Informal manufacturing sector in Bihar: A brief overview

Informal sector is now seen as the next engine of growth for the Indian economy. Given their potential for employment creation and their strong linkage effects with the other sectors of the economy, they have an important role in regional development. This paper aims to provide an overview of the growth and productivity dynamics of informal manufacturing sector in Bihar vis-à-vis the national scenario over the period 2000-2010. The segments exhibiting dynamism are also identified and the linkage between dynamism and sustainability are explored. A variety of activity groups, different for different enterprise types and location, are showing signs of dynamism in the states. These dynamic activities, if aligned with the existing strengths of the region in terms of natural resources and linkage will be sustainable and may contribute substantially to the economic progress of the region. This sector also has the possibilities to exploit an extended market both within the country and abroad, especially in the current globalised scenario. While new market horizons have emerged, technological obsolescence, lack of institutional credit, intense competition and price-cutting are challenges that have to be faced by this sector squarely. The most important objective now is to improve the productivity levels so that they can become competitive and sustainable in the long run, bringing about dynamism and development in the state.