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NIOS Class 12 Business Studies Chapter 8 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 8 Self Employment, NIOS Senior Secondary Course Data Business Studies for All Chapter, You can practice these here.
Self Employment
Chapter: 8
Module – 3 : PREPARING FOR EMPLOYMENT
INTEXT QUESTIONS 8.1
Q. 1. Define the term ‘Self-employment’ in your own words.
Ans: Any economic activity which one may perform on his own as a gainful occupation is termed as self-employment. Such an activity may consist of producing and selling goods, buying and selling goods, or rendering services for a price.
Q. 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: (b) A person running his stationery shop.
(d) A person running a chemist shop.
INTEXT QUESTIONS 8.2
Q. 1. State the meaning of small business in your own words. Give your answer in not more than 30 words.
Ars: We may define 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. Upto the year 1958, an industrial unit in which fixed capital investment was less than 5 lakh and employing workers of upto 50 if using power, and upto 100 if not using power was considered as a small business. This limit has been changed by the government from time to time.
Q. 2. Identify the category (avenue) of self- employment from the following. Mention your answer in the box given against each statement.
(a) Samnan is a farmer having four acres of land. He has employed three people to look after his fields and orchards.
Ans: Manufacturing.
(b) Ranjeet runs a small departmental store in the central market of the city.
Ans: Trading.
(c) Gopal’s mother is a doctor who runs her own clinic.
Ans: Professional Occupation.
(d) Karan’s father takes orders and makes furniture.
Ans: Individualised Service.
(e) Hari repairs gold chains and other ornaments.
Ans: Individualised Service.
INTEXT QUESTIONS 8.3
Q. 1. Name 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).
Q. 2. Identify the type of small scale industries 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 25 lakhs.
Ans: Tiny Industry.
(b) The total amount of fixed capital investment in plant and machinery does not exceed One lakh.
Ans: Micro Business Enterprises.
(c) The total amount of fixed capital investment in plant and machinery is less than one Crore and more than 25 lakhs.
Ans: Small-scale Industry.
(d) The total amount of fixed capital investment in plant and machinery does not exceed 10 Lakhs.
Ans: SSSBE.
(e) The total amount of fixed capital investment in plant and machinery does not exceed 50,000 per artisan.
Ans: Village Industry.
INTEXT QUESTIONS 8.4
Q. 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.
Q. 2. Mention the full form of the following in the space given below:
(a) DIC
Ans: DIC – District Industries Centre.
(b) SIDBI
Ans: SIDBI – Small Industries Development Bank of India.
(c) NABARD
Ans: NABARD – National Bank for Agriculture and Rural Development.
(d) NSIC
Ans: NSIC – National Small Industries Corporation.
(e) SSIDC
Ans: SSIDC – State Small Industries Development Corporations.
TERMINAL EXERCISE
Very Short Answer Type Questions:
Q. 1. What is meant by term ‘Self-employment”?
Ans: Any economic activity which one may perform on his own as a gainful occupationis termed as self-employment. Such an activity may consist of producing and selling goods, buying and selling goods, or rendering services for a price.
Q. 2. State any two characteristics of small business.
Ans: Characteristic of Small Business:
(i) It is owned and managed by one or few persons.
(ii) The owner takes active participation in day to day management.
(iii) Small businesses are generally labour intensive and require less capital investment.
Q. 3. What is tiny industry?
Ans: Tiny Industries: A business unit whose total fixed capital investment in plant and machinery does not exceed Rs 25 lakhs is called a tiny industry.
Q. 4. Mention any four types of business enterprises included under Small-scale Service and Business (Industry related) Enterprises.
Ans: (a) Small-scale industries.
(b) Tiny industries.
(c) Ancillary industrial undertakings.
(d) Village industries.
Q. 5. Enumerate any four types of small-scale industries found in India.
Ans: On the basis of fixed capital investment in plant and machinery, small businesses in India are classified as:
(a) Small-scale industries.
(b) Tiny industries.
(c) Ancillary small industry.
(d) Village industries.
(e) Cottage industries.
(f) Micro business enterprises.
(g) Small-scale service and business (industry related) enterprises and
(h) Trading units.
Short Answer Type Questions:
Q. 6. Mention any four characteristics of Self-employment.
Ans: Following are the characteristics of self-employment:
1. Self-employment involves doing something on one’s own to earn one’s livelihood.
2. 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.
3. 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.
4. 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.
Q. 7. Explain any two avenues of self-employment.
Ans: 1. Trading: 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.
2. 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.
Q. 8. State any four characteristics of small business.
Ans: 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 decision.
(iv) The area of operation of a small business is limited. It generally caters to the need of the local people.
(v) The small business units are generally labour intensive and thus require less capital investment.
Q. 9. Describe the role of SIDBI and SISI in providing support to small business inIndia.
Ans: 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 in our country.
Small Industries Service Institutions: The Small Industries Service Institutions(SISIs) are set up to provide consultancy and training to small enterprises. The institutions render technical support service and conduct entrepreneurship development programmes. They also provide trade and market information to small-scale industries.
Q. 10. What are the areas in which small-scale business enterprises can be successfully established?
Ans: Scope For Small Business: The scope for small business is vast covering a wide variety of activities starting from retailing to manufacturing. There are some specific areas of economic activity which can be effectively and successfully managed by forming small business enterprises.
These are:
1. Trading which involves buying and selling of goods and services requires less capital and time to start. This area of economic activity is dominated by small-scale entrepreneurs.
2. The activities which require personalised service like motor repairing, tailoring, carpentry, beauty parlour etc. are run by establishing small business.
3. It is the best option for those who do not like to be an employee, but become self-employed. People can work independently by running a small enterprise of their own.
4. For products and services, which are of less demand or their demand is limited to any specific area, the small-scale business is most suitable for them.
5. A large industrial unit cannot run smoothly without the support of small units. These industrial units often depend upon the small units (ancillary industrial undertaking) to get some parts or spares, which cannot be profitably produced by them.
6. In the acra of business process outsourcing (BPO), many new areas have opened up for small business enterprises.
7. The business enterprises, which require constant touch of the owners with customers as well as the employees, can only be successfully run in the form of small enterprises.
Long Answer Type Questions:
Q. 11. Explain any four points of significance of self-employment.
Ans: Following are the points of self-employment significance:
1. Advantage 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 soon.
2. 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.
3. 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.
4. 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.
Q. 12. State and explain any four types of small industries.
Ans: (a) 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.
(b) Village Industries: A unit that is located in rural area and whose fixed capital investment in plant and machinery does not exceed Rs 50, 000 per artisan or worker is termed as village industry.
(c) Cottage Industries: These are small manufacturing units producing simple products involving some specific art or skill like handicrafts, filigree etc. They use simple equipments with indigenous technology for production. Cottage industries are carried on wholly or primarily with the help of members of the family either on a whole or part-time basis. These units are not defined by the ceiling of capital of investment.
(d) Micro Business Enterprises: The fixed capital investment in plant and machinery of these enterprises does not exceed rupees one lakh.
Q. 13. Describe the various institutional support provided to the small business in India.
Ans: To start and run a business enterprise one requires various resources and facilities. These may be in the form of technical, financial marketing or training support. Such support is provided by the Government by establishing different institutions or organisations from time to time. Such institutions and their role in providing support to the small business in India:
1. 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.
2. 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.
3. 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.
4. Small Industries Development Bank of India: The Small Industries Development Bank of India (SIDBI) was set up in 1990 as a financial institution for promotion, financing and development of small-scale industrial enterprises. It principal acts as an apex institution for all banks providing credit facility to small-scale industries in our country.
5. 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.
6. District Industries Centres: For promotion of small industries in our 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.
Q. 14. State any six assistance and support provided by the Government of India for development of small-scale business.
Ans: The Government of India has given special importance to small business enterprises due to their vast potentiality for development of social and economic conditions of the country. Several kinds of assistance and support are announced from time to time keeping in view the changing economic conditions. The following are some of such steps taken by the Government for development of small business in India:
1. It provides liberalised credit policy like, less formalities to process the loans and advances, loans at concessional rate, etc. for small scale industries.
2. 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.
3. It provides concession and exemption in excise and sales tax to the small scale units. The excise exemption has raised from Rs 50 lakh to Rs One crore for small industries.
4. The Government also gives preference to the products of small enterprises while purchasing stationery and other items for its own consumption and use.
5. 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.
6. 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.
Q. 15. Describe the importance of small business in India.
Ans: In India small-scale enterprises account for 35% of the gross value of the output in the manufacturing sector, 80% of the total industrial employment and about 45% of the total exports. Besides these contributions, the importance of small-scale business is increasing day by day due to the following factors.
1. The small business enterprises are capable of generating immediate and large-scale employment opportunities in our country.
2. They require less capital investment as compared to large scale business enterprise.
3. The cost of production is less due to use of local resources and less establishment and running cost.
4. The small industries help in effective mobilisation of the untapped resources of the country. With the help of local resources and indigenous technology, world-class products can be produced by village and cottage industries.
5. Small industries promote balanced regional development of the country. These can be easily set up at the source of resources that leads to overall economic development of that place.
6. The small industries help in improving the national image by exporting quality products to foreign country. The Indian handicrafts, handloom products, filigree, applique works have a high demand in international market.
7. Small enterprises help in raising the standard of living of people. The people get employment or can start their own enterprises easily. They get variety of quality products for their daily consumption and use.
Q. 16. After passing Class 12, Apoorva wants to start her own manufacturing business on a small-scale. Her father has promised her to meet her initial financial requirement. She has advised that there number of a 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: Institutional Support To Small Business: To start and run a business enterprise one requires various resources and facilities. These may be in the form of technical, financial, marketing or training support. Such support is provided by the Government by establishing different institutions or organisations from time to time.
1. 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.
2. 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.
