What is agglomeration economies? Why is it important for our country to keep the mill sector loomage lower than power loom and handloom?
Agglomeration economies refers to the benefits received by the firms and people when they come together to make use of the advantages offered by the urban cities that prove helpful to them.
In our country, many artisans and weavers work independently along with the family on handlooms and power looms. Most of these are poor and have only one mill. It is the only source of income for them. If the mill production is increased to meet the demands of the people then these weavers and artisans will suffer as their sales will be affected. This will lead largely to rural unemployment and decline in standard of living. In order to provide more employment opportunities and regular income to these weavers, the loomage or the production of the mills is deliberately kept lower than power loom and hand loom.
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