Another unwelcome feature of industrial development in the past has been the concentration of economic power and the concentration of new industrial investment around some existing industrial agglomerations. Certain large business groups, later identified by the Industrial Policy Enquiry Committee, expanded their operations faster than others and so acquired a position of dominance in different industrial fields. The enormous expansion of the large business groups often took place at the cost of the growth of small and medium scale enterprises. And, along with growing concentration, strong monopolistic tendencies came to the fore in a number of product lines. An important factor which made it possible for the larger groups to expand, at the cost of potential new entrants, was easy access to short-term credit as well as longer-term finance. In fact, the development rebates also perpetuated the dominant hold of established and large business houses.
While the expansion of larger business houses came in the way of a wider diffusion of entrepreneurship, the concentration of new units in the already developed areas aggravated the problem of regional imbalances. The major factor underlying the geographical concentration of industrial investment is that private profitability calculus governing the location of industry, like in other countries, has been overwhelmingly in favour of the existing industrial areas. The social and economic costs of regional imbalances are high; but they do not always get reflected in the actual costs and profitability of an individual industrial firm. The problem of the development of backward regions has now become formidable; and a sustained and long drawn out effort will be essential to exploit fully the development potential of the industrially underdeveloped regions. It is indeed heartening to see that the young entrepreneurs are conscious of the dangers inherent in regional and entrepreneurial concentration and feel the need for a wider diffusion of industrial development.
The dispersal of industry and entrepreneurship will also go a long way to help us in tackling the mammoth problem posed by growing unemployment. Small or medium scale industries have a considerable employment potential. Even now small-scale industries provide employment to about as many as are employed in what is called the organised sector. It is my belief that considerable new employment opportunities can be created without uneconomic production and high costs through the growth of well managed small and medium scale industrial units.