Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsINDUSTRIAL SECTOR3 Marks
Question
Explain any three matters/points to prove importance of Small Scale Industries.
✓
Answer
Importance of Small Scale Industries:
$(1)$ Employment Creation:
In India the problem of unemployment is becoming more severe due to rapid growth of population and slow pace of economic progress.
Small Scale Industries can contribute to reduce this problem because these industries involve labour intensive production technique and compare to large scale industries it generate more employment opportunities.
In India these industries have created employment at increasing rate every year.
E.g. Small Scale Industries had created $191.40$ lacs employment in $1994-95$ which has increased to $249.33$ lacs in $2001-02$ and it has increased very fast in the let Century and in $2011-12, 1012.59$ lacs employment was created.
Within $10$ years its employment creation competency was increased by $10$ times.
$(2)$ Output Growth:
Generally large scale industries manufacture machines, while Small Scale Industries produce the items required by people.
Small Scale Industries produce more with less capital investment.
Time of compile cycle of this industry is quite short so they can attain speedy growth rate of small industry is found higher than the growth rate of large scale industries.
E.g., In India $2001-02$ small scale production way of $Rs.2,82,270$ Crore which increased to $Rs.18,34,332$ Crore in $2011-12.$
Means within $10$ years it increased around $7$ times.
As in India due to capital shortage it is necessary to raise economic development rate through Small Scale Industries with less capital investment and more output.
$(3)$ Increase in Production growth:
Factors of localization are not much importance in Small Scale Industries.
Government is interested and keen in the development of this industry as it produces necessary products with less capital investment and can be started within short time.
E.g., In India in $1994-95, 76.60$ lacs small units were in the industry which increased to $105.21$ lacs in $2001-02$ and in $2011-12$ it touched $447.73$ lacs units.
In this decade the number is raised by four times.
This shows that India is emerging as great power in let Century.
The contribution of Small Scale Industries cannot be ignored. Increasing number of units in the industry shows that India is marching towards industrialization.
$(4)$ Exports:
Contribution of small scale industry in the income of India's export cannot be ignored because it is not of sizeable amount.
E.g., In $1994-95$ export income of small scale was $Rs.29,068$ Crore which increased to $Rs.1,17,600$ Crore in $2006-07.$
Increase in export income of small industries is an evidence of demand of its products in the world.
Small scale does not involve foreign exchange in its establishment and its output is used for nation's import and services.
In modern time small units manufacture the products which has demand in Asian countries and it should take opportunity for its development through export.
$(5)$ Labour intensive production technique:
There are two types of production techniques
$(i)$ Capital Intensive Production Technique and
$(ii)$ Labour Intensive Production Technique.
Capital intensive production technique utilizes more capital and less labour.
Its main emphasis on production with the help of capital.
Labour intensive production technique emphasize more on labour and less on capital.
In a nation like India, labour is surplus and capital is in short supply.
Here labour based techniques for production are a blessing in disguise.
Such units are useful in production.
As they are mainly employment oriented so they are blessings to the nation and the people.
$(6)$ Saving of Foreign Exchange:
Small Scale Industries are very much essential for balancing in balance of trade.
This industry earns foreign exchange by increasing export and no foreign exchange is used in their establishment.
Through small scale industry necessary items are produced in the country so the import of these things can reduced.
Thus, exchange is saved. This surplus exchange is used for import of inevitable things and economic progress can be made faster.
$(7)$ Short Period of Time:
Small Scale Industries require short period of time between investment and production.
The time for completion is quite short and problem of shortage of product can be easily solved by producing the product.
It is not difficult to overcome scarcity of goods.
$(8)$ Balanced Regional Development:
Balanced regional development is required to maintain national integrity.
Establishment of large scale industries depend on localized factors.
In Small Scale Industries the localized factors do not play vital role.
They can be started with less capital, in backward areas.
These units help to reduce inequality between development and under developed regions.
$(9)$ De-Centralization:
Large amount of money is required for large scale industry.
So its ownership is limited to the rich people.
Capital and wealth are centralized in the hands of certain rich group.
It increases inequality of income and wealth.
Small Scale Industries are started with less capital.
So many producers are interested in such industry and join to manufacture the product.
As a result, economic power gets decentralized.
Small scale units utilize unused resources such as natural resources, raw material, human wealth $($force$)$ etc. are utilized with their maximum capacity.
It increases employment along with increase in total production 0f the nation.
Benefits of production is distributed equally and inequality will be reduced in real sense and it will bring decentralization in economy.
$(10)$ High rate of Development:
Large scale industries require large amount of money.
Risk factors are many and profitability is quite high.
Large scale industries are more affected by factors of market.
It is difficult to change for them as per market factor.
Development through this industry is not stable so far as economic development is concerned.
Small units are started with less capital but the number of procedures are many.
So total production and income of the nation is short.
As per the factors of the market change is adopted in production and nature of the product.
In short, compare to large scale units small scale units are more stable in development.
So its development is highly needed.
$(11)$ Others:
$(A)$ These industries complement to large industries and they do not have the problem of market.
$(B)$ Such industries are established in rural sector and thereby the problems of cost by urbanization and the problems of transportation can be solved.
$(C)$ It solves the problem of inflation because it is started with less capital and production time is much less so scarcity can be overcome.
$(D)$ As these units decentralized, so the social expense of government is reduced.
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