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Chapter 9 of NCERT Class 11 Business Studies deals with Micro, Small and Medium Enterprises (MSME) and Business Entrepreneurship. It explains the meaning of MSME, their classification based on investment in plant and machinery/equipment and annual turnover, the MSMED Act 2006, role of MSMEs in socio-economic development, problems faced by MSMEs, government measures for support, meaning and characteristics of entrepreneurship, its connection with MSMEs, importance of innovation and creativity, village and khadi industries, and incentives for backward areas. These solutions are written in simple, easy-to-understand language and are completely aligned with the latest CBSE pattern and NCERT textbook.
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NCERT Solutions Class 11 Business Studies Chapter 9: MSME and Business Entrepreneurship
This section provides detailed and student-friendly answers for the Class 11 Business Studies Chapter 9 exercise questions. Each answer is explained clearly to strengthen understanding and exam preparation.
Exercise
Very Short Answer Questions
- Which year was the MSMED Act passed?
The MSMED Act was passed in the year 2006.
- What is a micro-enterprise?
A micro-enterprise is an enterprise where the investment in plant and machinery or equipment does not exceed INR 1 crore and the annual turnover does not exceed ₹5 crore.
- What is a cottage industry?
A cottage industry is a small-scale industry, often operated from home or small workshops in rural areas, where artisans and family members use simple tools and local raw materials to produce handicrafts or traditional goods.
- What is meant by Village and Khadi Industry?
Village and Khadi industries refer to traditional industries located in rural areas that use local resources and simple production techniques to manufacture goods like khadi cloth, handlooms, handicrafts, and agro-based products, promoted for self-employment and rural development.
- Give any two characteristics of entrepreneurship development.
Here are two characteristics of entrepreneurship development:
(i) It is a systematic, purposeful, and organised activity aimed at fostering entrepreneurial skills.
(ii) It involves innovation, risk-taking, and the ability to identify and exploit business opportunities.
Short Answer Questions
- What is MSME?
MSME stands for Micro, Small, and Medium Enterprises. These are businesses classified by the Government of India based on their investment in plant and machinery or equipment and annual turnover, playing a vital role in employment generation, industrial output, and economic growth.
- State the meaning of entrepreneurship?
Entrepreneurship refers to the process of identifying a business opportunity, organising resources like capital, labour, and materials, taking calculated risks, and managing a venture to create value, innovate, and earn profits while bearing uncertainties.
- MSME and Entrepreneurship are connected. Do you agree? Give two reasons.
Yes, I agree that MSME and entrepreneurship are connected. Here are two reasons:
(i) Entrepreneurship drives the creation and growth of MSMEs by encouraging individuals to start small ventures with innovative ideas and limited resources.
(ii) MSMEs provide a platform for entrepreneurs to experiment, innovate, and scale up, fostering economic development through job creation and local resource utilisation.
- State the role of MSME in the development of a country?
MSMEs play a crucial role in the development of a country in the following ways:
(i) Generating large-scale employment, especially for unskilled and semi-skilled workers.
(ii) Contributing significantly to GDP and industrial output.
(iii) Promoting exports and earning foreign exchange.
(iv) Ensuring balanced regional development by setting up units in rural and backward areas.
(v) Fostering innovation, entrepreneurship, and efficient use of local resources.
- What are the different parameters used to measure the size of MSME?
The size of MSMEs is measured using the following parameters as per the MSMED Act, 2006: Basis Micro Enterprise Small Enterprise Medium Enterprise Investment in Plant and Machinery or Equipment Does not exceed INR 1 crore Does not exceed INR 10 crore Does not exceed INR 50 crore Annual Turnover Does not exceed INR 5 crore Does not exceed INR 50 crore Does not exceed INR 250 crore.
- State the meaning of Village and Khadi industries?
Village and Khadi industries are traditional, small-scale industries operating in rural areas, focusing on the production of goods using indigenous techniques, local raw materials, and manual labour. They include activities like khadi weaving, village pottery, gur making, and handicrafts, aimed at promoting rural self-reliance and employment under the Khadi and Village Industries Commission (KVIC).
- State any three major problems faced by MSMEs?
Here are three major problems faced by MSMEs:
(i) Inadequate access to finance and credit due to lack of collateral and high interest rates.
(ii) Difficulties in marketing products because of competition from larger firms and limited reach.
(iii) Outdated technology and a lack of skilled manpower, leading to low productivity and quality issues.
Also Read: CBSE Class 10 Economics Chapter 3 NCERT Solutions
Long Answer Questions:
- How do small-scale industries contribute to the socio-economic development of India? Discuss.
Small-scale industries (a key part of MSMEs) contribute significantly to India’s socio-economic development in the following ways:
(i) Employment generation: They provide jobs to millions, especially in rural and semi-urban areas, absorbing labour from agriculture and reducing unemployment.
(ii) Balanced regional development: By setting up in backward areas, they reduce regional disparities, prevent urban migration, and promote inclusive growth.
(iii) Efficient resource utilisation: They use local raw materials and skills, minimising waste and supporting sustainable development.
(iv) Contribution to GDP and exports: They account for a large share of industrial output, GDP, and exports, boosting foreign exchange earnings.
(v) Promotion of entrepreneurship: They encourage self-employment and innovation among youth and women, fostering a culture of entrepreneurship.
(vi) Social upliftment: They empower marginalised sections, improve living standards, and support ancillary industries, leading to overall socio-economic progress. Without small-scale industries, India’s economy would face higher inequality and slower growth.
- Describe the role of small businesses in rural India.
Small businesses play a pivotal role in rural India by addressing economic and social challenges. Here is a description:
(i) Employment creation: They offer jobs in agriculture-allied activities, handicrafts, and services, reducing underemployment and poverty.
(ii) Utilisation of local resources: They use locally available materials like bamboo, clay, and agricultural produce, promoting sustainable practices and value addition.
(iii) Improvement in living standards: By generating income, they enable better access to education, healthcare, and infrastructure in rural areas.
(iv) Reduction in migration: Providing local opportunities discourages migration to cities, preserving family structures and rural culture.
(v) Promotion of traditional skills: They preserve artisanal crafts, khadi, and village industries, supporting cultural heritage and women’s empowerment.
(vi) Economic diversification: They shift dependence from agriculture to non-farm activities, making rural economies more resilient. Overall, small businesses are engines of rural transformation, aligning with goals like a self-reliant India.
- Discuss the problems faced by small-scale industries.
Small-scale industries face several problems that hinder their growth and sustainability. Here is a discussion:
(i) Finance: Limited access to credit from banks due to lack of collateral, high interest rates, and bureaucratic hurdles, leading to reliance on moneylenders.
(ii) Raw materials: Difficulty in procuring quality raw materials at competitive prices, often resulting in shortages or high costs.
(iii) Marketing: Competition from large firms, lack of branding, poor distribution networks, and inability to afford advertising, affecting sales.
(iv) Technology and infrastructure: Outdated machinery, power shortages, and inadequate infrastructure reduce efficiency and product quality.
(v) Managerial skills: Owners often lack professional management expertise, leading to poor planning and decision-making.
(vi) Globalisation and competition: Exposure to cheap imports and stringent quality standards poses survival threats.
(vii) Labour issues: Skilled labour shortage and compliance with labour laws add to operational challenges. These problems require government intervention for the sector’s viability.
- What measures has the government taken to solve the problem of finance and marketing in the small-scale sector?
The government has implemented various measures to address finance and marketing issues in the small-scale sector. Here are the key ones:
For finance:
(i) Establishment of institutions like SIDBI (Small Industries Development Bank of India) for providing loans and refinancing.
(ii) Credit Guarantee Fund Scheme to cover loans without collateral.
(iii) Priority sector lending by banks, reserving a portion for MSMEs.
(iv) Schemes like MUDRA Yojana for micro-unit financing.
For marketing:
(i) National Small Industries Corporation (NSIC) for procurement, marketing assistance, and participation in trade fairs.
(ii) Government e-Marketplace (GeM) for direct selling to government agencies.
(iii) Export Promotion Councils and schemes like Market Development Assistance for international exposure.
(iv) Reservation of items for exclusive production by small-scale units.
(v) Training programs and subsidies for branding and quality certification. These measures aim to enhance competitiveness and sustainability.
- ‘Innovation is integral to MSME’. Discuss giving reasons to your answer.
Yes, innovation is integral to MSMEs for their survival and growth. Here is a discussion with reasons:
(i) Enhances competitiveness: Innovation allows MSMEs to develop unique products or processes, differentiating them from larger competitors in a global market.
(ii) Improves efficiency: Adopting new technologies reduces costs, increases productivity, and optimises resource use, crucial for small units with limited funds.
(iii) Meets market demands: Innovation helps adapt to changing consumer preferences, such as eco-friendly or digital products, ensuring relevance.
(iv) Drives growth: It enables expansion into new markets, diversification, and scaling up, contributing to higher turnover and employment.
(v) Overcomes challenges: Innovation addresses issues like outdated technology and competition through R&D and creative solutions.
(vi) Fosters entrepreneurship: It encourages risk-taking and problem-solving, core to MSME owners.
- ‘Creativity and Innovation is the key to MSME’. Justify the statement.
The statement ‘Creativity and Innovation are the key to MSME’ is justified as they form the foundation for success in this sector. Here is the justification:
(i) Creativity sparks ideas: It helps identify niche opportunities, like unique handicrafts or customised services, using limited resources effectively.
(ii) Innovation leads to differentiation: By introducing new products, processes, or business models, MSMEs can stand out in crowded markets.
(iii) Adapts to challenges: Creativity enables flexible solutions to problems like finance or marketing, while innovation upgrades technology for better quality.
(iv) Promotes sustainability: Innovative practices, such as green manufacturing, ensure long-term viability and compliance with regulations.
(v) Boosts economic contribution: Creative MSMEs drive job creation, exports, and GDP growth through value addition.
(vi) Aligns with entrepreneurship: MSMEs thrive on entrepreneurial spirit, where creativity and innovation turn ideas into profitable ventures. Government initiatives like Atal Innovation Mission reinforce this key role.
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