Importance and Problems of Medium / Large Scale Industries - Economics Notes Grade XI

Commerce Notes

☰   Related Articles

Development Planning

Development Planning in Nepal

Quantitative Analysis In Economics

Quantitative Analysis in Economics

Importance and Problems of Medium / Large Scale Industries

Importance of Medium and Large Scale Industries:
The industries which produce the goods in large amount by using the improved technology, efficient manpower, and more capital are known as medium and large scale industries. The contribution of the industrial sector to the total Gross Domestic Products (GDP) is only around 17 %. However, the importance of the industrial sector, in the process of overall economic development of the country is very remarkable. The importance of medium and large scale industries can be explained as the following points.

1. Provides employment opportunities:
In Nepal, there is a problem of unemployment due to the seasonal nature of agriculture. Development of medium and large scale industries help to remove the problem of unemployment by providing a large number of employment opportunities to unskilled, semi-skilled and highly skilled human resources.

2. Helps to modernize the agricultural sector:
For the modernization of agriculture, modern tools and technology are needed. The medium and large scale industries produce the modern machine, chemical fertilizers, material of irrigation and transportation. Thus, establishment, of agro-based medium and large scale industries would help to increase the agricultural production and productivity.

3. Development of transportation and communication:
The medium and large scale industries help to develop transportation and communication because these facilities are a basic infrastructure of industrial development. The means of transportation are required to transport and distribute the industrial production to different places and the means of communication are required to have up to date market information.

4. Proper utilization of resources:
Nepal has various significant natural resources but available resources are not fully utilized in Nepal due to the lack of industrial development. Medium and large scale industries can use natural resources like forest, water mineral, etc. properly which prevent the available resources from exported to foreign countries.

5. Development of basic industries:
The industries producing goods like iron, steel, copper, cement, etc are called basic industries. These industries help to establish and promote other industries. Thus, the establishment of large industries helps the development of basic industries.

6. Improvement in the living standard:
The employment and income opportunity of the people increases with the establishment and development of these industries. The regular income of the people forms these industries help to raise the living standard of the people.

These are other importance of medium & large scale industries like sources of government revenue, expansion in soul facilities, increase in revenue, expansion in soul facilities, increase in export, the key to rapid economic growth, etc.

Problems of Medium and Large Scale Industries
The medium and large scale industries play a significant role in the overall economic development of a nation. The establishment of organized industries was started in Nepal in 1993 B.S. But there are very few large scale industries which can’t be achieved in the expected level of development in Nepal up to now. Medium and large scale industries are suffering from various problems, which are as follows:

1. Lack of capital:
A large amount of capital investment is required for the establishment and development of medium and large scale industries, but Nepalese entrepreneurs don’t have such a sufficient amount to invest. Even the people who are able to invest are not interested to invest in these sectors due to the lack of favourable industrial policy.

2. Lack of raw material:
Medium and large scale industries require raw materials in large amount in a regular way. But most of the raw materials in Nepal are in remote areas and their availability is not at the right time. So, these industries can’t manage raw materials easily which hampers productivity.

3. Lack of energy:
Medium and large scale industries require a high level of power energy like coal, petrol, diesel, electricity, etc. But these energies are not available in sufficient amount to these industries regularly. Due to this reason, some of these industries are closing down.

4. Lack of technical knowledge:
High levels of technology and skilled manpower are essential for the establishment and operation of these industries. But Nepal doesn’t have sufficient technical manpower. Therefore, foreign experts have to be imported, who are comparatively expensive and are no available when required.

5. Limited market:
The medium and large scale industries produce a large number of goods. Therefore, the market for these goods should be also large. But the domestic market for Nepalese industrial products is very limited due to the low purchasing power of the people. The market expansion is also made more limited by the causes of a landlocked country.

6. Lack of appropriate government policy:
Sound and stable industrial policy are needed for the industrial development of the country. But the policy changes frequency due to the unstable government. There is a lack of proper coordination between political parties. Investors hesitate to invest their capital due to such unstable policies and uncertain environment.

There are other problems of medium and large scale industries such as lack of transportation and communication facilities, unable to compete with foreign goods, lack of industrial security, and lack of sufficient research.

You may also like to read:

Join with us on social media to see our updates on your feed.
facebook logo twitter logo