Structure and Performance of Unorganized Manufacturing in Rural India

The unorganised manufacturing occupies a pivotal position within the rural economic landscape of India though it has been neglected since ages. Its contribution is immense in terms of number of workers it engages and value addition it generates. Its structure may be defined as the distribution of various types of enterprises in employment generation while its performance may be reflected in terms of the gross value added it generates. One of the important theories of industrial organization economics: the SCP paradigm; suggests that there is a direct and positive relationship between structure and performance. Taking the clue from the SCP paradigm, the present study intended to explore the possibility of such a relationship in the context of unorganised manufacturing in rural India by running simple OLS regressions. For this purpose the study considered 20 important states of India and 24 different industries as per NIC 2008 classification. Interestingly, the findings of the study are contrary to the expectation of SCP paradigm. Based on the findings; the study prescribes that policy emphasis should be given on the transition of large number of organizationally primitive units to modern ones.