Kerala Plus One Business Studies Chapter Wise Previous Questions Chapter 9 Small Business
Question 1.
Small Industries Development Bank of India (SIDBI) has been set up in the year 1990 with a view to the promotion and development of small industries in India. Harikrishnan, a new small industrialist, wants to know the functions of SIDBI. Write any three functions to satisfy him. (August – 2009)
Answer:
The important functions of SIDBI are:-
- Helps SSI units by providing loans for modernization and up-gradation of technology.
- It provides working capital requirements of SSIs
- It provides means for the rehabilitation of sick units
- It provides services like leasing, hires purchase, venture capital assistance, etc.
- Special financial assistance to industries in rural and backward areas like investment subsidy, transport subsidy, tax deductions, etc.
Question 2.
Which among the following banks provide financial assistance, particularly to small businesses? (March – 2013)
a) IDBI
b) ICICI
c) SIDBI
d) IFCI
Answer:
SIDBI
Question 3.
Small Industries Development Bank of India (SIDBI) has been set up in the year 1990 with a view for the promotion and development of small industries in India. Mr. Gautham, a small industrialist, wants to know the functions of SIDBI. Write any two functions to satisfy him. (March – 2014)
Answer:
1) Help SSIs in modernization and technology upgradation
2) Meet the working capital requirements of SSIs.
Question 4.
Name the bank set up to meet the financial and developmental needs of small businesses in India. (August – 2014)
Answer:
SIDBI
Question 5.
Mr. Amaf, Mr. Akbar, and Mr. Antony have started a small-scale industry in their village by taking financial assistance with the help of the Khadi and Village Industries Commission. In this context, explain the significance of small enterprises in rural India. (March – 2015)
Answer:
1) Cottage and rural industries provide employment opportunities in the rural areas especially for the traditional artisans and the weaker sections of society.
2) It prevents the migration of the rural population to urban areas in search of employment.
3) Small business helps to eradicate poverty, income inequalities, etc in a rural area.
4) Small scale industries are powerful instruments for accelerated industrial growth and creating productive employment in rural and backward areas.
Question 6.
State and Central Governments are providing a number of incentives to small scale industries in rural areas. List and explain such incentives. (Say – 2015)
Answer:
Incentives to small scale industries in rural areas – Incentives:
The incentives offered by the government to develop backward areas are :
- Availability of land at a concessional rate.
- Supply power at a concessional rate of 50% or exempt such units from payment in the initial years.
- Water is supplied on a no-profit, no-loss basis or with 50 percent concession or exemption from water charges for a period of 5 years.
- All-union territories, industries are exempted from sales tax,
- Most states have abolished octroi.
- Units located in backward areas get scarce raw. materials at concessional rates.
- Subsidy of 10-15% for building capital asset. Loans are offered at concessional rates.
- Some states encourage the setting up of industrial estates in backward areas.
- Exemption from paying taxes for 5 or 10 years is given to industries established in backward, hilly, and tribal areas.
Question 7.
The role of SSI units in Indian economic development is very important. Still, they struggle to exist because of many problems. Discuss. (March – 2016)
Answer:
A brief explanation of the problems faced by small business units.
Problems of small business
Small businesses are faced with the following problems:
1. Small scale industries find it difficult to get adequate finance from banks and other financial institutions.
2. They are not able to get quality raw materials at reasonable prices.
3. Small business is generally operated by people who may not have all the managerial skills required to run the business.
4. Small business firms cannot afford to pay higher salaries to employees. So productivity per employee is relatively low and employee turnover is generally high.
5. Small business depends excessively on middlemen for marketing the products. Middlemen exploit them by paying low prices and delayed payments.
6. Small business organization uses outdated technology to produce products. So they cannot compete with global enterprises with low-quality products.
7. Due to lack of marketing skills or lack of demand, many small business firms have to operate below full capacity.
8. Use of outdated technology results in low productivity and uneconomical production.
9. Small-scale units find it very difficult to compete .with the product of multinational companies which are comparatively very cheap and of better quality
10.Other important problems are poor project planning, inefficient management, transportation problems, lack of power, and lack of adequate warehousing, etc.
Question 8.
Explain any four incentives given by the Government of India for boosting up a small business in India, (September – 2016)
Answer:
Incentives: The incentives offered by the government to develop backward areas are :
- Availability of land at a concessional rate.
- Supply power at a concessional rate of 50% or exempt such units from payment in the initial years.
- Water is supplied on a no-profit, no-loss basis or with 50 percent concession or exemption from water charges for a period of 5 years.
- All-union territories, industries are exempted from sales tax,
- Most states have abolished octroi.
Question 9.
a) …………. are also known as rural industries or traditional industries. (March – 2017)
Answer:
a) Cottage industries/village Industries
b) a) These are organized by individuals, with private resources
b) Normally use family labour and locally available talent
c) The equipment used is simple