Industrial Financing and Recovery – A Comparative Study of Backward and Developed Regions

Indian economy is characterised by imbalanced regional development in terms of per capita income, employment, industrial activities, human development index, health care services, etc., and this is true even in the case of Karnataka state which is one of the fast-developing states. In order to address this issue and to achieve balanced regional development, the state government is taking many steps and one such step is the support for industrial activities in backward districts of the state.

With the objective of assisting industrial enterprises in the state including those in backward regions/districts in pursuit of balanced regional development, the state government has established the Karnataka State Financial Corporation (KSFC). This study examines the role of KSFC in assisting industrial enterprises in backward and other districts of Karnataka using three variables and to evaluate its recovery performance by using another three variables. For this purpose, the relevant statistics are collected for a period of ten years, 2007-08 to 2016-17. And the descriptive statistics, CAGR, and student’s t-test are used for evaluating its assistance to industrial enterprises and also to evaluate its recovery performance. Besides, testing of hypotheses is made using Granger's Causality Test and Co-integration Test parallel to CAGR and t-test.

The study finds that the corporation has been increasing its financial assistance for industrial enterprises in both the backward and developed districts. However, the rate of increase is comparatively higher for units in backward districts through the difference is statistically not significant. Further, no much difference is found in the recovery performance between industrial enterprises in backward districts and in developed districts.