Entrepreneurship Development Solved Papers: November' 2014 | Dibrugarh University | B.Com 5th Sem

2014 (November)
COMMERCE (General/Speciality)
Course: 502 (Entrepreneurship Development)
Time: 3 hours
The figures in the margin indicate full marks for the questions
Full Marks: 80
Pass Marks: 32
1. (a) Write True or False:                                             1x4=4
(i) There is no difference between a manager and an entrepreneur.                       False
(ii)  Entrepreneurs are born, not made.                 False, Entrepreneurs are made, not born
(iii) The word “Entrepreneur” has been derived from the French word ‘entreprendre’.                  True
(iv) Innovation theory of entrepreneur was advocated by J.A. Schumpeter.                                        True
(b) Write the full form of:                                             1x4=4
(i) SHG: Self Help Group
(ii) SISI: Small Industries Service Institute
(iv)SIDBI: Small Industries Development Bank of India
2. Write short notes on the following:                                    4x4=16
(i) Skill Development Programmed
Ans: Skill development and vocational training programs are conceptualized, executed and monitored by various organizations, working closely with the government of India. There are various plans and schemes that are dedicated to achieve scalable skilling with quality and higher productivity, particularly in the unorganized  or informal sector which accounts for  83% of India’s workforce. The Ministry of Skill Development and Entrepreneurship (MSDE) is responsible for the co-ordination of overall skill development efforts across the country, building the vocational and technical training framework, skill up-gradation, building of new skills, and innovative thinking not only for existing jobs but also jobs that are to be created.

(ii) SWOT Analysis

(iii)Qualities of Entrepreneur
Ans: The true entrepreneur is one who is endowed with more than average capacities in the task of organizing and co-coordinating the various other factors of production. He should be a pioneer, a captain of industry. The supply of such entrepreneurship is however quite limited and all are not endowed with such talent. The modern entrepreneur is one who detects and evaluates a new situation in his environment and directs the making of such adjustments in the economic systems as he deems necessary. He conceives a new industrial enterprise, displays considerable initiative, grit and determination in bringing his project to fruition. Some of the qualities of an entrepreneur are mentioned below:
1)Initiative: Initiation of any business activity should come from the entrepreneur. It is the entrepreneur who takes action that goes beyond job requirements or the demand of the situation. He does things before being asked or forced by the events.
2)Looking for opportunities: A successful entrepreneur is one who always is on the look for and takes action on opportunities. He must be always in readiness to exploit it in maximizing the interest of the organization.
3)Persistence: An entrepreneur should take repeated actions to overcome the obstacles that get in the way of reaching goals. He should never be disheartened by failures. He should believe in the Japanese proverb, "Fall seven times, and stand up eight".
4)Information seeking: An entrepreneur is always in search of new ideas and information’s from various sources to help reach objectives or clarify problems. He can consult experts for business or technical advice. He personally undertakes research, analysis or investigation on his own to get information in realizing his goals.
5)Concern for quality products: Successful entrepreneurs always believe in high quality standards of their products with reasonable prices. They believe in excellence. They act to do things that meet or beat existing standards of excellence.
(iv) Entrepreneurial Motivation

Ans: Entrepreneurial motivation is the process of transforming an ordinary individual to a powerful businessman, who can create opportunities and helps in maximizing wealth and economic development. It is defined as various factors stimulate desires and activates enthusiasm in entrepreneurs which make them attain a particular goal. Entrepreneurship is the process of identifying strengths and opportunities which help in the realization of one’s dreams for designing, developing and running a new business by facing threats and risks effectively. To become an entrepreneur one should identify their strengths and opportunities from the external environment. Here motivation plays a major role in identifying their own strengths to become strong leaders or powerful entrepreneurs which make them to accepting risks and face uncertainty for the purpose of reaching pre-described goals.
3. (a) Define entrepreneurship. Explain its significance.                  4+7=11
Ans: Entrepreneur: The word “entrepreneur” is derived from the French word entreprendre which means to initiate or undertake. In the early sixteenth century, the Frenchmen who organised and led military expeditions were referred to as “entrepreneurs”. The term entrepreneur was applied to business in the early eighteenth century by French Economist Richard Cantillon. According to him, the entrepreneur buys factor services at certain prices with a view to sell their products at uncertain prices in the future. Richard Cantillon conceived of an entrepreneur as a bearer of non-insurable risk.
The entrepreneur is the key to the creation of new enterprises thatenergise the economy and rejuvenate the established enterprises that make upthe economic structure. Entrepreneurs initiate and sustain the process ofeconomic development in the following ways:
1. Capital formation: Entrepreneurs mobilise the idle savings of the public through the issues of industrial securities. Investment of public savings in industry results in productive utilisation of national resources. Rate of capital formation increases which is essential for rapid economic growth. Thus, an entrepreneur is the creator of wealth.
2. Improvement in per capita income: Entrepreneurs locate and exploit opportunities. They convert the talent and idle resources like land, labour and capital into national income and wealth in the form of goods and services. They help to increase net national product and per capita income in the country, which are important yardsticks for measuring economic growth.
3. Improvement in living standards: Entrepreneurs set up industries which remove scarcity of essential commodities and introduce new products. Production of goods on mass scale and manufacture of handicrafts, etc., in the small scale sector help to improve the standard of life of a common man. These offer goods at lower costs and increase variety in consumption.
4. Economic independence: Entrepreneurship is essential for national self-reliance. Industrialists help to manufacture indigenous substitutes of hitherto imported products thereby reducing dependence on foreign countries. Businessmen also export goods and services on a large scale and thereby earn the scarce foreign exchange for the country. Such import substitution and export promotion help to ensure the economic independence of the country without which political independence has little meaning.
5. Backward and forward linkages: An entrepreneur initiates change which has a chain reaction. Setting up of an enterprise has several backward and forward linkages. For example, the establishment of a steel plant generates several ancillary units and expands the demand for iron ore, coal, etc. These are backward linkages. By increasing the supply of steel, the plant facilitates the growth of machine building, tube making, utensil manufacturing and such other units.
6. Generation of Employment: Entrepreneurship development training which helps in strengthening informal and unorganised sector is expected to motivate enterprising people to opt for self employment and entrepreneurial career. It will therefore, help in solving the problem of increasing unemployment to some extent.
7. Harnessing Locally Available Resources and Entrepreneurship: India is considered to be very rich in natural resources. In spite of about five decades of planned development a large number of states have remained economically backward. A few large scale industries started by entrepreneurs from outside the state in an economically backward area may help as model of pioneering efforts, but ultimately the real strength of industrialisation in backward areas depends upon the involvement of local entrepreneurship in such activities: Increased activities of local entrepreneurs will also result in making use of abundantly available local resources.
8. Balanced Regional Growth: Medium and large scale industries can only be started with huge investment which is either available with well established industrial houses or need to be drawn from public exchequer. Also, promotion of such industries does not help in reducing disparities of income and wealth. On the other hand, an important advantage of small scale enterprises is that they can be started with meager financial ‘resources and little or no previous experience or entrepreneurial background.
9. Reducing Unrest and Social Tension amongst Youth: Many problems associated with youth unrest and social tensions are rightly considered to be due to youth not being engaged in productive work. In the changing environment where we are faced with the problem of recession in wage employment opportunities, alternative to wage career is the only viable option. The country is required to divert the youth with latent entrepreneurial traits from wage career to self employment career. Such alternate path through entrepreneurship could help the country in defusing social tension and unrest amongst youth.

10. Innovations in Enterprises: Business enterprises need to be innovative for their survival and better performance. It is believed that smaller firms have relatively higher necessity and capability to innovate. The smaller firms do not face the constraints imposed by large investment in existing technology. Thus they are both free and compelled to innovate: The National Science Foundation, an organisation in USA found that small companies produce four times more innovations per research dollar than do bigger companies. Entrepreneurship development programmes are aimed at accelerating the pace of small firms growth in India. Increased number of small firms is expected to result in more innovations and make the Indian industry compete in international market.
(b) “Creation, Innovation and Dynamism are foundations of entrepreneurship development.” Discuss the statement.  11
4. (a) Critically examine the innovation theory of entrepreneurship.                                        11
Ans: Innovation is one of the most important functions of an entrepreneur according to Schumpeter. An entrepreneur uses information, knowledge and intuition to come up with new products, new methods of reducing costs of a product, improvement in design or function of a product, discovering new markets or new ways of organization of industry. Through innovation, an entrepreneur converts a material into a resource or combines existing resources into new and more productive configurations. It is the creativity of an entrepreneur that results in invention [creation of new knowledge] and innovation [application of knowledge to create new products, services or processes.] Systematic innovation means monitoring the following for innovative opportunity:
Ø  The unexpected success or failure or any unexpected outside event, (e.g. when the IT bubble burst the ITES sector started growing.)
Ø  Innovation based on process need [e.g. plate based cameras, film based cameras, digital cameras]
Ø  Changes in industry and market structure [e.g. video cassette VCD, DVD, Blue ray disc]
Ø  Demographics changes (e.g. increasing number of working women and nuclear families in most metropolitan cities)
Ø  New knowledge (e.g. Pentium chip)
Schumpeter makes a distinction between an innovator and an inventor. A inventor discovers new methods and new materials. On the contrary, an innovator is one who utilizes or applies inventions and discoveries in order to make new combinations and thus produces newer and better and goods which yield both satisfaction and profits. An investor produces ideas which the innovator implements these ideas. In inventor is concerned with his technical work of invention whereas an entrepreneur converts the technical work into economic performance. An innovator is more than an inventor because he does not only originate as the inventor does but goes much farther in exploiting the invention commercially.
Every Social environment has its own way of carrying out innovations. For example, in a developing country like India revolutionizing of agricultural methods by the government is an innovation. Introduction of nylon garments, development of mail order business, evolution of computer-aided manufacturer, rise of joint stock company are all example of innovation.
Schumpeter stressed the role of entrepreneurial function in economic development. He recognized that development was more than putting money into the bank of watching it grow. Development requires basic changes and entrepreneurs carry out the required changes. Entrepreneurial growth brings economic development. The entrepreneur leads the means of production into productive channels.
Schumpeter’s concept of entrepreneurship is both wide and narrow. It is wide in the sense that it includes not only the independent businessman but also company directors and manager who actually carry out innovative functions. It is narrow to the extent than individuals who merely operate an established business without performing innovative functions are excluded.
Schumpeter’s innovating entrepreneur represents the most vigorous type of enterprise. But this type of entrepreneur is a rare species in developing countries. The type of entrepreneur who exploits possibilities as they present themselves within a limited time horizon and mostly on a small scale can only produce limited results. Society must produce innovators with a long time horizon and how are capable of achieving substantial transformations.
Schumpeter’s views are particularly relevant to developing countries where innovation need to be encouraged. The transformation of an agrarian economy into an industrial economy requires a great deal of initiative and changes on the part of businessman and managers. However, Schumpeter’s theory puts too much emphasis on innovative functions. It ignores the risk taking and organizing aspects of entrepreneurship. An entrepreneur has not only to innovate but also assemble the resources and put them to optimum use. While stressing upon the innovative function of the entrepreneur, Schumpeter ignored the risk-taking function which is equally important. It is quite difficult to imagine an enterprise without risk and profit is the main force for undertaking risk. When an entrepreneur developed a new combination of factors of production, there is enough risk involved.
Schumpeter’s entrepreneur is a large scale businessman who creates something new. But an entrepreneur cannot have large scale operations for the very beginning. Moreover, in underdeveloped countries people who can adopt the existing technology are needed. Such countries need more ‘immitators’ than ‘innovators’. They have to launch a small scale enterprise due to imperfect market, shortage of capital and scarcity of skilled labour.
Schumpeter did not explain why some countries had more entrepreneurial talent than other. He only pointed out that entrepreneurs are not a class in themselves like capitalists and workers. An individual is an entrepreneur only when he actually carries out new combinations and ceases to be an entrepreneur the moment he settled down to running the established business. The entrepreneur leads the means of production into new channels.
(b) Describe the problems of women entrepreneurs.                                     11
Ans: Ans: Introduction to Women Entrepreneurship
Women Entrepreneurs may be defined as the women or a group of women who initiate, organize and operate a business enterprise. Government of India has defined women entrepreneurs as an enterprise owned and controlled by a women having a minimum financial interest of 51% of the capital and giving at least 51% of employment generated in the enterprise to women. Like a male entrepreneurs a women entrepreneur has many functions. They should explore the prospects of starting new enterprise; undertake risks, introduction of new innovations, coordination administration and control of business and providing effective leadership in all aspects of business.
Problems and Challenges of woman entrepreneurship in Assam
The entrepreneurs in Assam in particular and those of Indian’s North Eastern Region in general, irrespective of their gender, have some specific problems in setting up and running their business ventures. Similarly the Indian women in general have some problems specific to them. The nature and magnitude of the problems faced by our women depends on various factors to which a woman is subjected. Women in general have high degree of patience, profound sincerity in work, diligence, sense of duty and efficient managerial skill (with initial guidance). But unfortunately, the society either fails to identify their quality or under-estimate them and /or suppress them as second class citizen. The problems in general the women entrepreneurs in developing countries like India face, which are equally applicable to the women entrepreneurs in Assam relate to the following:
1)      Social attitude and support: Being in a male dominated society, the Indian women are treated as dependent on men and have no liberty to take decisions of their own. The attitude of non-co-operative from her husband or close family members stands heavily in the way of developing women entrepreneurship. Moreover, the conservative attitude of the society does not allow our women in most cases, to take up entrepreneurial ventures. The gender related discrimination is felt more severely when a woman entrepreneur approaches promotional agencies or banks.
2)      Mobility constraint: The women in Assam more particularly those of rural areas have restrictions in their mobility so far as their social status is concerned. Although now-a-days they have relatively more freedom of mobility, but most often become soft target of suspicion by husband. As a prospective entrepreneur, a woman has to visit various financial institutions and Govt. agencies repeatedly to get her works done. But the humiliating attitude of the officials frustrates her and most often abandons the idea of venturing the project.
3)      Dual Responsibility: A woman entrepreneur has to perform dual responsibility of her profession at enterprise as also at family as wife and mother. The unmarried girls also, in many cases, are expected to take care of their younger’s and help mother in her work, besides working at their enterprises. As responsibility of family care largely remains in the hands of women, the women entrepreneurs in Assam in particular and India in general suffer from work-family conflicts.
4)      Scanty Financial Resources: Financial constraint is a problem for business in general. But when it comes to the case of a woman entrepreneur, the problem becomes more severe. As both family members and the officials of financial institutions have less confidence on women as entrepreneurs, they are mostly reluctant to spare finance for a woman business venture.
5)      Low risk bearing capacity: Women in general have less confidence as compared to their male counterparts. As such, they have less risk taking ability; which is an essential pre-requisite for entrepreneurial success. Women in our country live a protected life. She is taught to depend on male members from birth. She is not allowed to take any risk even if she is willing to take and has ability to bear it.
6)      Low educational background: Our women, more particularly those who live in rural areas, bear a very low educational profile. Many of them are either illiterate or have very low level of education. As a result, they face a lot of problems in doing with their business.

7)      Absence of Skill and Motivation: Our rural women in general lack entrepreneurial skill and they do not posses adequate motivation towards entrepreneurial career. However, the Indian Institute of Entrepreneurship (IIE) experience indicates that effective training is a vibrant tool in developing and motivating women entrepreneurship.
8)      Absence of Group Efforts: The tendency of our women to work in group is very less. More particularly, when it comes to the case of doing business, they hardly understand the benefit of working in group. Therefore, our women should be encouraged to setup and operate enterprises with their group efforts.

9)      Absence of Rural Connectivity and Development: Our rural areas are highly potential markets for consumer goods. But absence of proper connectivity and development efforts are the major challenges in developing sustained entrepreneurial practices among our rural women.
5. (a) Discuss the salient features of the Micro, Small and Medium Enterprises Development Act, 2006.  11
Ans: Salient features of Micro, Small and Medium Enterprises Development Act, 2006 are as follows:
By enacting the Micro, Small and Medium Enterprises Development Act, 2006, the Government has recently fulfilled one of the needs felt and articulated by this segment for long. This Act seeks to facilitate promotion and development and enhancing competitiveness of these enterprises. It provides the first-ever legal framework for recognition of the concept of “enterprise” (comprising both manufacturing and services) and integrating the three tiers of these enterprises, namely, micro, small and medium. Apart from clearer and more progressive classification of each category of enterprises, particularly the small, the Act provides for a statutory consultative mechanism at the national level with wide representation of all sections of stakeholders, particularly the three classes of enterprises.
1. Section 7 of Act provides for the following classification in respect of industries engaged in production or manufacture of goods or rendering service enterprises:
Manufacturing Enterprises – Investment in Plant & Machinery
Services Enterprises – Investment in Equipment
Less than Rs. 25 lacs
Less than Rs. 10 lacs
Greater than Rs. 25 lacs but up to Rs. 5 Cr.
Greater than Rs. 10 lacs but upto Rs. 2 Cr
Greater than Rs. 5 Cr. but up to 10 Cr.
Greater than Rs. 2 Cr. but upto Rs. 5 Cr.
2. Filing of Memoranda by MSMEs: Process of two-stage registration of Micro and Small Enterprises dispensed with and replaced by filing of memoranda. 1. Filing of Memorandum optional for all Micro and Small Enterprises. 2. Filing of Memorandum optional for Service Sector Medium Enterprises. 3. Filing of memorandum mandatory for Manufacturing Sector Medium Enterprises.
3. Constitution of National Board: National Board for Micro, Small and Medium Enterprises (MSME) to be headed by the Central Minister in-charge of MSMEs and consisting of 46 members from among MPs and Representatives of Central Ministries, State Governments, UT Administration, RBI, SIDBI, NABARD, Associations of MSMEs including women etc.
Functions of the National Board: Examine the factors affecting the promotion and development of MSMEs and review the policies and programmes of the Central Government in this regard.
4. Advisory Committee Headed by Central Government Secretary I/c of MSMEs and including not more than five officers of the Central Government and not more than three representatives of State Governments; and One representative each of the Associations of micro, small and medium enterprises.
5. Functions of the Advisory Committee
Ø  To examine the matters referred to it by the National Board;
Ø  To advise Central Government on matters relating to classification of MSMEs, programmes, guidelines or instructions for the promotion and development and enhancing the competitiveness of MSMEs.
Ø  To advise State Governments on matters specified in the rules related to repeal of, “The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993, including anything done or any action taken under the Act so repealed
6. Promotional and Enabling Provisions Central Government to notify programmes, guidelines or instructions for facilitating the promotion and development and enhancing the competitiveness of MSMEs. Central Government to administer the Fund or Funds for purpose mentioned in Section 9 and coordinate and ensure timely utilization and release of sums with such criteria, as may be prescribed.
7. Credit: The policies and practices in respect of credit to the MSMEs shall be progressive and such as may be specified in the guidelines or instructions issued by the Reserve Bank of India, with the aims of:
Ø  Ensuring smooth credit flow to the MSMEs,
Ø  Minimizing sickness among them, and
Ø  Ensuring enhancement of their competitiveness

8. Procurement Policies: Central Government or a State Government to notify preference policies in respect of procurement of goods and services produced and provided by MSEs, by its Ministries, departments or its aided institutions and public sector enterprises .
9. Provisions to Check Delayed Payments
Ø  Provisions related to delayed payments to micro and small enterprises (MSEs) strengthened.
Ø  Period of payment of MSEs by the buyers reduced to forty-five days.
Ø  Rate of interest on outstanding amount increased to three times the prevailing bank rate or Reserve Bank of India compounded on monthly basis.
Ø  Constitution of MSE Facilitation Council(s) mandatory for State Government.
Ø  Declaration of payment outstanding to MSE supplier mandatory for buyers in their annual statement of accounts.
Ø  Interest (paid or payable to supplier) disallowed for deduction for income tax purposes.
Ø  No appeal against order of Facilitation Council to be entertained by any Court without deposit of 75% of the decreed amount payable by buyer.
Ø  Appellate Court may order payment of a part of the deposit to the supplier MSE
10. Facilitating Closure of Business: Central Government may (within one year of the commencement of the Act) notify a scheme for facilitating closure of business by a micro, small or medium enterprise. The objectives of the rehabilitation policy are to give guidelines in the following areas:
• Identifying the sickness at an early stage.
• Initiating remedial measures promptly with a pro active approach
• Formulation and implementation of rehabilitation package for potentially viable sick MSME units
(b) Describe the prime objectives of “Entrepreneurship Development Programme”.                       11
Ans: Entrepreneurial Development Programme (EDP) can be defined as a programme, formally designed to help an individual in strengthening his/her entrepreneurial motive and in acquiring skill and capabilities necessary for playing entrepreneurial role effectively. In fact, it is an academic exercise to build up human resources by including them to take up entrepreneurial activities through motivation and developing the required entrepreneurial skills through exposure creation to effectively manage their enterprises. According to N.P. Singh, EDP is not merely a training programme. It is a process of:
a)      Enhancing and motivation, knowledge and skills of the potential entrepreneurs;
b)      Arousing and reforming the entrepreneurial behavior in their day-to-day activities; and
c)       Assisting them develop their own ventures or enterprise as a sequel to entrepreneurial action.
Thus, EDPs endeavous to change educate and equip a person to become a successful entrepreneur. The whole process envisages developing the participant’s latent qualities and skills as also equipping him with other capabilities. By the end of the programme, the participant is expected to be in a position to crystalise his vision in to action and launch and manage his enterprise with competence. The system involves a selection procedure and only those who prove to have certain minimum initial traits are selected as potential entrepreneurs to be trained up to develop the other required traits through interventions.
Objectives of EDP: The major objectives of the Entrepreneurship Development Programmes (EDPs) are to:
1)      Develop and strengthen the entrepreneurial quality, i.e. motivation or need for achievement.
2)      Analyse environmental set up relating to small industry and small business.
3)      Select the product.
4)      Formulate proposal for the product.
5)      Understand the process and procedure involved in setting up a small enterprise.
6)      Know the sources of help and support available for starting a small scale industry.
7)      Acquire the necessary managerial skills required to run a small-scale industry.
8)      Know the pros and cons in becoming an entrepreneur.
9)      Appreciate the needed entrepreneurial discipline.
10)   Besides, some of the other important objectives of the EDPs are to:
11)   Let the entrepreneur himself / herself set or reset objectives for his / her enterprise and strive for their realization.
12)   Prepare him / her to accept the uncertainty in running a business.
13)   Enable him / her to take decisions.
14)   Enable to communicate clearly and effectively.
15)   Develop a broad vision about the business.
16)   Make him subscribe to the industrial democracy.
17)   Develop passion for integrity and honesty.
18)   Make him learn compliance with law.
Need and Importance of EDP
Importance of entrepreneurship development programme (EDP) is to enable entrepreneurs initiating and sustaining the process of economic development in the following ways:
1.Creation of Employment Opportunities: Unemployment is one of the most important problems confronting developing and underdevelopment countries, EDP’s enable prospective entrepreneurs in the setting up of their own units, thus enabling them to get self employment. With the setting up of more and more units by entrepreneurs, both on small and large scale, numerous job opportunities are created for the others.
2. Capital Formation: It is not possible to set up an enterprise without adequate funds. Entrepreneur as an organizer of factors of production employs his own as well as borrowed resources for the setting up of his enterprise. Entrepreneur mobilizes idle savings of the public and put them to productive use. In this way he helps in capital formation, which is so essential for the industrial and economic development of a country. Various development banks like ICICI, IFCI, IDBI; SFCs, SIDCs take initiative in promoting entrepreneurship through assistance to various agencies involved in EDP and by providing financial assistance to new entrepreneurs.
3.Balanced Regional Development: Small scale units can be set up in industrially backward and remote areas with limited financial resources. Successful EDP’s assisted in accelerating the pace of industrialization in the backward areas and reduces the concentration of economic power in the hands of a few. Setting up of more units leads to more development of backward areas and balanced regional development.
4. Use of Local Resources: In the absence of any initiative local resources are likely to remain unutilized. Proper use of these resources can result in the progress or development of the area and that too at lower cost. Effective EDPs can help in the proper use of local resources by providing guidance, assistance, education and training to the prospective entrepreneurs.

5.Improvement in per Capital Income: Entrepreneurs are always on the look out for opportunities. They explore and exploit the opportunities. Entrepreneurs take lead in organizing various factors of production by putting them into productive use through the setting up of enterprises. More enterprises will lead to more production, employment and generation of wealth in the form of goods and services. It will result in the increase in the overall productivity and per capita income in the country. EDPs play a positive role in the setting of more units and thus help in generation of more employment and income.
6.Improvement in the Standard of Living: Entrepreneurs by adopting latest innovations help in the production of wide variety of goods & services. By making efficient use of the resources, they start producing more of better quality and that too at lower costs. This enable them to ensure easy availability of better quality products at lower prices to the consumers which result in the improvement in the standard of living of the people.
7.Economic Independence: Entrepreneurs enable a country to produce wide variety of better quality goods & services and that too at competitive prices. They develop substitutes of the goods being imported and thus prevent over-dependence on foreign countries and at the same time help in the saving of precious foreign exchange. Through sale of their surplus products in foreign market entrepreneurs enable a country to earn foreign exchange, which is so essential for meeting developmental needs of the economy. Export promotion and import substitution thus help in promoting economic independence of the economy.
8.Preventing Industrial Slums: Industrially developed areas are faced with problem of industrial slums, which result in over burdening of civic amenities and adverse impact on the health of people. Dispersal of industries can help in the overcoming of this grave problem. EDPs can help in preventing spread of industrial slums by providing various incentives, subsidies and infrastructural support to entrepreneurs for setting up their enterprises in industrially backward areas. This will also help in reducing pollution and overtaxing of civic amenities.
9. Helps in searching and exploiting opportunities: There are many opportunities for entrepreneurs in various fields like-Electronics,medicine,engineering,agriculture,food technology and packing, communication etc. EDPs help in searching such opportunities and provide necessary information, guidance  and assistance in the search and exploiting these opportunities.
10. Enhancing managerial abilities: Entrepreneur development programmes help the entrepreneurs to enhance their organizing and managerial abilities so that they can run their enterprise efficiently and successfully. This is done through organizing educational, management, training and orientation programmes. Various specialized agencies like National Institute for Entrepreneurship and small Business Development(NIESBUD),New Delhi and Entrepreneurship Development Institute of India(EDII), Ahmadabad are engaged in entrepreneurship programmes.
6. (a) Discuss the role played by the North-eastern development finance corporation of India, in the economic development of north-eastern region.                  11          
The North Eastern Development Finance Corporation Ltd (NEDFi) is a Public Limited Company registered under the Companies Act 1956 on 9th August, 1995. It is notified as a Public Financial Institution under Section 4A of the said Act and was registered as an NBFC in 2002 with RBI. The shareholders of the Corporation are IDBI, SBI, LICI, SIDBI, ICICI, IFCI, SUUTI, GIC and its subsidiaries. The management of NEDFi has been entrusted upon the Board of Directors comprising representatives from shareholder institutions, DoNER, State Governments and eminent persons from the NE Region and outside having wide experience in industry, economics, finance and management.
NEDFi provides financial assistance to micro, small, medium and large enterprises for setting up industrial, infrastructure and agri-allied projects in the North Eastern Region of India and also Microfinance through MFI/NGOs. Besides financing, the Corporation offers Consultancy & Advisory services to the state Governments, private sectors and other agencies. NEDFi conduct sector or state specific studies under its Techno-Economic Development Fund (TEDF) and is the designated nodal agency for disbursal of Govt. of India incentives to the industries in the North-East India under North–East Industrial and Investment Promotion Policy 2007 (NEIIPP 2007).
Objectives: The main objective of NEDFi is to provide finance and other facilities for promotion, expansion and modernization of industrial and infrastructure projects in the NE-region.
Functions: The NEDFi aims to be a dynamic and responsive organization catalyzing the economic development of the North East India. It assists in the efficient formation of fixed assets by identifying and nurturing eco-friendly and commercially viable industrial and infrastructure projects in the region. Thus, the NEDFi prime role is to enhance the wealth of the region and prosperity of its people. The major functions of the NEDFi are as follows:
a)      To provide financial assistance to MSMEs for setting up industrial units, infrastructure and agri-allied projects in the North Eastern Region of India.
b)      To extend Micro-Finance to Non-Government Organizations (NGOs) and voluntary Agencies (Vas) with good track-records for on-lending to the needy who can take up income generating activities for self-employment.
c)       To offer Consultancy and Advisory services to the state Governments private sectors and other agencies.
d)      To conduct state specific studies under the state’s Techno-Economic Development Fund (TEDF).
e)      To serve as a designated nodal agency for disbursement of the Government of India’s incentives to industries in the N.E. Region under the “North East Industrial and Investment Promotion Policy (NEIIPP) 2007” and also under the “Prime Minister’s Employment Generation Programme (PMEGP)” scheme.
f)       In addition to the above, the NEDFi takes up promotional activities which include NEDFi Haat, NEDFi Convention Centre, NEDFi Pavilion, etc.
(b) Write an Explanatory note on the “needs of institutional support to entrepreneurs”
Ans: The term institutional support refers to the part of economic environment of industry and business. It consisting of authorities and institutions whose decisions and active support in form of laws, regulation, financial and non-financial help brings a lot of changes in the functioning of any business. The institutions could be government owned, statutory, semi autonomous or autonomous. It is the government or government supported institutions authorized to take up certain activities - financing, marketing, project preparation, training the to promote industrial activities in the state. There are three stages of promotion - inception stage, operational stage and expansion or diversification stage. The Government through its plans and policies assisted the business houses in facilitating in the above stages through various specialised institutions set up as per the law. An entrepreneur who needs to set up a business unit of his own or with his friends and relatives is supposed to know the various institutions or organizations working as per the law for the purpose. Dissemination of information in this regard can only help them in achieving the very dream of becoming a successful entrepreneur.
That is why since inception of our planning era, we have been giving much more stress on this vital sector to grew by providing many a support and assistant through different bodies and institutions. There are briefly discussed in subsequent paras as follows:
1. To prepare project profiles and feasibility on behalf of entrepreneur.
2. To undertake industrial potential surveys with a view to provide first hand information regarding raw material, required labour etc.
3. To identify potential entrepreneurs and provide them technical and managerial assistance.
4. To undertake market researches and surveys for specific products, so that in future the unit may not take any difficult in marketing products.
5. To undertake export consultancy for export oriented projects based on modern technology to facilitate export.
6. TO conduct entrepreneurship development programmes with a view to aware, create and groom entrepreneurs.
7. To procure and distribute scare raw materials as and when required.
8. To supply machinery on hire purchase system.
9. To render marketing assistance to small-scale industries with a view to effectively sell their products in competitive era.
10. To provide consultancy and trading services to strengthen the competitive ability and gain advance knowledge in the field.
11. To help in development and up gradation of technology and implementation of modernization programmes by replacing old and outdated equipments.
12. To undertake the mass construction of industrial estates with all basic facilities.
13. To provide infrastructure and accommodation facilities to the entrepreneurs.
7. (a) Discuss the legal requirements to establish a new business unit in the form of a private company. 12

(b) Explain briefly the different sources of funds to an entrepreneur.