Unit – IX: Small Business
Very Short Types Questions and Answers (1 Mark)
1. State any two external causes of sickness in small scale industry.
Ans. 1.Delayed Payment2. 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.
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.
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”.
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.
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.
SMALL SCALE UNIT
LARGE SCALE UNIT
It is labour intensive
It is capital intensive
It uses family labour
It hires labour
It produces small quantity
It produces large quantity
USE OF MACHINES
It uses small machines
It uses big machines and modern technology
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.
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.