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INDUTRIAL ECONOMICS

PREPARED BY: PRESENTED TO: VARGEES MAM HIMANI JAIN M-COM- Ist YEAR M.J. COLLEGE, JALGAON

RATIONALISATION:
Meaning:

1. Rationalisation implies: choice of the proper productive factors, modifications of the production process; or methods of employing the resources, improvement in the working environment; or improvement in the organisation and management
2. to increase productivity and to ensure

conducive working condition.

Rationalisation may involve any one of the following:


1. Standardisation of materials and products;

2. Modification of process;
3. Improvement in the system of transport; 4. Improvement in the system of marketing; 5. Better personal management; 6. Improvement in the working conditions; 7. Better financial management; 8. Improvement in organisation and

management

Aspects of Rationalisation:
1. Technological 2. Financial

3. Organisational and Managerial


4. Human and Sociological

Objectives of Rationalisation:
1. Economic Size 2. Distribution 3. Optimum Location 4. Management 5. Exports 6. Self-Reliance

Need for Rationalisation in India:


1. Standard of Living: 2. Working Conditions:

3. Revitalisation of Industry:

Facilities for Rationalisation:


1. Finance

2. Project Evaluation
3. Research and Development 4. Productivity Drive

5. Indian Standards Institution


6. Import of know-how and Foreign

Collaboration 7. Consultancy

Problems of Rationalisation:
1.

When rationalisation takes the form of automation, it may reduce employment in certain cases. In labour surplus economies the rehabilitation of displaced labour is a problem. Certain misconceptions and fears about rationalisation create unfavourable attitude towards rationalisation. For instance, according to some labour leaders and workers, rationalisation implies Displacement of labour Increased work load of labour Increased exploitation of labour and Reduced role of labour in the production process

2.

Cont..
Rationalisation may, sometimes, requires changes in social attitudes and existing institutional set ups. But the social attitude may not favour revamping of the existing structure and organisational ralationship. 4. Social and economic conditions prevailing in a country may demand adoption of the appropriate technology for rationalisation which need not be sophisticated technology. But sometimes this fact is not sufficiently appreciated. Instead, there is a tendency to go in for highly capital intensive sophisticated technology, including imported technology, which is irrelevant.
3.

Cont..
5. If the country does not have sufficient capital and

know-how required for modernisation and rationalisataion, it would increase its dependence on foreign countries

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