64 SOCIAL SCIENTIST have become "sickness prone/5 The Sixth Plan, commenting on the consequences of sickness, says, "The phenomenon of industrial sickness not only tends to aggravate the problem of unemployment, but also renders infructuous capital investment and generally creates an adverse climate for further industrial growth. While in advanced countries where there are adequate social security benefits, this is accepted as a normal feature of industrial scene, such sickness has much more serious economic consequences in a country where unemployment is a major problem and resources are scarce. .. . Clearly, the problem of industrial sickness is an area to which Government must give high priority.)?1 The working group of central trade unions, set up by the Union Ministry of Industry, also echoed similar sentiments: "Whatever may be the causes, the consequence is always the same: loss of employment and production to an economy already suffering from chronic unemployment and shortages. The workers are the worst victims of industrial sickness."2 Obviously, industrial sickness has both growth and welfare implications. Factors Responsible for Industrial Sickness Two sets of factors are responsible for industrial sickness— exogenous and endogenous. The exogenous factors relate to such factors as government policies pertaining to production, distribution and prices, change in the investment pattern following new priorities in the plans, shortage of power, transport and raw materials and deteriorating industrial relations. Such factors are likely to affect all units in an industry. These factors deserve corrective action at the level of the state. One such instance is the controlled cloth scheme. The Planning Commission has itself admitted: The controlled cloth scheme has been considered as a contributory factor to the prevalent sickness in this sector. ... A study of the economics of the production of controlled cloth shows that the cost of cotton alone is higher than the stamped prices in many of the varieties. Even after taking into account 35 per cent increase granted to mills on 1st January, 1977 (not translated into the form of an increased consumer price), the uncovered cost of production has been found to be sizeable.3 When the government itself is convinced that a particluar policy is unjustifiable, it does necessitate remedial action on the part of the government. Another important case of state inaction is its failure to evolve a suitable national income and wage policy. As a consequ-