An industry is "any human activity which is engaged in the conversion of raw materials into readily usable materials". Industrialisation is the process of using modern techniques of production to produce goods required by consumers and other producers on a large scale. This chapter covers why industries matter, what industrial clusters are, how they developed in Tamil Nadu, and the government agencies that promoted them.
1. Why Industrialisation Is Needed
The share of agriculture in an economy's income and employment decreases with development, because:
- Demand for food remains constant with regard to income, so as incomes rise people spend a lesser share on agricultural products.
- Food is transported, processed, branded and preserved, so the prices farmers get are much less than the prices consumers pay.
- Agriculture's ability to absorb labour is limited by the declining marginal productivity of land; wages cannot rise and poverty may remain high.