities in Karnataka 1985 revels that, industrial development in Karnataka is lopsided and imbalanced. Major concentration of industries is around Bangalore metropolitan region. And the structure consists of

industries requiring low still and technological know, how major part of the state is still backward both in terms of magnitude and adqudity of industrial units, employment, investment. The study of industrial development in Hyderabad Karnataka, on inter-regional and inter-district analysis by prof.B.Seshadri, indicates that there are imbalances in forms of spread of units, investment and employment within the region.

The study of industrial development pattern and industrial location in Bellary district by Prof.M.prahlachar Institute for social and economic change (ISEAC) 1994 reveals that, despite endowed richly with mineral resources Bellary district. Continues to be industrially

backward for want of exploitation of these for the purpose of industrial development.

All India financial institutions and a study of industrial development of Maharashtra by Malati Angol and A.k.Swain, department of Bombay University. This study gives a brief review of development banks in India on industrial development in all India level.

IV. JUSTIFICATION FOR THE STUDY

There is dearth of studies pertaining to analysis of finance and industrial development in the backward regions. Finance and industrial development concept is powerful strategy to remove the backwardness in the country.therfore it is imperative to analyse the impact of Karnataka state financial corporation on industrial

development in backward areas like Gulbarga district. Hence it is essential to study the impact of Karnataka state financial corporation on industrial development in Gulbarga district.

V. OBJECTIVES OF THE STUDY 1. To study the pattern industrial development in Gulbarga district. 2. Examine role of promotional agencies in industrial development focusing on KSFC. 3. To study about the contribution of KSFCs 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. 5. To know the problems faced by the KSFC in financing industrial development. 6. to offers suggestions based on analysis.

VI. HYPOTHESIS

On the basis of the Review of literature and objectives of this study, to proceed in a systematic way, following hypotheses are for testing to arrive at some definite conclusions they are:

Supply of credit by KSFC in relation to requirement is

adequate.

KSFC has promoted development of small medium

entrepreneurs in Gulbarga district. The supply of credit by KSFC in relation to requirement of

enterprises is adequate.

To examine the trends in financial assistance by KSFC in

Gulbarga district.

VI. METHODOLOGY

The methodology of the present study can be outlined as under,

1. SOURCE OF DATA The study is mainly based on secondary data as well as primary data. The annual survey of industries [ASI] besides five year plans of Karnataka, Karnataka at glance, district at glance, annual reports of Karnataka state financial corporation will be used for collection of secondary data. Further the unpublished reports, studies will be

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collected. Primary data will be collected from sample units based on questionnaire.

2. DATA ANALYSIS:To analysis the data statistical techniques like compound growth rate, regression analysis test statistic like t-teat will be used.

3. PERIOD OF ANALYSIS: The study tentatively covers the period from 2000 to 2009. The sample units which have three years of production will be included in the sample.

VII. SCOPE OF THE STUDY

The present study is confined to Gulbarga district only. It is focused mainly on barrowers from a Karnataka state financial

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corporation. However analysis based on aggregate secondary will be made to develop the frame work for study.

VIII. LIMITATION OF THE STUDY:-

The study analyses the role of KSFC in industrial development Gulbarga district only. The present study suffers from the following limitations.

The study is confined to KSFC in Gulbarga district only. The information used for analysis collected from sample

respondents, its validity depends on the honesty of the respondents.

Hence the conclusions drawn from the study have a

limited applications and they may not be generalised the

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limits are also set by the availability of data and the personal capacity of the researcher.

IX. CHAPATER SECHEME:-The study is presented in the following chapters, first chapter deals with introduction consisting of statement of the problem, review of literature, justification for the study objectives methodology. Scope and limitation. The second chapter provides an over view of Karnataka state financial corporation. Third chapter deals with KSFC and industrial development in Karnataka and fourth chapter deals financial assistance by KSFC in Gulbarga district. And fifth chapter is based on field study. Findings and suggestions, conclusion in sixth and final chapter.

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