Organisational morphology of rural industries in liberalised India : a study of West Bengal

Recent interest on rural industries derives from recognition of the limits of agriculture and organised manufacturing sector in employment generation especially during the post-liberalisation period in India. Historically, industrial development of the West and the East present contrasting pictures of rural industries. One, the linearity model founded on the historical experience of the West, holds that development implies a movement away from traditional subsistence production in rural areas to modern industrial production in urban centres. The other, the East Asian Experience has shown that the growth potential of rural industries is considerable given the under-utilisation of the physical labour and the entrepreneurial ability of rural people. A combination of putting out system and subcontracting system - along with modern factory and industrial cooperatives - has persisted in the rural manufacturing sector even in the era of economic liberalisation. We find differential capital endowments and socio-economic constraints of rural artisans reflecting extensive division of labour, specialisation and fragmentation of the labour process. These do not satisfy the requirements of the linearity model founded in advanced capitalist countries. Key words: Rural industry, production organisation, linearity model, transaction cost JEL Classification : O18, R12