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NIOS Class 12 Business Studies Chapter 20 Self – Employment
Also, you can read the NIOS book online in these sections Solutions by Expert Teachers as per National Institute of Open Schooling (NIOS) Book guidelines. These solutions are part of NIOS All Subject Solutions. Here we have given NIOS Class 12 Business Studies Chapter 20 Self – Employment, NIOS Senior Secondary Course Business Studies for All Chapter, You can practice these here.
Self – Employment
Chapter: 20
Module – 6 Awareness in Business and Employment
INTEXT QUESTIONS 20.1
1. Define the term ‘Self-employment’ in your own words.
Ans: All of us have seen small grocery shops, tailoring shops, medical stores etc. in our locality. These are owned and managed by a person, with or without the help of some assistants. Their economic activities are termed as self employment. So when an individual engages in any economic activity and manages it on his own, it is known as self-employment.
2. Which of the following examples indicate self-employment? Put a tick mark in the box if your answer is ‘Yes’.
(a) A worker working in a factory.
(b) A person running his stationery shop.
(c) A person working as manager in a bank.
(d) A person running a chemist shop.
Ans: Yes – ‘b’ and ‘d’.
1. State the meaning of small business in your own words.
Ans: A small business as a business which is actively managed by its owners, operating within the local area and relatively small in size. However, the Government of India has considered the fixed capital investment in plant and machinery as the only criteria to define a small industrial unit in our country.
2. Identify the category (avenue) of self-employment from the following:
(a) Ravi is a farmer having four acres of land. He has employed three people to look after his fields and orchards.
Ans: Manufacturing.
(b) Ram runs a small departmental store in the central market of Kolkata.
Ans: Trading.
(c) Geeta is a doctor who runs her own clinic.
Ans: Professional Occupation.
(d) Karan’s father takes orders and makes carpets.
Ans: Individualised Service.
(e) Hari repairs gold chains and other ornaments.
Ans: Individualised Service.
INTEXT QUESTIONS 20.3
1. Identify any two specific areas of economic activity, which can be effectively managed by small business enterprises.
Ans: (a) Trading.
(b) Personalised services (or any other).
2. Name the type of small scale industry on the basis of fixed capital investment in plant and machinery.
(a) Total amount of fixed capital investment in plant and machinery does not exceed Rs. 25 lakhs.
Ans: Micro manufacturing Enterprise.
(b) The total amount of fixed capital investment in plant and machinery does not exceed Rs. 10 lakhs.
Ans: Micro service Enterprises.
(c) The total amount of fixed capital investment in plant and machinery is upto 2 Crores.
Ans: Small-scale manufacturing enterprise.
(d) The total amount of fixed capital investment in plant and machinery does not exceed Rs. 5 crores.
Ans: Small Service Enterprise.
INTEXT QUESTIONS 20.4
1. Mention any five supports provided by SISIs to small-scale industries.
Ans: (a) Consultancy.
(b) Training.
(c) Technical support service.
(d) Entrepreneurship development programmes.
(e) Provides trade and market information.
2. Mention the full form of the following:
(a) DIC ( ).
Ans: District Industries Centre.
(b) SIDBI ( ).
Ans: Small Industries Development Bank of India.
(c) NABARD ( ).
Ans: National Bank for Agriculture and Rural Development.
(d) NSIC ( ).
Ans: National Small Industries Corporation.
(e) SSIDC ( ).
Ans: State Small Industries Development Corporations.
| TERMINAL EXERCISE |
Very Short Answer Questions:
1. What is meant by the term ‘Self-employment’?
Ans: Self – employment may be defined as, an economic activity which one may perform on his own as a gainful occupation. Self-employment may consist of producing and selling goods, buying and selling goods, or rendering services for a price by taking the risk to mobilise inputs and other resources.
2. State any two characteristics of small business.
Ans: From the above discussion now we can identify the main characteristics of small business as:
(i) A small business is usually owned and managed by one or a few persons.
(ii) The owners take active participation in day-to-day activities of business.
3. What is micro enterprise?
Ans: The term microenterprise, also known as a microbusiness, refers to a small business that employs few people. A micro enterprise usually operates with fewer than 10 people and is started with a small amount of capital advanced from a bank or other organisation.
4. Enumerate the types of small-scale industries found in India.
Ans: Small-scale industrial enterprises several institutes like Small:
(i) Industrial Development Bank of India (SIDBI).
(ii) National bank for Agriculture and Rural Development (NABARD).
(iii) District Industries Centres (DICs) etc.
| Short Answer Questions |
1. Mention any four characteristics of self-employment.
Ans: Following are the characteristics of self-employment:
(i) Self-employment involves doing something on one’s own to earn one’s livelihood.
(ii) It involves ownership and management of activities by a person although he/she may take the help of one or two persons to assist him/her. Thus, self-employment may provide employment to other persons as well.
(iii) The earning from self-employment is not fixed. It depends on the income one can earn by producing or buying and selling goods or providing services to others at a price.
(iv) In self-employment, the owner alone has to take the profit and bear the risk of loss. So, we find a direct link between the effort and reward in self-employment.
2. Explain any two avenues of self-employment.
Ans: The two avenues of self – employment are:
(i) Trading: You know that trade involves buying and selling of goods and services. With small amount of investment one can start and run a small trading unit. You can think of starting a small grocery or stationery shop in your locality. If you are able to invest more capital and ready to take risk, then wholesale business is a good option for you. One can also take up some agency business or become a stockist. The real estate business which is booming now-a-days can also be a lucrative alternative.
(ii) Manufacturing: One can start a small industry of manufacturing bricks, or producing bakery items or confectionery. All these businesses require small amount of capital and simple equipment. Farming is another such area in which a person can work all alone or take the help of one or two persons. This is an age-old area of self-employment. Orchards, dairy, poultry, sericulture, fisheries, horticulture, etc. are good examples of avenues of self-employment.
3. State any four characteristics of small business.
Ans: From the above discussion now we can identify the main characteristics of small business as:
(i) A small business is usually owned and managed by one or a few persons.
(ii) The owners take active participation in day-to-day activities of business.
(iii) The participation of owners in the management helps in taking quick decisions.
(iv) The area of operation of a small business is limited. It generally caters to the need of the local people.
4. Describe the role of SIDBI and SISI in providing support to small business in India.
Ans: (i) Small Industries Development Bank of India: The Small Industries Development Bank of India (SIDBI) was set up in 1990 as a principal financial institution for promotion, financing and development of small-scale industrial enterprises. It acts as an apex institution for all banks providing credit facility to small-scale industries across the country.
(ii) Small Industries Service Institutions: The Small Industries Service Institutions (SISIs) are set up to provide consultancy and training to small enterprises. These institutions render technical support service and conduct entrepreneurship development programmes. They also provide trade and market information to small-scale industries.
5. What are the areas in which small-scale business enterprises can be successfully established?
Ans: The National Bank for Agriculture and Rural Development (NABARD) was set up in 1982 as an apex institution for financing agricultural and rural sectors. It provides financial assistance through Regional Rural banks and cooperative banks to agriculture, small-scale, cottage and village industries, handicrafts and other allied activities in rural areas.
| Long Answer Questions |
1. Explain any four points of significance of self-employment.
Ans: Its importance/significance can be enumerated as follows.
(i) Advantages of Small Business: Small-scale business has several advantages over large-scale business. It can be easily started, and requires small amount of capital investment. The self-employment involving activities on a small-scale is a good alternative to large scale business which has brought various evils like environmental pollution, development of slums, exploitation of workers, and so on.
(ii) Preference over Wage Employment: In self-employment there is no limit of earnings as is the case with wage employment. In self-employment one can use one’s talent for own benefit. The decisions can be taken quickly and conveniently. All these factors act as strong motivators for self-employment to be preferred over wage employment.
(iii) Developing the Spirit of Entrepreneurship: Entrepreneurship involves taking risks because the entrepreneur tries to innovate new products, new methods of production and marketing. Self-employment, on the other hand, involves either no risk or very little risk. But, as soon as the self-employed person starts becoming innovative and takes steps to expand his business, he becomes an entrepreneur. Therefore, self-employment becomes a launching pad for entrepreneurship.
(iv) Promotion of Individualised Services: Self-employment may also take the form of providing individualised services like tailoring, repair work, dispensing of medicines etc. Such services are helpful in providing better consumer satisfaction. These can be easily started and run by individuals.
2. State and explain any four types of small industries.
Ans: Following are some of the main types of small business:
(a) Small-scale Enterprises: According to the MSMED Act 2006Small-scale enterprises are classified into two major categories viz., manufacturing and services.
(i) Small manufacturing enterprises have investment in plant and machinery of more than twenty five lakh rupees but not exceeding five crore rupees.
(ii) However, investment in equipment is more than ten lakh rupees but does not exceed two crore rupees in small service enterprises.There are about twenty-one major industry groups in the small scale sector.
(b) Micro Enterprises: Under the MSMED Act 2006 on the basis of capital investment made in plant and machinery excluding investments in land and building: manufacturing units having investment below Rs 25 lakh (Rs 2.5 million) were termed Micro Manufacturing industries and service units, having investment upto Rs 10 lakh (Rs 1 million) were called Micro Service industries
(c) Ancillary Industrial Undertakings: When a small-scale industry supplies not less than 50% of its production to another industry, it is called as ancillary industrial undertaking. The fixed capital investment limit of Rs. One crore also applies to it. If an ancillary unit is owned by some other business unit, it losses it status of small business.
(d) Village Industries: A unit that is located in rural area and which produces goods or renders service with or without the use of power and in which the fixed capital investment per head or artisan or worker is specified by the central government from time to time.
3. Describe the various institutional support provided to the small business in India.
Ans: The various institutional support provided to the small business in India are:
(i) National Small Industries Corporation Ltd: The National Small Industries Corporation Ltd. (NSIC) was set up in the year 1955 to promote, aid and foster the growth of small industries in India. It provides wide range of promotional services to small-scale industries. It provides machinery to small-scale industries under hire purchase schemes and also on lease basis. It helps in export marketing of the products of small-scale industries. It also helps in development and upgradation of technology and implementation of modernisation programme of small-scale industries.
(ii) State Small Industries Development Corporations: The State Small Industries Development Corporations (SSIDCs) are set up in various states of our country to cater to the developmental needs of small, tiny and village industries. Their main functions include procurement and distribution of scarce raw materials, supply of machinery on hire purchase basis, and providing marketing facilities for the products of small-scale industries.
(iii) National Bank for Agriculture and Rural Development: The National Bank for Agriculture and Rural Development (NABARD) was set up in 1982 as an apex institution for financing agricultural and rural sectors. It provides financial assistance through Regional Rural banks and cooperative banks to agriculture, small-scale, cottage and village industries, handicrafts and other allied activities in rural areas.
(iv) Small Industries Development Bank of India: The Small Industries Development Bank of India (SIDBI) was set up in 1990 as a principal financial institution for promotion, financing and development of small-scale industrial enterprises. It acts as an apex institution for all banks providing credit facility to small-scale industries across the country.
(v) Small Industries Service Institutions: The Small Industries Service Institutions (SISIs) are set up to provide consultancy and training to small enterprises. These institutions render technical support service and conduct entrepreneurship development programmes. They also provide trade and market information to small-scale industries.
(vi) District Industries Centres: For promotion of small industries across the country, District Industries Centres (DICs) are set up at district level. They conduct industrial potential survey keeping in view the availability of resources. Their main function includes implementation of various schemes of central and state governments. They appraise the worthiness of various proposals of the entrepreneurs to establish new units, guide them in choosing suitable machinery, equipment and raw materials.
4. State any six types of assistance and support provided by the Government of India for development of small-scale business.
Ans: The following are some of such steps taken by the Government for development of small business in India.
(i) It provides liberalised credit policy like, fewer formalities to process the loans and advances, loans at concessional rate, etc. for small scale industries.
(ii) To keep away from the competition with large scale industries, the Government of India has reserved about 800 items for exclusive production by small scale industries.
(iii) The limit for exemption from payment of goods and services (GST) has been raised to 40 lakh turnover for small scale industries from April 1,2019 Under the GST Composition Scheme, small traders and and businesses can pay 1 per cent tax based on turnover of 1.5 crore from April 1 ,2019 against earlier turnover of 1 crore.
(iv) The Government also gives preference to the products of small enterprises while purchasing stationery and other items for government departments and institutions.
(v) For promotion, financing and development of small-scale industrial enterprises several institutes like Small Industrial Development Bank of India (SIDBI), National bank for Agriculture and Rural Development (NABARD), District Industries Centres (DICs) etc. have been set up by the Government.
(vi) The Government of India has set up separate Ministry of Micro, Small and Medium Enterprises (http://msme.gov.in) for effective planning and monitoring of the development of small business enterprises in the country.
(vii) To provide benefits of its plans and policies to a large number of Small industries, it has lowered the investment limit from Rs. 3 crore to Rs. 1 crore.
(viii) The Government provides capital subsidy of 12 % for investment in technology in select sectors of small-scale business.
(ix) To encourage total quality management (TQM) the Government provides grant of Rs. 75,000 to each unit that obtains ISO 9000 certification.
(x) To provide finance, design and marketing support to handloom sector it has launched the Deendayal Hathkargha ProtsahanYojana.
(xi) The Government of India has permitted upto 24 % of total shareholding of small-scale units by other industrial units.
(xii) The Government provides land, power and water etc. at concessional rates to small business enterprises.
(xiii) Special incentives are also provided for setting up of small enterprises in rural and backward areas.
(xiv) The Government encourages establishment of small-scale industries by providing developed land and industrial estates.
(xv) Through the MUDRA scheme of providing capital to the Medium and Small Business Enterprises sector, the government has sought to provide capital to people who wish to start their own enterprises.
(xvi) Some government policies focus on skill building activities under the framework of Skill India Mission that allows self-employed individuals to start more productive jobs.
(xvii) Ministry of Women and Child Development, Government of India launched Support to Training and Employment Programme for Women (STEP ) to train women in sectors such as agriculture, horticulture, food processing, handlooms, traditional crafts like embroidery, travel and tourism, hospitality, computer and IT services who had no access to formal skill training facilities, especially in rural India.
(xviii) Another government initiative ‘Stand-up India’ launched in 2015 seeks to provide institutional credit to women entrepreneurs, individuals from Scheduled Castes and Scheduled Tribes to set up Greenfield enterprises in manufacturing, services or the trading sector. The Stand-Up India portal also acts as a digital platform for small entrepreneurs and helps to provide information on financing and credit guarantee to them.
5. Describe the importance of small business in India.
Ans: Besides these contributions, the importance of small-scale business is increasing day by day due to the following factors.
(i) The small business enterprises are capable of generating immediate and large scale employment opportunities in our country.
(ii) They require less capital investment as compared to large scale business enterprise.
(iii) The cost of production is less due to use of local resources and fewer establishments and less running cost.
(iv) The small industries help in effective mobilisation of the untapped resources of the country. With the help of local resources and indigenous technology, worldclass products can be produced by village and cottage industries.
(v) Small industries promote balanced regional development of the country. These can be easily set up near the source of resources that leads to overall economic development of that place.
(vi) The small industries help in improving the national image by exporting quality products to foreign countries. The Indian handicrafts, handloom products, filigree, appliqué works have a high demand in international market.
(vii) Small enterprises help in raising the standard of living of the people. The people get employment or can start their own enterprises easily. They get a variety of quality products for their daily consumption and use at reasonable prices.
6. After passing Class 12, Radha wants to start her own boutique. Her father has promised her to meet her initial financial requirement. She has been advised by her teacher that there are a number of government agencies providing help in various fields and she can approach them. Name such agencies and state the nature of assistance these can provide in starting small businesses.
Ans: Students, do yourself.
7. Anil has been observing since his childhood that his father, who is working in a reputed company in a high position, comes from office quite late and exhausted. Most of the time he is tense because of the pressure of office work so he decides never to go for wage employment. Anil wants to start his own business. Explain to him the various avenues of self employment so that he may understand the advantages and disadvantages of each one of them.
Ans: Students, do yourself.
