Entrepreneurship Development Solved Papers: November' 2019 | Dibrugarh University | B.Com 5th Sem

 2019 (November)

COMMERCE (General / Speciality)

Course: 502 (Entrepreneurship Development)

Time: 3 hours

The figures in the margin indicate full marks for the questions

(NEW COURSE)

Full Marks: 80

Pass Marks: 24

1. (a) Write True or False of the following:            1x4=4

1)      There is difference between a manager and an entrepreneur.               True

2)      Innovativeness is essential for an entrepreneur.                           True

3)      Entrepreneur is not a risk taker.            False

4)      Self-help groups are formed by the government.                         False

(b) Write the full forms of the following:           1x4=4

1) IIE - Indian Institute of Entrepreneurship

2) KVIC- KHADI AND VILLAGE INDUSTRIES COMMISSION

3) SIDO - Small Industries Development Organisation

4) MSME - Micro, Small and Medium Enterprises

2. (a) Write short notes on the following:              4x4=16

1) Social entrepreneur.

Ans: Social Entrepreneur: A social entrepreneur is one who sets up his organisation to work for social change where the society suffers from certain problem which deteriorates the lives of common people, particularly the poor or the weaker section of the society. Such entrepreneurs also address to the environment issues and work for protection of environment through protection of plant and animal lives.

Thus, social entrepreneurs are those exceptional individuals who dream up and take responsibility for an innovative and untested idea for positive social change and usher that idea from dream to reality. They focus on transforming system and practices that are root cause of poverty, marginalization, environmental deterioration and accompanying loss to human dignity. In doing so, they may set up for-profit or not-for-profit organisation and in either case; their primary objective is sustainable system change.

2) Mohila Vikash Nidhi.

Ans: Mahila Vikash Nidhi: It is another initiative taken by the SIDBI to encourage women entrepreneurship. Under this scheme, the SIDBI extends development assistance to women to pursue income generating activities. It is a specially designed fund to support economic development of women, especially in the rural areas by providing them avenues for training and employment opportunities.

Under the scheme of assistance, a judicious mix of loan and grant is extended to accredited NGOs for creation of training and other infrastructural facilities. In addition to this, activities like vocational training, strengthening of marketing setup for the products marketing of the beneficiary groups, arrangement for supply of improved inputs, production and technology improvement are also covered under the Mahila Vikash Nidhi scheme.

3) Leadership style.

Ans: Leadership is the ability to build up confidence and deal among people and to create an urge in them to be led. To be a successful leader, a manager must possess the qualities of foresight, drive, initiative, self-confidence and personal integrity. Different situations may demand different leadership style. A leadership style is a leader's method of providing direction, implementing plans, and motivating people. Leadership style is of various types some of them are listed below:

a)      Autocratic or Authoritarian Style leader: An autocratic also known as authoritarian style of leadership implies wielding absolute power. Under this style, the leader expects complete obedience from his subordinates and all decision-making power is centralized in the leader.

b)      Laissez-faire or Free-rein Style Leader: Under this type of leadership, maximum freedom is allowed to subordinates.

c)       Democratic or Participative Style leader: The democratic or participative style of leadership implies compromise between the two extremes of autocratic and laissez-fair style of leadership. Under this style, the supervisor acts according to the mutual consent and the decisions reached after consulting the subordinates.

d)      Paternalistic Style leader: This style of leadership is based upon sentiments and emotions of people. A paternalistic leader is like a father to these subordinates. He looks after the subordinates like a father looks after his family.

4) Challenges of women entrepreneurship.

Ans: 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.

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.

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.

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.

3. (a) Define the term “Entrepreneur”. Explain the different classification of entrepreneur.      14

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.

 An entrepreneur is a person who starts an enterprise. He searches for change and responds to it. A number of definitions have been given of an entrepreneur. The economists view him as a fourth factor of production along with land labour and capital. The sociologists feel that certain communities and cultures promote entrepreneurship. Some others feel that entrepreneurs are innovators who come up with new ideas for products, markets or techniques. Some of the popular definitions are given below:

J.B. Say: An entrepreneur is an economic agent who unites all means of production- land of one, the labour of another and the capital of yet another and thus produces a product. By selling the product in the market he pays rent of land, wages to labour, interest on capital and what remains is his profit. He shifts economic resources out of an area of lower and into an area of higher productivity and greater yield.

Schumpeter: According to him entrepreneurs are innovators who use a process of shattering the status quo of the existing products and services, to set up new products, new services.

To put it very simply an entrepreneur is someone who perceives opportunity, organizes resources needed for exploiting that opportunity and exploits it.

Types of Entrepreneurs

Entrepreneurs are classified as under different heads as given below. This helps the potential entrepreneurs to choose his own nature and style of entrepreneurship.

a) According to the Type of Business: Entrepreneurs are found in various types of business occupations of varying size. We may broadly classify them as follows:

Business Entrepreneur: Business entrepreneurs are individuals who conceive an idea for a new product or service and then create a business to materialize their idea into reality. They tap both production and marketing resources in their search to develop a new business opportunity. They may set up a big establishment or a small business unit.

Trading entrepreneur: Trading entrepreneur is one who undertakes trading activities and is not concerned with the manufacturing work. He identifies potential markets, stimulates demand for his product line and creates a desire and interest among buyers to go in for his product. He is engaged in both domestic and overseas trade.

Industrial Entrepreneur: Industrial entrepreneur is essentially a manufacturer who identifies the potential needs of customers and tailors product or service to meet the marketing needs. He is a product oriented man who starts in an industrial unit because of the possibility of making some new product.

Corporate Entrepreneur: Corporate entrepreneur is essentially a manufacturer who identifies the potential needs of customers and tailors product or service to meet the marketing needs. He is a product oriented man who starts in an industrial unit because of the possibility of making some new product.

Agricultural Entrepreneur: Agricultural entrepreneurs are those entrepreneurs who undertake such agricultural activities as raising and marketing of crops, fertilizers and other inputs of agriculture. According to the use of Technology.

Technical Entrepreneur: A technical entrepreneur is essentially an entrepreneur of “Craftsman type”. He develops a new and improved quality of goods because of his craftsmanship. He concentrates more on production than marketing.

Non-technical Entrepreneur: Non-technical entrepreneurs are those who are not concerned with the technical aspects of the product in which they deal. They are concerned only with developing alternative marketing and distribution strategies to promote their business.

Professional Entrepreneur: Professional entrepreneur is a person who is interested in establishing a business but does not have interest in managing or operating it once it is established.

b) According to Motivation: Motivation is the force that influences the efforts of the entrepreneur to achieve his objectives. An entrepreneur is motivated to achieve or prove his excellence in job performance. He is also motivated to influence others by demonstrating his power thus satisfying his ego.

Pure Entrepreneur: A pure entrepreneur is an individual who is motivated by psychological and economic rewards. He undertakes an entrepreneurial activity for his personal satisfaction in work, ego or status.

Induced Entrepreneur: Induced entrepreneur is one who is being induced to take up an entrepreneurial task due to the policy measures of the government that provides assistance, incentives, concessions and necessary overhead facilities to start a venture.

Motivated Entrepreneur: New entrepreneurs are motivated by the desire for self-fulfillment. They come into being because of the possibility of making and marketing some new product for the use of consumers. If the product is developed to a saleable stage, the entrepreneur is further motivated by reward in terms of profit and enlarged customer network.

Spontaneous Entrepreneur: These entrepreneurs start their business out of their natural talents and instinct. They are persons with initiative, boldness and confidence in their ability which motivate them to undertake entrepreneurial activity.

Growth Entrepreneur: Growth entrepreneurs are those who necessarily take up a high growth industry. These entrepreneurs choose an industry which has substantial growth prospects.

Super-Growth Entrepreneur: Super-growth entrepreneur are those who have shown enormous growth of performance in their venture. The growth performance is identified by the liquidity of funds, profitability and gearing.

c) According to Stages of Development

First-Generation Entrepreneur: A first generation entrepreneur is one who starts an industrial unit by means of an innovative skill. He is essentially an innovator, combining different technologies to produce a marketable product or service.

Modern Entrepreneur: A modern entrepreneur is one who undertakes those ventures which go well along with the changing demand in the market. They undertake those ventures which suit the current marketing needs.

Classical Entrepreneur: A classical entrepreneur is one who is concerned with the customers and marketing needs through the development of a self supporting venture. He is a stereo type entrepreneur whose aim is to maximize his economic returns at a level consistent with the survival of the firm with or without an element of growth.

Innovating Entrepreneurs: Innovating entrepreneurship is characterized by aggressive assemblage of information and analysis of results, deriving from a novel combination of factors. Men/women in this group are generally aggressive in experimentation who exhibit cleverness in putting attractive possibilities into practice.

Imitative Entrepreneurs: Imitative entrepreneurship is characterized by readiness to adopt successful innovations by innovating entrepreneurs. They first imitate techniques and technology innovated by others.

Fabian Entrepreneurs: These categories of entrepreneurs are basically running their venture on the basis of conventions and customary practices. They don’t want to introduce change and not interested in coping with changes in environment. They have all sorts of inhibitions, shyness and lethargic attitude. They are basically risk aversor and more cautious in their approach.

Drone Entrepreneurs: Entrepreneurs who are reluctant to introduce any changes in their production methods, processes and follow their own traditional style of operations. Though they incur losses and looses their market potential, will not take any effort to overcome the problem. Their products and the firm will get natural death and knockout.

Forced Entrepreneurs: Sometimes, circumstances made many persons to become entrepreneurs. They do not have any plan, forward looking and business aptitude. To mitigate the situational problem, they are forced to plunge into entrepreneurial venture. Most of the may not be successful in this category due to lack of training and exposure.

Or

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Also Read:
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Also Read (Dibrugarh University)

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(b) Distinguish between the following:                                7x2=14

1. Rural Entrepreneur and woman Entrepreneur

2. Manager and Entrepreneur

Ans: 1. Difference between Rural Entrepreneur and Woman Entrepreneur

Rural Entrepreneur: Rural entrepreneurs are those who carry out entrepreneurial activities by establishing industrial and business units in the rural sector of the economy. In other words, establishing industrial and business units in the rural areas refers to rural entrepreneurship. In simple words, rural entrepreneurship implies entrepreneurship emerging in rural areas. Or, say, rural entrepreneurship implies rural industrialisation. Thus, we can say, entrepreneurship precedes industrialization.

According to KVIC (Khadi and Village Industry Commission), "village industries or Rural industry means any industry located in rural areas, population of which does not exceed 10,000 or such other figure which produces any goods or renders any services with or without use of power and in which the fixed capital investment per head of an artisan or a worker does not exceed a thousand rupees".

The modified definition of rural industries has been given by Government of India in order to enlarge its scope. According to Government of India, "Any industry located in rural area, village or town with a population of 20,000 and below and an investment of Rs. 3 crores in plant and machinery is classified as a village industry."

Women Entrepreneurs: 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.

2. Difference between Manager and Entrepreneur

Ans: Comparison of Managers and Entrepreneurs

Basis

Traditional Managers

Entrepreneurs

Primary motives

Promotional and other Traditional corporate Re­wards, such as office, Staff, and power

Independence, Opportunity to create And money

Time Orientation

Short-term meeting quotas and budgets, weekly monthly, quarterly, and the annual planning horizons.

Survival and achieving 5-10 year growth of business.

Activity

Delegates and supervises More than direct involvement

Director involvement

Risk

Careful

Moderate risk taker

Status

Concerned about status symbols.

No concern about status symbols.

Failure and mistakes

Tries to avoid mistakes and surprises

Deals with mistakes and failures.

4. (a) Point out the various opportunities available for development of woman entrepreneurship in India.        14

Ans: Government Incentives and supports and opportunities towards women entrepreneurship

Despite various constraints faced by the women entrepreneurs of Assam in particular and India in general, several opportunities are also available now-a-days. Women Entrepreneurs can be seen everywhere in the startup-up ecosystem of India. Women too are seen leaving their high-profile jobs as well as some stepping out of the four walls of their homes and joining the pool of Entrepreneurship in India. The major factor to jumpstart the entrepreneurial journey is capital and various banks offer specialized loans for women entrepreneurs that have slightly different and more flexible set of terms and conditions pertaining to collateral security, interest rates, etc. 

Central Government Incentives and Supports: Now-a-days there are various Govt. schemes of incentive and support to promote women entrepreneurship. Some of the schemes are absolutely for women and other weaker sections of the society; while there are many others which are gender free where women have some privilege. Here is a list of various schemes and loans exclusively for women that aim at promoting and easing out the process for them:

1. Annapurna Scheme: This scheme is offered by the State Bank of Mysore for those women entrepreneurs who are setting up food catering industry in order to sell packed meals, snacks, etc. The amount granted as a loan under this scheme can be used to fulfill the working capital needs of the business like buying utensils and other kitchen tools and equipment.  Under this loan, a guarantor is required along with the assets of the business being pledged as collateral security. Further, the maximum amount of money that is granted is Rs. 50,000 which has to re-paid in monthly installments for 36 months, however, after the loan is sanctioned, the lender doesn’t have to pay the EMI for the first month. The interest rate is determined depending upon the market rate. 

2. Stree Shakti Package For Women Entrepreneurs: This scheme is offered by most of the SBI branches to women who have 50% share in the ownership of a firm or business and have taken part in the state agencies run Entrepreneurship Development Programmes (EDP).  The scheme also offers a discounted rate of interest by 0.50% in case the amount of loan is more than Rs. 2 lakhs. 

3. Bharatiya Mahila Bank Business Loan: This loan is a support system for budding women entrepreneurs looking to start new ventures in the fields of the retail sector, loan against property, MICRO loans, and SME loans.
The maximum loan amount under this loan goes up to
Rs. 20 crores in case of manufacturing industries and also a concession is available to the extent of 0.25% on the interest rate and interest rates usually range from 10.15% and higher. Additionally, under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), there is no requirement of collateral security for a loan of up to Rs. 1 crore.

4. Dena Shakti Scheme: This scheme is provided by Dena bank to those women entrepreneurs in the fields of agriculture, manufacturing, micro-credit, retail stores, or small enterprises; who are in need of financial assistance. The interest rate is also decreased by 0.25% along with the maximum loan amount being Rs. 20 lakhs for retail trade; education and housing whereas 50,000 under the microcredit. 

5. Udyogini Scheme: This scheme is offered by Punjab and Sind Bank so as to provide women entrepreneurs involved in Agriculture, retail and small business enterprises to get loans for business at flexible terms and concessional interest rates. The maximum amount of loan under this scheme for women between the age bracket of 18-45 years is 1 lakhs but your family income is also taken into consideration and is set at Rs. 45,000 per annum for SC/ST women. 

6. Cent Kalyani Scheme: This scheme is offered by the Central Bank of India with the aim of supporting women in starting a new venture or expanding or modifying an existing enterprise. This loan can be availed by women who are involved in village and cottage industries, micro, small and medium enterprises, self-employed women, agriculture and allied activities, retail trade, and government-sponsored programs. This scheme requires no collateral security or guarantor and charges no processing fees. And the maximum amount that can be granted under the scheme is Rs. 100 lakhs. 

7. Mahila Udyam Nidhi Scheme: This scheme is launched by Punjab National Bank and aims at supporting the women entrepreneurs involved in the small scale industries by granting them soft loans that can be repaid over a period of 10 years. Under this scheme there are different plans for beauty parlors, day care centres, purchase of auto rickshaws, two-wheelers, cars, etc. the maximum amount granted under this scheme is Rs. 10 lakhs and the interest depends upon the market rates. 

8. Mudra Yojana Scheme For Women: This scheme has been launched by the Govt. of India for individual women wanting to start small new enterprises and businesses like beauty parlors, tailoring units, tuition centres, etc. as well as a group of women wanting to start a venture together. The loan doesn’t require any collateral security and can be availed as per 3 schemes :

i. Shishu – loan amount is limited to Rs. 50,000 and can be availed by those businesses that are in their initial stages.

ii. Kishor – loan amount ranges between Rs. 50,000 and Rs. 5 lakhs and can be availed by those who have a well-established enterprise. 

iii. Tarun – loan amount is Rs. 10 lakhs and can be availed by those businesses that are well established but require further funds for the purpose of expansion

If the loan is granted, a Mudra card will be given to you which functions the same way as a credit card however the funds available are limited to 10% of the loan amount granted to you. 

9. Orient Mahila Vikas Yojana Scheme: This scheme is provided by Oriental Bank of Commerce to those women who hold a 51% share capital individually or jointly in a proprietary concern. No collateral security is required for loans of Rs. 10 lakhs up to Rs. 25 lakhs in case of small-scale industries and the period of repayment is 7 years. A concession on the interest rate of up to 2% is given.

Or

(b) Define Leadership and Point out the major features of leadership.

Ans: Leadership is the ability to build up confidence and deal among people and to create an urge in them to be led. To be a successful leader, a manager must possess the qualities of foresight, drive, initiative, self-confidence and personal integrity. Different situations may demand different types of leadership.

Leadership means influencing the behaviour of the people at work towards realizing the specified goals. It is the ability to use non-coercive (no force) influence on the motivation, activities and goals (MAG) of others in order to achieve the objectives of the organisation.

Koontz and 0' Donnel “Leadership is the ability of a manager to induce subordinates to work with confidence and zeal”.

George R Terry “Leadership is the activity of influencing people to strive willingly for group objectives”.

Qualities and features of leadership:

1.       Patience: Patience is the capacity to face difficult situations, hardships or inconvenience without making a single complaint. It is the ability to wait calmly for something to happen without complaining or giving up or getting angry. Patience requires Calmness, Self-Control, Willingness or Ability to tolerate delay. A good leader must show patience while waiting for expected results, facing difficult situations and taking important decisions. He must avoid taking hasty decisions and actions.

2.       Good Personality: A good personality is a combination of physical, mental and social qualities. Good personality helps a leader to influence his followers. Attractive physique and good manners add an advantage to the leader's personality.

3.       Self-confidence: A good leader must have self confidence. This quality is necessary for facing challenging situations and for solving problems easily and effectively.

4.       Human Skills: A good leader must have essential social and human skills. That is, he must understand people. This quality is necessary for dealing with different types of persons and social groups.

5.       Judgment skills: A good leader should be able to examine problems in right perspective. His judgment and decision making abilities should be superior to others. He should be able to form opinions and judge based on facts and not be prejudiced

6.       Communication skills: A good leader should be able to communicate the goals and procedures of the organisation clearly, precisely and effectively to the subordinates. Only then will it be possible for him to convince, persuade and stimulate subordinates to action.

7.       Listening skills: People tend to avoid a leader who does not listen. Hence a good leader in one who can listen to other peoples problems. He should be able to create a culture whereby people can be frank with him and give him information and also give him feedback about himself, which can help him to improve himself.

8.       Inspiring skills: A good leader should be able to inspire people to deal with the “why” question. He should not just command and control but be able to lead the people and get them involved to work together as a team.

9.       Administrative Skills: A good leader must have an administrative ability. This means, he must be able to get the work done through his followers. He must know how to plan, organize and control the work of his followers.

10.   Discipline: A good leader must be a disciplined person. This means he must have respect for the rule and regulations of the organisation. This is because his followers will follow his example.

11.   Initiative: A good leader must always take an initiative. This means he should do the right thing at the right time without being told by others. He must be able to construct and implement his own plan.

12.   Intelligence: A good leader must be smart and intelligent. That is, he should have a good educational background and sound technical knowledge. He should be more intelligent than his followers. If not, his followers will not respect him. This will have a bad effect on his performance.

13.   Innovative:  A good leader must have an art of innovation. That is, he must have a good imagination and visualization skills. He must develop new ideas and tactics to solve problems. He must combine the new ideas with the old ideas.

5. (a) What are the salient features of the Micro, Small and Medium Enterprises Development Act, 2006? Explain. 14

Ans: Salient features of Micro, Small and Medium Enterprises Development Act, 2006 are as follows (Role)

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:

Class

Manufacturing Enterprises – Investment in Plant & Machinery

Services Enterprises – Investment in Equipment

Micro

Less than Rs. 25 lacs

Less than Rs. 10 lacs

Small

Greater than Rs. 25 lacs but up to Rs. 5 Cr.

Greater than Rs. 10 lacs but upto Rs. 2 Cr

Medium

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

Or

(b) Justify the government of India’s effort towards the promotion of rural entrepreneurship. 14

Ans: Rural entrepreneurs are those who carry out entrepreneurial activities by establishing industrial and business units in the rural sector of the economy. In other words, establishing industrial and business units in the rural areas refers to rural entrepreneurship. In simple words, rural entrepreneurship implies entrepreneurship emerging in rural areas. Or, say, rural entrepreneurship implies rural industrialisation. Thus, we can say, entrepreneurship precedes industrialization.

According to KVIC (Khadi and Village Industry Commission), "village industries or Rural industry means any industry located in rural areas, population of which does not exceed 10,000 or such other figure which produces any goods or renders any services with or without use of power and in which the fixed capital investment per head of an artisan or a worker does not exceed a thousand rupees".

The modified definition of rural industries has been given by Government of India in order to enlarge its scope. According to Government of India, "Any industry located in rural area, village or town with a population of 20,000 and below and an investment of Rs. 3 crores in plant and machinery is classified as a village industry."

Government Support for Rural Entrepreneurs

Present Government of India has taken many steps to promote the entrepreneurship in rural areas. Some of them are listed below:

1.       Government Incentives and Supports: With a view to encouraging entrepreneurship development in the rural areas, the Government of India has initiated various schemes of incentives and supports through various Ministries like the Ministry of Rural Development, the Ministry of MSME and the Ministry of Social Welfare. These schemes of incentives, if properly implemented can significantly add to the prospect of rural entrepreneurship in Assam in particular and India in general.

2.       Government policies and subsidies: The government of India is continuously monitoring and introducing the new policies for encouraging the rural entrepreneurship. These policies are very flexible, innovative, liberalized and giving continues support to rural entrepreneurs. At the same time government has also announced huge subsidies for promoting the rural entrepreneurship.

3.       Initiation of PURA model for Development: Now day, our Government is actively considering the introduction of PURA (Providing Urban amenities to Rural Areas) model for development to ensure participatory development of the economy. Under such a trend, rural entrepreneurship counts high prospect for development in the days ahead.

4.       MNREGA: It is important to refer that in addition to various self-employment schemes, wage employment schemes like the MGNREGA are also being operated in rural areas. The main purpose of such schemes is to inject purchasing power in the hands of rural people; at the same time to create community assets. By the process, it was expected that the quality of man’s life in the rural areas would improve considerably. But unfortunately, rampant corruption at all levels of administration has neutralized the benefits of such schemes. Now, with the Right to Information (RTI) Act in place, a change is expected to come up gradually. Such developments may open up the scope for rural entrepreneurship in days ahead.

5.       Skill Development in Rural areas: Labour is a factor of production, if it can be utilized properly. It multiplies economic development. On the contrary, if it remains un-utilized, it creates problems and becomes burden for the economy. The abundant supply of labour force in our rural areas is clearly visible. This abundant labour force will find its fruitful utilization through the practice of indigenous entrepreneurship in our rural areas. Thus, the practice of rural entrepreneurship will get tremendous support in the rural areas through locally available labour force. Availability of skilled labour force was a big problem in rural areas but with the introduction of skill development programme in rural areas, it is now possible for rural entrepreneurs to get skilled labour force in rural areas.

6.       Ready online Market: As close to 70% of our population lives in rural areas, the products will find their markets within the rural areas through continuous process; as rural entrepreneurship ensures income generation through employment creation in those areas. Thus, there is high prospect of getting a sustained rural market in the long-run if entrepreneurship gains its ground in rural areas. Also, government of India introduces many online portal for farmers and rural entrepreneurs like ENAM.GOV.IN and FARMER.GOV.IN where they can easily sale their products.

7.       Availability of Land: One important advantage in setting up of industrial units in our rural areas is the availability of land resource. As compared to our urban areas, land is still available in our rural areas; which makes the ground for setting up of industrial units in those areas. Thus, the prospect of entrepreneurship makes its ground in rural areas of our state in particular and the country in general. With the introduction of New Land Acquisition Bill, it is now easier for entrepreneurs to get land in rural areas.

8.       Local for Vocal: PM Modi slogan “Local for Vocal” is now proved to be a booster for Indian entrepreneurs especially rural entrepreneurs. This slogan motivated us to buy local products which increase the turnover of local businessmen.

9.       Rural Entrepreneurship Development Programme (REDP): This is one of the important Non-Farm Sector (NFS) promotional programmes supported by the National Bank for Agriculture and Rural Development (NABARD) for creating sustainable employment and income opportunities in a cost effective manner for the benefit of educated unemployed rural youths. As per the programme, the NABARD provides promotional assistance to select agencies to meet the recurring expenditure in conducting REDP. Under institutionalization of the REDP, the select institutions are provided with need-based capacity building supports and long-term assistance by way of continued financial assistance, for conducting REDP.

Objectives: The avowed objective of the programme is to develop entrepreneurial and activity oriented skills among unemployed rural youths willing to set up micro/small enterprises; by assisting Voluntary Agencies (VA), Non-Governmental Organisations (NGOs)/ Development Agencies (DA), etc with good track record in conducting REDPs.

From the above discussion, we can conclude that the present government is doing very well for the promotion and development of rural entrepreneurs.

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Also Read:
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Also Read (Dibrugarh University)

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6. (a) What is EDP? Point out a brief historical perspective of entrepreneurship development in India.                14

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.

History of Entrepreneurship Development in India

Traditionally, Indian economy is purely agriculture based due to which our country is still a backward country. The experience all over the world proves that the economies which are predominately agrarian in character continue to remain backward and fails to sustain development. To diversify the Indian economy and to accelerate the entrepreneurial activities, The Government of India soon after attaining independence laid down its first Industrial Policy Resolution in 1948. In order to promote local entrepreneurs, ban on the imports of a large number of consumers and other goods imposed by the Government of India during the post independence period. Subsequently, during 1953-54, the Ministry of Commerce and Industry, Government of India, invited an International Planning Team under the courtesy of Ford Foundation to report on measures that could be adopted to develop small scale industries for promotion of indigenous entrepreneurship. The team strongly recommended the need for development of “Modern Small Scale Industries” to meet the need of time and pace. The team also recommended several measures for promotion and development of entrepreneurship in this sector of the economy.

Since then, the Government of India has been adopting a series of measures for promotion of local entrepreneurship in the country. In course of time, with unemployment problem taking serious turn, the self employment and Entrepreneurial Development Programmes (EDPs) came to receive serious attention in the country. The literature available indicates that the birth of training effort for the promotion of entrepreneurship in India was purely an indigenous initiative i.e. the “Technician Scheme” launched in the year by two state level agencies of Gujarat. The scheme visualized 100% finance without collaterals. A large number of people took the advantage of this scheme. The real gain of the scheme was the realization that there is vast entrepreneurial potential available in the country that could be tapped and developed through appropriate training intervention. This led the Gujarat Industrial Investment Corporation (GIIC), along with other state level agencies to conceptualize, mount and develop, in 1970, a 3-month long training programme known as Entrepreneurship Development Programme (EDP). However, with the number of programme increasing, the need for having a separate state level organization to look into selection, training and development of first generation entrepreneurs was strongly felt. Thus, the Centre for Entrepreneurship Development (CED), Gujarat, the first of its kind in the country came into existence in 1979 with the support of the Government of Gujarat and the industrial promotion and the assistance agencies in the state.

Meanwhile, the success story of Gujarat experiment spread far and wide and the Ford Foundation encouraged the Gujarat team to test out EDP strategy in a few less developed states like Rajasthan, Assam, etc. Several development agencies in other parts of the country also mounted their own EDPs and the Gujarat CED provided professional support to some of them.

There is another story of the origin of Entrepreneurship Development Programme (EDP) in India. The story suggests that the well known behavioural scientist David McClelland at Harvard University made an interesting investigation into why certain societies developed great creative powers at particular period of time of their history. He found that “the need for achievement” was the answer. It was the “need to achieve” that motivated people to work hard and money making was incidental. Money was only a measure of achievement, not its core motivation.

In order to answer the next question whether this need for achievement could be induced, McClelland conducted a five-year experimental study in one of the prosperous distracts of Andhra Pradesh in India in collaboration with the Small Industry Extension Training Institute (SIET); which later came to be known as the National Institute for Small Industry Extension Training (NISIET) and now called National Institute for Micro Small and Medium Enterprises (ni-msme), Hyderabad. This experiment is popularly known as “Kakinda Experiment”. Under this experiment, young persons were selected and put through a three month training programme and motivation to see fresh goals.

One significant conclusion of the experiment was that traditional belief did not seem to inhibit an entrepreneur and that suitable training can provide the necessary motivation to entrepreneurs. It was the Kakinda Experiment that made people appreciate the need for entrepreneurial training (now popularly known as EDPs) to induce motivation and competence among young prospective entrepreneurs. Based on this realization India embarked in 1971 on a massive programme of entrepreneurship development. At present there are more than 700 all India and state level institutions conduct EDPs.

The above findings reveal that EDP was conceptualized almost at the same time in two parts of India viz Gujarat and Andhra Pradesh. However, while the Gujarat model was applied first to organize massive EDPs in 1970, the Andhra Pradesh (SIET) model found its massive application in 1071.

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(b) Write short notes on the following:                7x2=14

(i)     Major Functions of DICC

(ii)   Role of KVIC

Ans: (i) DISTRICT INDUSTRIES AND COMMERCE CENTRE (DI&CC)

The District Industries and Commerce Centre (DI&CC) operate from the District head quarters of Assam. The centres work in close association with the Commissioner of Industries and Commerce, Guwahati. All the preliminary works relating to availing of the Govt. policy supports by the entrepreneurs in the form of schemes and incentives are done at the DI&CC level.

Functions of DI&CC: The DI&CC words at the grass-root for promotion and development of indigenous entrepreneurship in the state through policy supports initiated by the central and the state Governments. The major functions include the following:

1.       To facilitate the voluntary filling of Memorandum by the Micro and Small Enterprises (MSEs) as per the Government of India’s MSME Development Act 2006.

2.       To facilitate the compulsory filling of Memorandum by the Manufacturing Sector Medium Enterprises as per the Govt. of India’s MSME Development Act 2006.

3.       To facilitate pre registration of the enterprises to avail benefits under the different schemes of assistance and supports under the central and the state Governments.

4.       To guide the prospective entrepreneurs through appropriate counseling and suggestions in staring their new enterprises.

5.       To guide the entrepreneurs through documentation and counseling in availing the Govt. incentive and support facilities.

6.        To facilitate organization of Entrepreneurship Development Programmes (EDPs) by the NGOs through liaison.

7.       To organize screening committee (Task Force) meeting for selection of beneficiaries for grant of Govt. incentives and supports.

8.       To forward and recommend the entrepreneurs’ applications for availing of Govt. incentive and supports to the Commissioner of Industries and Commerce, Guwahati for onward recommendations.

(ii) KHADI AND VILLAGE INDUSTRIES COMMISSION (KVIC)

It is a statutory body created by an Act of Parliament in 1956 and became operative from April 1957 by taking over the work of the erstwhile “All India Khadi and Village Industries Board” set up in 1950. The Commission is engaged in the task of promoting and developing Khadi and Village Industries (KVI) with a view to creating employment avenues in the rural areas thereby strengthening the rural economy of India. It functions under the administrative control of the Ministry of Micro Small and Medium Enterprises, Govt. of India.

KVIC has its central office at Mumbai. It has 36 State and Divisional offices, 6 Zonal offices, 15 Departmental and 23 Non-Departmental Training Centers and a number of accreted Training Centers in addition to 13 Departmental Sales Outlets. The KVIC operates through 33 Boards spread over in different states and union territories of the country, in addition to thousands of institutions and co-operatives including DIC/DICCs.

Objectives: The broad objectives of the KVIC are of three-fold as under:

·         The social objective of providing employment;

·         The economic objective of producing saleable articles, and

·         The wider objective of creating self-reliance amongst the people and building up a strong rural community spirit.

Functions: The crucial functions which the KVIC performs towards attainment of its avowed objectives are as follows:

1.       Works towards planning, promotion, organization and implementation of programmes for the development of Khadi and other village industries in the rural areas of the country in coordination with the other agencies engaged in rural development.

2.       Works towards building up of a reserve of raw materials and implements for supply to producers, creation of common service facilities for processing of raw materials as semi-finished goods and provision of facilities for marketing of KVI products.

3.       Organizes training of artisans engaged in Khadi and Village Industries.

4.       Encourages and promotes research in the production techniques and equipments employed in the KVI sector and provides facilities for study of the problems relating to the same.

5.       It also encourages the use of non-conventional energy, bio-fertilizer and other organic products.

6.       Provides financial assistance to institutions and persons who are engaged in the development and operation of Khadi and Village Industries and guides them through the supply of designs, prototypes and other technical information.

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