INFORMAL BRICK INDUSTRY IN THE NORTH KARNATAKA - FLOURISH OR PERISH

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1 INFORMAL BRICK INDUSTRY IN THE NORTH KARNATAKA - FLOURISH OR PERISH ABSTRACT DR. SHARANAPPA SAIDAPUR* *Assistant Professor of Economics, Govt. First Grade College, Chittapur, Gulbarga, Karnataka. Brick-kiln small scale industries have an important role to play in the Karnataka economy. In fact, they are considered to be the foundation of the North Karnataka economy. According to Mahatma Gandhiji the salvation of India lies in the cottage and small scale industries. The survey method has been used for data collection from the brick-kiln units through direct canvas of the interview schedules. The brick-kiln entrepreneurs are invested capital on brick-kiln enterprise their own risk but there is no risk coverage benefits from the Government. The brickkiln enterprises create the environmental problems like smoke, noise, mud sliding and dust etc. The important policy suggestion is that, similar to industrial estates government should provide earmarked place for establishment of brick-kilns, even if bit away from city surroundings. The land should be given on long lease basis. Brick enterprises are one of the oldest enterprises in Karnataka, contributing significantly to industrial and economic growth of the state. INTRODUCTION Pinnacle Research Journals 87 Brick-kiln small scale industries have an important role to play in the Karnataka economy. In fact, they are considered to be the foundation of the North Karnataka economy. According to Mahatma Gandhiji the salvation of India lies in the cottage and small scale industries. Even in advanced countries like England, Russia, France and Japan etc., they have occupied an important place. In France, nearly 90 percent of the industrial establishment employs less than 100 workers. In Japan, this is called the industrial hub of the eastern world more than 80 percent of the industrial units employ less than 30 workers. The case for development of small scale industries in underdeveloped country like India is very strong. Brick is one of the most important building materials used in India. The Indian brick industry, the second largest producer of brick in the world, is next to that of china. It is running as an unorganized small sector with more than 1, 00,000 brick-kiln units spread throughout the country, each unit manufacturing between 1 lakh to 10 million bricks per year. At present around 140 billion bricks are produced in those units. The brick industry has an annual turnover of more than Rs 140 billion and the present employment capacity of it is more than 6 million. It is consuming around 25 million tones of coal every year and is the third largest consumer of coal after thermal power and steel sector of the country.

2 Brick making venture is a traditional one confined to urban and semi urban areas with an objective to fulfill local requirement making it to operate as a small-scale industry. The industry, for this reason, comprises of different small scale, labour intensive units acting as one of the leading industries generating employment by employing millions of rural-urban people, both men and women, during agricultural off season. There are around 10,000 brick-kiln units operating throughout Karnataka State. These brick-kilns represent one of the major small-scale industries, which fulfill the ever growing demand of urban expansion. Brick-kiln industry is complete and independent activity. Further, it may also be treated as an economic activity in which land, labour and capital are used for one and only one purpose. Thus, in this sense the brick manufacturing becomes an activity worthy of an economic analysis, not withstanding to be called an urban informal activity. The National Commission for Enterprises in the Unorganized Sector (NCEUS) setup by the Government of India in September 2004 considered various aspects of the matter and defined the unorganized sector in the following manner. The unorganized sector consists of all unincorporated private (brick) enterprises owned by individuals or households engaged in the sale and production of goods and services operated on a proprietary or partnership basis and with less than 10 workers. THE PROCESS OF BRICK MANUFACTURING The production process is based on three characteristics. First, it is a sector of very low capital intensity. The brickyard rely on an entirely artisan mode of production with very highly labour intensity. The second characteristic of the production process concerns the cycle process, which is continuous and cyclic. Pinnacle Research Journals 88 The moulders must produce enough to feed the kilns and conversely, the firemen must maintain their functioning. Moreover, the brickyards stop their activity during the rainy season. These three elements intensive need of labour, continuous and cyclic production process. Suppose a seasonal and disciplined labour force and a large extent explain the recourse to the advance system. Brick made from clay, shale, soft slate silicate, concrete or shaped from quarried stone. Clay is the most common material, with modern clay bricks formed in one of three processedsoft soil, dry press and extruded. In 2007 a new type of brick was invented based on fly ash a by product of coal power plant. The soft mud method is the most common and as it is the most economical. It starts with the raw clay, preferably in a mix with 25-30% sand to reduce shrinkage. The clay is first ground and mixed with water to the desired consistency. The clay is then pressed into steel moulds with a hydraulic press. The shaped clay is then fired (burned) at C to achieve strength of bricks. The brick making is a simple process in the study region. The soil is mixed with water and kneaded into dough which is cast into moulds and shaped as bricks which are dried in the

3 open place and finally are stalked into the kiln. The sun dried (7 days) bricks are converted into red bricks in the kiln. A brick is a block of ceramic material used in masonry construction, usually laid using mortar. Brick making involves kneading, moulding, drying, storing and firing. Manual brick moudling is practiced widely in the study areas. OBJECTIVES OF THE STUDY The objectives of the study are as follows. 1. To analyze the nature and growth pattern of urban informal sector in the North Karnataka. 2. To examine the growth performance of brick industry in the study region. 3. To understand the problems faced by informal brick kiln units. 4. To give suggestions to policy makers to improve the performance of brick industries in the North Karnataka. SCOPE AND METHODOLOGY The present study is an attempt to focus into the problems and prospects of brick manufacturing industries of North Karnataka Region. The survey method has been used for data collection from the brick-kiln units through direct canvas of the interview schedules. The interview includes face to face meeting with purposive conversation. Every brick units in the study region have been contacted and data collected from brick-kiln manufacturer of their problems and prospects. The present study is concentrating the brick-kiln manufacturers in Gulbarga and Dharwad districts of North Karnataka, covering 110 brick-kiln manufacturers in each district of the urban area. Pinnacle Research Journals 89 ANALYSIS AND DISCUSSION: For interpretation of the data collected from the brick manufacturers, statistical tools like sample percentage and averages have been used. BRICK INDUSTRIES IN NORTH KARNATAKA The brick making on purely commercial basis in North Karnataka region had started in the mid-sixties of the last century. Prior to that bricks were manufactured solely on the basis of the requirement of any particular project. They mostly manufactured in the respective construction site for which a process of burning bricks in scove or country clamps was followed. But to keep pace with the infrastructural development of the state during post-independence period brick manufacturing got the shape of an industry step by step. At present 330 in Gulbarga and 350 in Dharwad brick manufacturing units are in operation each of which produces 2 to 4 crores of bricks on an average.the small-scale industrial sector which plays a pivotal role in the Karnataka economy in terms of employment and growth has recorded a high rate of development since independence inspite of stiff competition from the large sector and not so-encouraging support from the government.

4 TABLE-01 GROWTH OF BRICK MANUFACTURING INDUSTRIES IN NORTH KARNATAKA: Establishment year Brick-kiln units in Gulbarga Brick-kiln units in Dharwad Before Total Source: Brick Manufacturer Association, Gulbarga & Dharwad. It is observed from the above table the growth of brick-kiln enterprises in Gulbarga and Dharwad. It is evident that the number of enterprises has increased between both in Gulbarga and Dharwad respectively. There are 330 brick-kiln enterprises in Gulbarga and there is a 350 brick unit in Dharwad. However, if at all there is only a marginal difference in the growth of brick-kiln units in Gulbarga and Dharwad. OPERATIONAL PERIOD Pinnacle Research Journals 90 An operational period is a demonstration of a process of production and existence of duration of work.the brick production mainly through small scale enterprises that operate only during dry season (5-6 months in a year). These kilns operate at a time when they can get the maximum number of seasonal workers who are freed from the agricultural activities. The brickkilns shut down during the monsoon. It is a well known fact that, the brick making is a very peculiar activity and is largely dependent on rainy days. Therefore, the raw bricks made during the rainy days get if not covered damaged. The bricks made during these days also cannot be burnt in open chimneys. The number of days during which bricks are made in Gulbarga and Dharwad differ significantly. For instance there is more number of days during which bricks are made in Gulbarga than relatively less number of days at Dharwad. This is so because Dharwad has experience more numbers of rainy days than Gulbarga.

5 TABLE-02 OPERATIONAL PERIOD OF BRICK PRODUCTION Gulbarga Dharwad No. of Days No. of Brick No. of Brick Percentage Percentage Below 90 Days Below 120 Days Below 150 Days Below 180 Days Above 180 Days Total Source: Field Survey Note: Brick-kiln units are operating 180 days in Gulbarga and 120 days in Dharwad. It is evident from the above Table-02 that, the operational period of brick production in the study region. There are 56.5 percent of brick-kilns units in Gulbarga working 180 days in a year (6 months), whereas in Dharwad 67.3 percent brick-kiln units working 120 days in a year (4 months) only. SIZE OF BRICK PRODUCTION The size of brick production rapidly increasing in the recent year.the estimation of income generation is number of bricks made by all the sample brick-kilns for all the days of sample period. The emerging calculation of the production of bricks in the study area is noted in Table-03. Pinnacle Research Journals 91 TABLE-03 SIZE OF BRICK PRODUCTION (IN LAKHS) Gulbarga Dharwad Size of Daily No. of Brick No. of Brick Production Value of Value of Brick Production Brick Production (Range) Output Output Owners (in Lakhs) Owners (in Lakhs) (57.3) 567 (48.5) (54.5) 360 (42.9) (31.8) 441 (36.2) (30.0) 277 (33.0) (06.4) 113 (9.2) (08.2) 097 (11.6) (04.5) 099 (8.1) ) 105 (12.5) 315 Total 110(100) 1220 (100.0) (100.) 839 (100.0) 2517 Source: Field Survey Notes: 1).Price of each brick in Gulbarga is Rs and price of each brick in Dharwad Rs ). Figures in brackets indicate percentage to row total. It is illustrates from the above table-03, it is easy to calculate the total value of output produced at Gulbarga and Dharwad respectively. In Gulbarga, the total value of production of bricks from sample households is Rs lakhs Gulbarga and Rs.2517 lakhs. Brick-kiln units produce the minimum bricks of 3000 per day and maximum of bricks. The annual production of bricks is Rs.1220 in Gulbarga while Rs. 839 lakhs in Dharwad respectively.

6 SOURCE OF FINANCE Finance is the oxygen of brick industry. The brick-kiln industry needs the finance for production. The brick-kiln enterprises have no access to institutional finance and that they finance operations out of own and family savings, borrowing from friends, relatives, NBFCs and private money lender etc. The formal institutions seem to play only a negligible role in the promoting informal sector activity like bricks. TABLE-04 SOURCE OF FINANCE Pinnacle Research Journals 92 Source of Finance Gulbarga Amount Received No. of Brick Total Amount Dharwad Amount Received No. of Brick Total Amount Grand Total Friends (32.6) (36.60) 130 (33.7) Relatives (7.2) (1.8) 22 (05.7) Money Lender (47.8) (43.2) 179 (46.3) NBFCs (2.1) (11.0) 18 (04.8) Bank (10.3) (7.4) 36 (09.3) Total (100.0) (100.0) Source: Field Survey. Note: Figures in brackets indicates percentage to total amount. The above table-04 depicts the amount receive by the small scale brick-kiln units in the study region. The brick manufacturers have received loan of 32.6 percent from friends. 7.2 percent from relatives, 47.8 percent from money lender, 21 percent from non-banking finance companies in Gulbarga, whereas the brick-kiln units in Dharwad have taken loan of 36.6 percent from friends 1.8 percent from relatives, 43.2 percent from money lender and 11 percent from Non-Banking Finance Companies (NBFCs). There are some important problems be set with the availability of raw materials. MAJOR DIFFICULTIES FACED BY THE BRICK-KILN ENTERPRISES Most of the brick entrepreneur had also said that procurement of working capital, supply of power, soil, coal, labour and water were also some of the difficulties faced by brick-kiln enterprises in North Karnataka. The problem concerns soil in particular over the past few years; the extraction of soil has been regulated. PROBLEMS OF RAW-MATERIALS Brick making is one of the important labour intensive industries in the North Karnataka Region. The brick production is the part of the informal sector. It increases the income of the manufacturer and also workers. The brick production is the inputs are converted into the output.

7 In reality, small-scale brick makers often face many problems such as marketing price fluctuation, stiff competition, business management, record keeping, fuel scarcity, over burning, increase in price of soil, coal, electricity and labour etc. TABLE-05 PROBLEM OF RAW MATERIALS Gulbarga Dharwad No. of Days No. of Brick No. of Brick Percentage Percentage Mud Coal Water Labour Ash Coal Total Source: Field Survey. The above table depicts the problems of raw material in the brick-kiln units. As per Gulbarga is concerned there are 65.5 brick-kilns and in Dharwad 83.7 percent brick-kilns are facing the problem of getting mud. The problems of labour is relatively very high that means 44.5 percent of brick-kiln in Dharwad and 16.4 brick-kilns in Gulbarga have expressed problems of non-availability of labour. Pinnacle Research Journals 93 COST OF PRODUCTION Cost of production estimating is basically the process of planning for a brick long time production cost. It is very important for a brick manufacturing industry because it helps in analyzing the profitability of the brick production activities. It is the sum total of all the input cost incurred during the process of brick production. Raw material is necessary for preparation of bricks. The price of bricks depends upon using of inputs. The raw material cost like mud, coal, transportation, electricity and labour etc. TABLE-06 COST OF BRICK PRODUCTION Particulars Gulbarga Dharwad Input Cost Percentage Input Cost Percentage Rent Mud Transportation Coal Electricity Labour Total Source: Field Survey.

8 The above table reveals that the cost of production of 110 brick-kiln units in the study area. The total cost of production here would mean (a) the cost of mud (b) the cost of transportation of mud (c) the cost of coal and (d) electricity charges (all costs are in Rs. Lakhs). The total cost of brick-making sum up Rs Lakhs in Gulbarga and Rs Lakhs in Dharwad. The annual production of bricks is 1220 Lakhs in Gulbarga while 839 Lakhs in Dharwad respectively. IMPEDIMENT OF BRICK-KILN ENTERPRISES The Government of Karnataka is not giving enough priority to Small Scale Brick-Kiln Enterprises (SSBEs). The ban imposed on setting up new brick-kiln enterprises in Kapnoor industrial area in Gulbarga District. The labour shortage has engulfed the brick-kiln of Gulbarga and Dharwad cities. Pollution made brick-kilns to shut down after some year. There is shortage of skilled and honesty labourers at brick-kiln sites for preparing quality bricks. The shortage of labour was because of the wage fixed by the brick s was not attractive. With the work sites located outside the city and it is far from the central city. Majority of brick-kilns have close-down in the North Karnataka. The Government of Karnataka has imposed restriction on brick-kiln industry. Lack of space and mud the brick-kiln has shut down and because of extension of city and establishment of new official building came up. In Gulbarga, 50 brick-kiln units and 100 brick-kiln units in Dharwad has been closed-down. The Government of Karnataka has imposed heavy tax on brick-kiln. Department of Environment and Science have issued the notice to the many brick-kiln units in the North Karnataka Region. Operations of 50 brick industry have been mostly stopping their production. The labour shortage has engulfed the brick-kilns of North Karnataka. The over polluting brick-kilns to shut down after two year.the local working force with the brick industry and other associated business is totally jobless and their families are in dire situation. Therefore, it is high time for the Government to realize and encourage brick industries. Pinnacle Research Journals 94 FINDINGS OF THE STUDY The major findings of the study are as follows: There is no space for storage of mud and the work has to be stopped during rainy days. The brick-kiln enterprises create the environmental problems like smoke, noise, mud sliding and dust etc. The brick-kiln entrepreneurs are invested capital on brick-kiln enterprise their own risk but there is no risk coverage benefits from the Government. The sample brick enterprises manage their finances for fixed as well as working capital from personal and family savings and other informal sources of finance such as money-lender, non-banking finance companies (NBFCs), friends and relatives, etc. The workers are tried to move from one brick enterprise to another in order to enhance their earning or to avail better working conditions.

9 Majority of brick enterprises do not even provide their workers the benefit of weekly paid holidays. The brick-kiln enterprises in Gulbarga are earned an average profit of lakhs whereas brick-kiln units in Dharwad are earned an average profit of 4.02 lakhs and The performance of brick-kiln enterprises in Gulbarga is for better than the brick-kiln units in Dharwad. POLICY SUGGESTIONS The important policy suggestions of the study are as follows: The National Commission on Enterprises by the Unorganized Sector (NCEUS) is the first major attempt by the Central Government to address the issues related to unorganized sector enterprises. The policies and programmes in support of the brick-kiln in informal sector have to take into account its diversity and complex reality. Identification and removal of the adverse impacts of aspects of broader policies on the brick-kiln enterprises is an important task for a development agency. However, it must be strongly emphasized that the combination of macro policies and micro intervention has seriously hindered the efficient growth of this brick-kiln enterprises. Pinnacle Research Journals 95 Mud is main ingredients for the bricks. Hence, from the in-depth study these problems it is worthwhile to suggest that the land use authorities, forest officials and department of Geology have to facilitate the availability of mud either from Government lands or make rules applicable to private land s to sell the mud from their fields. The major practical policy suggestion emerging from the study is that the brick-kilns need coal and ash coal. The only requirement is that the brick-kiln s should get them self united and make transport arrangement of their own and should approach appropriate concerned authorities. The important policy suggestion is that, similar to industrial estates government should provide earmarked place for establishment of brick-kilns, even if bit away from city surroundings. The land should be given on long lease. The Government should help the manufacturers by providing license and other rules and regulations which can be early operated. The majority of the samples brick enterprises have face severe shortage of working capital. This should be made available at short notice without collateral guarantee. Special facilities are required to provide risk capital and long term loan capital. A co-operative type of bank or some other arrangement can be made to act as an intermediary between entrepreneurs in

10 the informal sector and the formal financial institutions are supply of credit to brick-kiln enterprise in the study area. Different orientation programme may be taken up for the brick manufacturers to change their mindset regarding the adoption of newer technology in the industry that will help them to think in a long term instead of short term. Providing integrated work place for brick manufacturing activity. Providing place to sell in terms of licensed and weekend markets and The National Commission for Enterprises in the unorganized sector (NCEUS) major recommendations should be applied to brick-kiln enterprises and also implementing on the priority basis. To set up the Karnataka Brick-kiln Enterprises Development Board in the North Karnataka Region. Joint committee to conduct a survey of all brick industries in North Karnataka. CONCLUSIONS The small scale brick enterprises play a crucial role in the Karnataka economy in terms of its contribution to the Gross Domestic Product (GDP), generation of employment opportunities and its share in the total income of the state. Brick-kiln enterprises are one of the oldest enterprises in Karnataka, contributing significantly to industrial and economic growth of the state. Pinnacle Research Journals 96 Around the world most of the governments are interested to know the secret behind success of brick-kiln enterprises. Most of them especially in the developing economies are facing macro economic problems such as unemployment, inflation, high interest rates and others which have been affecting the quality of life of their workers. Therefore, it is important that leaders of these countries find solutions to alleviate poverty by encouraging new entrepreneurs creating new jobs and products. As is known, some countries have adopted new attitude to solving the problem of unemployment and have been formulating encouraging policies help that entrepreneur to become economically empowered. The National Commission for Enterprises in the Unorganized Sector (2007) states: There is no doubt that this shining India has expanded in the past is still expanding at a very high rate because of only small scale enterprises. NOTE This article forms part of the unpublished thesis for Ph.D. degree awarded by Department of Studies and Research in Economics, Gulbarga University, Gulbarga.(2010) Karnataka.

11 REFERENCES 1. National Commission for Enterprises in the Unorganized Sector (2007), Report on Conditions of Work and Promotion of Livelihoods in the Unorganized Sector, p Bhatia A.K. (1998), Innovation Technology Option for Urban Informal Sector, New Age International Private Limited Publishers, New Delhi, pp Albert Dario Arias Ardila (2008), Promotion of Micro, Small and Medium Enterprises through Micro Finance, Small Enterprises Development, Management and Extension Journal published by ni-msme Hyderabad, Volume-35, No.4, pp Sukany N. and Vishwanath (2008), Commercial Bank Finance to Small Scale Industries in India Recent Trends and Their Implications, Published by ni-msme, Hyderabad, Vol.35, No.4, pp Bal Subrahmany MH (2005), Labour Productivity Energy Intensity and Economic Performance in Small Enterprises. A study of Brick Enterprises Cluster in India, Published by Indian Institute of Science, Bangalore, pp Basava K.D. (1990), Indian Economics published by Vidyavahini Prakashana, Hubli, pp Brick Manufacturer Association Gulbarga and Dharwad Pallab Kanti Ghoshal (2008) Prospects and Problems of Brick Industry A Mittal Publication New Delhi pp.1-5. Pinnacle Research Journals 97