How to Use This Solutions Page
1. Attempt all NCERT exercise questions on your own. 2. Compare answers below — especially for MSME classification and government institutions. 3. Memorise the revised MSME limits (2020).
Key Concepts Recap
- MSME (2020): Micro (1Cr/5Cr), Small (10Cr/50Cr), Medium (50Cr/250Cr).
- Role: Employment, ancillary, exports, regional balance, local resources, customised products.
- Problems: Finance, raw material, marketing, technology, management, infrastructure, competition.
- NSIC: Marketing, technology, hire-purchase machinery.
- DIC: Single-window at district level.
- SIDBI: Apex MSME financial institution.
- Key schemes: PMEGP, MUDRA (Shishu/Kishor/Tarun), CGTMSE, Udyam.
- Entrepreneur: Innovator, risk-bearer, visionary, leader.
Intext Questions
Q: What is the revised MSME classification (2020)?
| Category | Investment in Plant & Machinery | Annual Turnover |
|---|---|---|
| Micro | Up to Rs 1 crore | Up to Rs 5 crore |
| Small | Up to Rs 10 crore | Up to Rs 50 crore |
| Medium | Up to Rs 50 crore | Up to Rs 250 crore |
Key change: The revised classification (2020) uses both investment and turnover criteria and removes the earlier distinction between manufacturing and services enterprises.
Q: Name the apex financial institution for MSMEs in India.
Chapter-End Exercise Solutions
Q1: Define small business. What is the role of small business in India?
Small business refers to a business with relatively small investment in plant and machinery, fewer employees, and lower output compared to large enterprises.
Role of Small Business in India: 1. Employment generation — second largest employer after agriculture; requires less capital per job. 2. Support to large industries — supplies components, accessories, and semi-finished goods as ancillary units. 3. Contribution to exports — handicrafts, textiles, leather goods, gems and jewellery. 4. Equitable distribution of income and wealth — widespread ownership prevents concentration. 5. Use of local resources — utilises local raw materials and traditional skills. 6. Regional balance — can be set up in rural and backward areas, reducing migration to cities. 7. Customised products — caters to niche and specialised demands that large firms ignore. 8. Innovation — many innovations originate in small enterprises and start-ups. 9. Low cost of production — lower overheads and operating costs. 10. Social transformation — empowers women, SC/ST entrepreneurs, and rural youth.
Q2: Discuss the problems faced by small business in India.
| Problem Area | Details |
|---|---|
| Finance | Difficulty obtaining bank loans; inadequate credit; high interest rates; complex procedures |
| Raw Materials | Irregular supply; poor quality; high prices; dependence on middlemen |
| Marketing | Lack of market knowledge; weak bargaining power; poor distribution; competition from large brands |
| Technology | Outdated machinery; lack of R&D; low productivity and quality |
| Management | Lack of professional managers; owner handles everything; no delegation |
| Infrastructure | Poor power supply; inadequate transport; lack of storage facilities |
| Competition | From large firms with economies of scale and from cheaper imports |
| Regulatory | Complex compliance; multiple registrations; frequent inspections |
| Labour | High attrition; shortage of skilled workers; no training facilities |
| Quality | Lack of standardisation; no quality certification; inconsistent product standards |
Q3: What is NSIC? Explain its functions.
NSIC — National Small Industries Corporation — is a government enterprise established to promote, aid, and foster the growth of small-scale industries in India.
Functions: 1. Supply of machinery — provides machinery on hire-purchase basis to small enterprises. 2. Marketing support — organises buyer-seller meets, participates in trade fairs and exhibitions. 3. Technology support — helps small enterprises upgrade technology and modernise. 4. Credit support — facilitates bank loans and working capital for small businesses. 5. Consortia marketing — groups small firms together to bid for large orders. 6. Raw material assistance — procures and distributes raw materials to small enterprises at reasonable prices. 7. Performance and credit rating — provides credit ratings to help small firms get bank loans.
Q4: Explain the role of DIC and SIDBI in supporting small business.
DIC — District Industries Centre: 1. Single-window service for all small industry needs at the district level. 2. Registration of small-scale industries. 3. Assisting in obtaining licences, finance, and raw materials. 4. Providing marketing and export assistance. 5. Implementing government schemes at the district level. 6. Conducting entrepreneurship development programmes.
SIDBI — Small Industries Development Bank of India: 1. Principal financial institution for MSME promotion and financing. 2. Refinances loans given by banks and financial institutions to small enterprises. 3. Provides direct finance and micro-finance to MSMEs. 4. Promotes technology upgradation and modernisation through special schemes. 5. Provides venture capital support for innovative start-ups. 6. Operates the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) — collateral-free loans up to Rs 2 crore.
Q5: What are the important government schemes for MSMEs?
| Scheme | Purpose | Key Feature |
|---|---|---|
| PMEGP | Self-employment through micro enterprises | Margin money subsidy; loan from banks |
| MUDRA | Micro Units Development and Refinance Agency | Shishu (up to Rs 50,000), Kishor (Rs 50K–5L), Tarun (Rs 5–10L) |
| CGTMSE | Credit Guarantee Fund Trust | Collateral-free loans up to Rs 2 crore |
| Udyam Registration | Free online MSME registration | No fee; self-declaration; single registration |
| SAMADHAN | Delayed payment monitoring | Portal for MSMEs to report delayed payments |
| ZED | Zero Defect Zero Effect | Quality certification + environmental compliance |
| ASPIRE | Innovation and rural entrepreneurship | Promotes innovation, incubation, and rural start-ups |
Q6: Define entrepreneurship. What are the characteristics of an entrepreneur?
Entrepreneurship is the process of creating something new with value by devoting time and effort, assuming financial and social risk, and receiving the resulting rewards.
Characteristics of an Entrepreneur: 1. Innovation — identifies new products, methods, or markets. 2. Risk-bearing — accepts uncertainty and invests despite risk. 3. Vision — sees opportunities before others; thinks ahead. 4. Leadership — motivates the team and takes decisive action. 5. Persistence — does not give up after failures or setbacks. 6. Self-confidence — believes in the venture's success and ability to achieve it. 7. Organising ability — assembles resources and coordinates activities efficiently.
Q7: Distinguish between an entrepreneur and a manager.
| Basis | Entrepreneur | Manager |
|---|---|---|
| Motive | Profit and growth | Salary and career |
| Risk | Bears the business risk | Does not bear business risk |
| Innovation | Creates new ideas and opportunities | Implements existing ideas and policies |
| Decision | Autonomous — own judgement | Follows organisational policy |
| Status | Owner | Employee |
| Reward | Profit (uncertain) | Salary (certain) |
| Focus | Starting and growing the business | Running the business efficiently |
Internal Links
- [Chapter 9 Guide — Small Business and Entrepreneurship](/school/cbse/class/11/business-studies/cbse-small-business-entrepreneurship)
- [All Class 11 Business Studies Solutions](/school/cbse/class/11/business-studies/solutions)
- [Class 11 Business Studies Subject Guide](/school/cbse/class/11/business-studies)