Unit
– IX: MSME and Business Entrepreneurship
Very Short Types Questions and Answers (1
Mark)
1. State any two external causes of sickness
in small scale industry.
Ans. 1.Delayed
Payment 2. Shortage of Capital
2. Do you think that small –scale business can
survive in a competitive market? Give reasons to support your answer.
Ans. Yes the
small scale business can survive in a competitive market. Following points can
be presented for support of answer: 1. Personal attention 2. Flexibility of
Operation 3. Individual attitude 4. Social Utility 5. Individual attitude.
3. Name a few areas where SSI feels threatened
with the onslaught of global competition.
Ans. 1.
Technological skill 2. Quality standard 3.Managerial and marketing skill
4. What is the investment limit for SSI?
Ans. Rs.10
crores.
5. State the features of cottage industries.
Ans. 1.
Use family labour and local talent 2. Equipment used in simple 3. Organized by
individuals with private resources
7. Name the institution which was set up in
1955 to promote the growth of SSI.
Ans. NSIC
8. Give the full form of NABARD.
Ans:
NATIONAL BANK FOR AGRICULTURAL AND RURAL DEVELOPMENT. It was set up in 1982 to
promote integrated rural development.
Long Questions and Answers (2/3/4/6 Marks)
Q.1. Define
small scale industry. Mention the units included in it. 2016
Ans: The
definition used by Government of India is “A small scale industry is one in
which the investment in fixed assets of plant and machinery does not exceed one
crores”. 2016, 2018
Units
included in Small scale industry:
a)
An ancillary industrial unit is one
which supplies not less than 50% of its output to another parental unit.
b)
Export-Oriented unit is one
which exports more than 50% of its output and wherein investment in plant and
machinery does not exceed rupees one core.
c)
Small Scale Unit owned and
managed by Women Entrepreneur is one in which women have a share capital of not
less than 51%.
d)
Tiny Industrial unit is an
enterprise having investment in plant and machinery of not more than Rs.25
laths.
e)
Micro Business unit is
one where investment in plant and machinery of not more than Scone laky.
f)
Village Industry means any
industry located in a rural area which produces any goods, renders any service
with or without the use of power and in which fixed capital investment per head
does not exceeds Rs.50,000.
g)
Cottage Industry refers to
industrial units which are traditional rural industries located in residential
premises and in which manual techniques and simple tools are used.
Q.2. Mention
the government measures and schemes to promote small industries by the
government.
Ans:
Government Measures and Schemes (Subsidies and incentives)
a)
Land is supplied at a concessional rate to
industries setup in back ward areas.
b)
Power is supplied at a concessional rate.
c)
Water is supplied on no profit no loss basis.
d)
In all union territories SSI’s are exempted
from sales tax.
e)
Scarce raw materials are supplied on priority
basis.
f)
Loans are offered at concessional rate.
g)
They are exempted from payment of tax for 5 or
10 years.
h)
800 items are reserved for exclusive
production by SSI’s.
Q.3. Mention
problems of Small Business or small scale industry. 2016, 2018
Ans: The problems
of Small Business are given here:
a)
Small scale industries find it difficult to
get loans from banks & other financial institutions.
b)
They are not able to get quality raw materials
at reasonable prices.
c)
They are usually run by people who may not
have managerial skills.
d)
They cannot pay higher salaries to employees
so they leave the business.
e)
They face competition from global enterprises.
f)
They use outdated machineries &
technologies.
g)
Their quality of goods is low.
h)
Due to lack of marketing skills & lack of
demand, half of the capacity is not utilized so the operating cost is more.
Q.4. State the
features of Cottage Industries.
Ans: Following are the features of Cottage
Industries:
a)
Cottage industries use family labour and
locally available talent.
b)
Cottage industries are organised by
individuals with private resources.
c)
The capital investment is small.
d)
Cottage industries produce goods using
indigenous technology.
e)
Cottage industries produce simple goods.
f)
Cottage industries operate in owner’s
premises.
Q.5. Distinguish
between small scale unit and large scale unit.
|
DISTINCTION |
SMALL SCALE
UNIT |
LARGE SCALE
UNIT |
|
NATURE |
It is
labour intensive |
It is
capital intensive |
|
LABOUR |
It uses
family labour |
It hires
labour |
|
OPERATIONS |
It
produces small quantity |
It
produces large quantity |
|
USE OF
MACHINES |
It uses
small machines |
It uses
big machines and modern technology |
|
CAPITAL |
Its
capital is up to one Crore |
Its
capital increases more than one Crore |
Q.6. Describe the
role of small scale industries in rural India. 2017,
2019
Ans: Role
of Small Business in India (With Special Reference to Rural Areas)
a)
Small industries provide employment
opportunities in rural areas
b)
They are the second largest employers of human
resources
c)
They contribute nearly 40% of the gross
industrial value added
d)
The development of village & rural
industries leads to industrialization in rural areas
e)
They ensure equitable distribution national
income & wealth by reducing income inequalities between rural & urban
areas
f)
They help in mobilization & utilization of
local resources & skills
g)
They help generate multiple sources of income
to the rural house holds
h)
They prevent migrations of rural population to
urban areas in search of employment.
Q.7. How do small
scale industries contribute to socio economic development of India?
Ans: Indian society has various problems like
unemployment, scarcity of capital, unbalanced regional development, economic
inequality etc. Small scale industries help in solving these problems and help
in the socio- economic development.
a)
Small scale industries are labour intensive
and provide employment to large number of people in rural areas where large
industries cannot be set up.
b)
Small scale industries prevent concentration
of economic power and lead to wide dispersal of income.
c)
Small scale industries facilitate regional
balanced development by setting up industries in rural areas.
d)
Small scale industries use entrepreneurial
abilities and unutilised savings of people in remote areas.
e)
Small scale industries provide valuable
support to large scale industries by supplying them necessary inputs or
distributing the final output.
Q.8. Describe
briefly the various institutions setup for the promotion of small and rural
industries.
Ans: The various institutions setup for the
promotion of small and rural industry:
a)
National Bank of Agriculture and rural development (NABARD): It
supports small and rural industries by offering credit facilities, counseling
and consultancy services and organising training programs.
b)
Rural Small Business Development (RSBDC): It
provides management and technical support to small entrepreneurs in rural
areas.
c)
Small Industries Development bank of India (SIDBI): It
provides direct and indirect assistance to meet credit needs of small business
organisations.
d)
National Commission for enterprises in the unorganized sector
(NCEUS) - It helps in improving the productivity of small enterprises, to
enhance the competitiveness and to provide facilities in the areas of credit
technology and raw material.
e)
Rural and Women Entrepreneurship Development (RWED) - It
creates a business environment to encourage initiatives of rural people. Women
entrepreneurs provide training and advisory services.
f)
District industry Centers (DICs): It provides integrated administrative
framework at district level. It provides all the services and support
facilities to the entrepreneurs for setting up small industries.
Q.9. State the
features of small business? Do you think it can survive in competitive market?
Ans: These
are the features of small scale business:
a)
Personal Touch: The management and organisation is
personal in nature. The managers and owner are the same.
b)
Capital: The amount of capital required is less as
compared to large scale industries.
c)
Employment-Small business is labour intensive and it
does not require huge amount of capital because its scale is small.
d)
Technology: The technology used is simple in
nature.
e)
Area of operations: A small business firm generally has
local area of operations.
f)
Limited Finance: Small business enterprises require
limited financial resources in comparison to large scale industries because
they are less capital intensive.
g)
Limited Demand: Small business enterprises are
suitable for goods and services have limited market.
h) Low Cost of Production: Small business use locally available resources and raw material.