Attempt the following.
1) Explain the meaning of Small Scale industries.
Ans:-
Small Scale Industries are those industries where fixed assets i.e. plant and machinery which is owned or hired or taken on lease basis, do not exceed more than one crore.
MSMED has classified Small Scale Industries into the manufacturing sector and services sector, and further into three categories of business i.e. Micro business, Small business, and Medium business.
Subsequently, over a period of time, a new definition was introduced by the MSMED Act, 2006 (Micro Small and Medium Enterprises Development) is as follows:
(A) Manufacturing Enterprises:
1. A micro enterprise, Where the investment in plant and machinery is less than Rs. 25 lakh.
2. A small enterprise, where the investment is more than Rs. 25 lakh but less than Rs. 5 crores.
3. A medium enterprise, where the investment in plant and machinery is more than Rs. 5 crores but less than Rs. 10 crore.
(B) Service Enterprises:
1. A micro enterprise, where the investment in equipment is less than Rs.10 lakh.
2. A small enterprise, where the investment in equipment is more than Rs. 10 lakh but less than Rs. 2 crores.
3. A medium enterprise where the investment in equipment is more than Rs. 2 crores but less than Rs. 5 crores. An industrial unit can be categorized as a small business if it fulfills the above capital investment criteria.
2) State the importance of small business.
Ans:-
Following are the importance of Small Business:
1. Supply of Raw Materials to Large Industries: Finished goods of Small Scale Industries is the raw material for large scale industries. E.g., headlights supplied to automobile industries. Small Scale Industries supply raw materials to large scale industries and they get easy market available to their product.
2. Balanced Development between Rural and Urban Areas: With the help of locally available raw materials and labour, more and more Small Scale Business can be started in rural areas. This helps to a reduced regional imbalance between urban and rural areas.
3. Opportunities to Young Generation: Young generations by using their creative skills make product unique in the market. Small scale business gives an opportunity to youngster to show their creativity and abilities to prove themselves and achieve success in development.
4. Large Employment: India is second largest populated country after China, which faced the problem of unskilled and semi-skilled labour. Small Scale Industries operate with more labour and less capital, which can accommodate more manpower to solve the employment problem.
5. The utilisation of Domestic Resources: Small farmers can start their own unit of the small industry by using locally available raw materials. He can get self employment and involve his family members too.
3) Explain in brief the impact of capital on Small Scale industries.
Ans:-
Following are the importance of Small Business:
1. Supply of Raw Materials to Large Industries: Finished goods of Small Scale Industries is the raw material for large scale industries. E.g., headlights supplied to automobile industries. Small Scale Industries supply raw materials to large scale industries and they get easy market available to their product.
2. Balanced Development between Rural and Urban Areas: With the help of locally available raw materials and labour, more and more Small Scale Business can be started in rural areas. This helps to a reduced regional imbalance between urban and rural areas.
3. Opportunities to Young Generation: Young generations by using their creative skills make product unique in the market. Small scale business gives an opportunity to youngster to show their creativity and abilities to prove themselves and achieve success in development.
4. Large Employment: India is second largest populated country after China, which faced the problem of unskilled and semi-skilled labour. Small Scale Industries operate with more labour and less capital, which can accommodate more manpower to solve the employment problem.
5. The utilisation of Domestic Resources: Small farmers can start their own unit of the small industry by using locally available raw materials. He can get selfemployment and involve his family members too.
4) State any five problem faced by Small Scale industries
Ans:-
Problems faced by Small Scale Industries:
1. Outdated Technology: Traditional methods of productions are used due to lack of finance and knowledge about the latest technology. This results in the poor quality of production with a low output.
2. Problems of Infrastructure: Problems of infrastructure faced by small business are power cuts, improper transport facility, a problem like congestions, bottlenecks, strikes, rise in freight charges, inadequate space, bad repair of premises, unsuitable location, high rent, etc. These problems definitely affect the smooth working of small business.
3. Underutilization of Capacity: Small Scale Industries cannot utilize optimum resources and capacity ‘ due to lack of marketing skills, lack of demand, etc. This lead to an increase in the cost of product and wastage of resources.
4. Lack of Capital: Nationalised and Cooperative banks are not ready to provide finance without securities. Owners of Small Scale Industries don’t have any option other than borrowings funds from landlords and money lenders where they have to pay a very high rate of interest.
5. Problem of Skilled Labourers: Mostly unskilled and semi-skilled labourers are available to Small Scale Industries as they cannot afford the wages to the highly skilled labourer. This affect quality and quantity of output which results in less price for sales.
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5) Explain the role of Small Scale industries in employment generation.
Ans:-
Small Scale Industries play a very important role in the generation of employment as follows:
1. Small Scale Industries are Labour Intensive: There is a shortage of capital with small scale industries. They are labour intensive. They use more manpower than machines, they create more opportunities for rural employment.
2. Employment to Unskilled and Semiskilled Labourer: Small Scale Industries are using the old and traditional method of production where they need unskilled and semi-skilled labourer.
3. Employment of Rural Land Less Labourer: Small Scale Industries are set-up in rural areas. They provide employment to local labourers. They have the potential to create opportunities to large scale employment to mass population in villages.
4. The decrease in Migration of Labourers: Migration means the movement of labourers from village to city in search of a job. Due to an increase in small scale industries in village areas migration of labour is reduced Labourers are getting good employment at their own villages.