RBSE Solutions for Class 11 Economics Chapter 18 Industrial Development

Rajasthan Board RBSE Class 11 Economics Chapter 18 Industrial Development

RBSE Class 11 Economics Chapter 18 Text book Questions

RBSE Class 11 Economics Chapter 18 Objective Type Questions

Question 1.
New industrial policy was announced on
(a) 21st July, 1991
(b) 24th July, 1991
(c) 24th July, 1990
(d) 21st July, 1990
Answer:
(b) 24th July, 1991

Question 2.
Which industrial policy is called “India’s Economic Constitution”?
(a) Industrial Policy, 1991
(b) Industrial Policy, 1977
(c) Industrial Policy, 1956
(d) Industrial Policy, 1948
Answer:
(c) Industrial Policy, 1956

Question 3.
At present, obtaining license is mandatory for how many types of industries?
(a) 4
(b) 5
(c) 6
(d) 3
Answer:
(b) 5

Question 4.
“Make in India” campaign was launched by the Prime Minister in
(a) July 2014
(b) October 2014
(c) August 2014
(d) September 2014
Answer:
(d) September 2014

Question 5.
The contribution of small-scale and cottage industries in Gross Domestic Product for 2012-13 was
(a) 37.54 per cent
(b) 37.84 per cent
(c) 36.54 per cent
(d) 36.84 per cent
Answer:
(a) 37.54 per cent

Question 6.
In which Industrial Policy the concept of tiny industries was adopted?
(a) Industrial Policy, 1948
(b) Industrial Policy, 1977
(c) Industrial Policy, 1956
(d) Industrial Policy, 1980
Answer:
(b) Industrial Policy, 1977

Question 7.
Micro, Small and Medium Industries Development Regulation was passed in
(a) 2006
(b) 2007
(c)2008
(d)2005
Answer:
(a) 2006

Question 8.
“MUDRA” plan was launched in
(a) March 2015
(b) April 2015
(c) May 2015
d) June 2015
Answer:
(b) April 2015

RBSE Class 11 Economics Chapter 18 Very Short Answer Type Questions

Question 1.
Into how many categories were industries divided in the first Industrial Policy of Independent India?
Answer:
4.

Question 2.
Mention the main characteristics of Industrial Licensing Policy, 1970.
Answer:
Initiation of reservation for small scale industries.

Question 3.
What is the full form of MSME?
Answer:
Micro, Small and Medium Enterprises.

Question 4.
What is the full form of LPG?
Answer:
Liberalization, Privatization and Globalization.

Question 5.
When was the list of reserved products for small scale industries abolished?
Answer:
In 2015.

Question 6.
What is dumping?
Answer:
It is the export by a country or company of a product at a price that is lower in the foreign importer’s market than the price charged in the exporter’s domestic market.

Question 7.
What does the emblem of “Make in India” campaign depict?
Answer:
Courage, intelligence and power.

Question 8.
What is the full form of MUDRA?
Answer:
Micro Units Development and Refinance Agency.

RBSE Class 11 Economics Chapter 18 Short Answer Type Questions

Question 1.
Mention any four obstacles of industrial development.
Answer:
Four obstacles in industrial development are :

1. Gap between fixed targets and actual achievements.
2. Under-utilization of industrial capacity.
3. Performance of public sector.
4. Industrial sickness.

Question 2.
Write a brief comment on “Make in India” campaign.
Answer:
The Make in India initiative was launched by the Prime Minister on 25 September 2014 as part of a wider set of nation-building initiatives. It is devised to transform India into a global design and manufacturing hub.

Question 3.
What were the reasons of adopting the new Industrial Policy?
Answer:
The reasons of adopting the new Industrial Policy were :

1. The fiscal deficit was continually growing due to increase in non-developmental expenditure and it became 8.4 per cent of Gross Domestic Product in 1990-91.
2. Payment of interest increased to 36.4 per cent of total expenditure in 1990-91.
3. Fiscal deficit was increasing in the Balance of Payment of India.
4. Rate of inflation had become 17 per cent.
5. In 1991, the foreign exchange reserves of India decreased to a quantity that could fund imports just for a fortnight.

Question 4.
Define industrial sickness.
Answer:
“An industrial company which has, at the end of any financial year, accumulated losses equal to, or exceeding, its entire net worth and has also suffered cash losses in such financial year and the financial year immediately preceding such financial year”.

Question 5.
Write any four contributions of small-scale sector in the development of Indian economy.
Answer:
Four contributions of small-scale sector in the development of Indian economy :

1. Share in industrial production
2. Expansion of small scale sector
3. Contribution in employment
4. Efficiency of small scale industries.

Question 6.
Write the names of those industries for which obtaining a license is essential.
Answer:
These industries are :

1. Electronic related to aerospace and Defence.
2. Gunpowder industrial explosives and detonator fuses
3. Hazardous chemicals
4. Tobacco, cigarettes, and other related products
5. Alcoholic beverages.

Question 7.
Write a short note on the Industrial policy of 1956.
Answer:
This policy is also known as the ‘Economic Constitution of India ‘or the ‘Magna Carta’ of industrial policy. This policy divided industries into three categories :

1. Monopolistic sector industries under the government of India were kept under Schedule A in the industrial policy proposal,
2. Industries having the coexistence of public and private sector were kept under schedule B. 12 industries were kept under this which in included fertilizers, chemicals roadways, etc.
3. All the remaining industries were kept under the private sector.

Question 8.
Define small scale and cottage industries.
Answer:
Small scale industries- Small scale, industries, also known as MSMEs, are defined and categorized by Micro, Small and Medium Enterprises. This divides the industries into various types, on the basis of investment in plant & machinery in case of manufacturing industries and on the basis of investment in equipment in case of service sector industries.

Cottage Industry :
A business or manufacturing activity carried on in people’s homes by the family members. Example- weaving clothes etc.

Question 9.
Write the names of industries reserved for public sector.
Answer:
Names of industries reserved for public sector are-

1. Atomic energy
2. Atomic Energy (Production and utilization control)
3. In directive 1995 list, the listed sector of minerals and rail transport, in which, private investment was allowed in 2014.

Question 10.
Why was Indian economy compared to the elephant?
Answer:
The Elephant metaphor is used for India as just like an Elephant, India is mighty and powerful, but does not know it, and just like an Elephant, it is slow to turn around. This economy is developing at a slow pace.

RBSE Class 11 Economics Chapter 18 Long Answer Type Questions

Question 1.
Explain in detail the role of industrial sector in the development of Indian economy.
Answer:
Role of industrial sector in the development of Indian economy is as follows :

• Rapid growth in income :
  With the development of industries, per capita income will also increase. Industrial productivity is greater than agricultural productivity. Industries are mainly the result of human effort. Along with industrialization in the country, the contribution of industries in national income has increased. The share of industrial sector in GDP has increased from 16.6 per cent in 1950-51 to 26.2 per cent in 2013-14.
• Contribution in employment :
  Industrial sector has extended an important contribution in employment. As industries develop, employment opportunities increase. Indian industrial sector is a big employer in the organized sector and employment has increased as a result of establishment of industries.
• Development of infrastructure :
  We inherited a less-developed infrastructure at the time of independence. The government rapidly developed the infrastructure, the benefit of which was received by the industries and they grew. It was necessary to develop the infrastructure rapidly to achieve rapid industrialization.
• Utilization of resources :
  Industries have a greater capacity to utilize resources, as compared to agriculture. Unskilled resources are trained to increase their productivity, and for this purpose, industrial units organize training camps from time to time, so that complete utilization of resources is made.
• Development of agriculture :
  Industrial development bears an effect on agricultural development also. Agricultural implements, agricultural machines, pesticides/insecticides, chemical fertilizers etc. are produced by industries and used in agriculture to increase its production.
• Balanced growth :
  Development has been unbalanced in India. Our development is mainly dependent on agriculture, which is a major drawback. Through development of industries, the dependence on agriculture can be reduced.
• Self sustained growth :
  Rapid industrialization increases the self-reliance of any economy. Industries encourage agriculture, transport, communication etc. The role of industries has been considerable in manufacturing consumer products and transporting them to every part of the country.
• Increase in Nation’s Security :
  It is due to the development of industries that we have been able to produce defence equipment and machinery within the country, which saves us from spending valuable foreign exchange on their import.

Question 2.
Write a detailed note on “Make in India” programme.
Answer:
Prime Minister Mr. Narendra Modi launched the Make in India initiative on September 25, 2014, with the primary goal of making India a global manufacturing hub, by encouraging both multinational as well as domestic companies to manufacture their products within the country. A lion is shown as emblem of this programme which is not only a part of the India’s national emblem ‘ Ashoka Chakra’, but also the emblem of “Make in India” programme that depicts courage, intelligence and power.

Indian economy has been accorded the name ‘elephant’ by international economists and investors, which is very huge, but slow in movement, that indicates the limitless dynamism of the economy. With a view to shatter this view, the lion was adopted as emblem of the programme. Industrialists were of the view that ‘Make in India’ could become the main factor of lending speed to development of the country. If its policies are implemented properly, then 9 crore employment opportunities will be generated in the next 10 years.

Transformational sector could be the sector of registered manufacturing or services. It is as important to enhance the extensive skills of the economy as to improve conditions for increased population. Manufacturing and services sectors are such sectors, which, if focused upon, could bring about revolutionary changes in the economy. The principles of growth indicate that the evaluation of the transformational sector should be done on the basis of the qualities present in them, and not as a traditional manufacturing service. In this way, 5 qualities were identified :

1. High level productivity which could increase income.
2. Rapid growth rate in productivity on both foreign and domestic fronts.
3. Capability to attract resources, which could facilitate extension of benefits of economy.
4. Increasing capacity of non-skill resources present in the country.
5. Integrating skill-deficient resources with resources of the country.

However, these sectors have not been successful in attracting a large number of skilled workers, due to which the benefits of their dynamism have been limited. In other words, dynamic sectors should be skill-rich, in which India does not have any comparative benefit.

Question 3.
State the importance of small scale and cottage industries in Indian economy.
Answer:
Importance of small scale and cottage industries in Indian economy is as follows :

• Share in Industrial Output :
  In 2006-07, the total production value of MSME was 1198,818 crore rupees, and their contribution in GDP was 35.13 per cent. In 2012-13, the total production value of MSME increased to 18,09,976 crore rupees, while their contribution in GDP increased to 37.54 per cent. The contribution of MSME in GDP product is about 173rd even today.
• Expansion of small scale sector :
  The number of MSMEs in 2006-07 was 361.8 lakh, which increased to 467.54 lakh in 2012-13. This number further increased to 488.56 lakh in 2013-14.
• Role in employment :
  In 2006-07, the MSME sector employed 805.23 lakh people, and in 2012-13, the number of people employed in MSME sector increased to 1114.29 lakh.
• Efficiency of small scale industries :
  Experts have different views in this context. Some experts believe that the efficiency of small scale industries is greater than that of large scale industries, while several others think otherwise.
• Decentralization of national income :
  In comparison to large scale industries, their ownership is scattered and extensive. In addition, they are more capable in creating employment than large scale industries. A large number of people have been successful in providing greater contribution in national production.
• Contribution in exports :
  Small scale industries have been expanding rapidly after independence. Their contribution in total exports has been increasing continuously. In 1971 -72, the total export from MSMEs was 155 crore rupees which increased to 6,77,318 crores in 2012-13.
• Regional dispersal of industries :
  Large scale industries are concentrated mainly in Maharashtra, West Bengal, Gujarat and Tamil Nadu, but small scale industries have been established in all regions. Today, Punjab is more prosperous than Maharashtra due to the presence of small scale industries.
• Less industrial disputes :
  Experts are of the opinion that in comparison to large scale industries, less disputes emerge in small scale industries. They have a cordial relationship, thus have lesser disputes, problems like strikes and lockouts are also less in them.
• Utilization of local resources :
  Small scale industries employ local capital and resources, which are not required by large scale industries. Local savings, raw materials and workers have been better used by MSMEs, which enhances their income. In urban areas, artisans, workers, craftsmen etc. are employed in them.
• Conservation of traditional and artistic goods :
  Traditional and artistic goods are provided conservation and protection by small scale and cottage industries, which are a part of our cultural heritage.
• Less dependence on imports :
  MSME sector has less dependence on imports, which enables saving of our foreign exchange reserves. They use local technology and foreign technology is used at the minimum.

Question 4.
Critically discuss the new Industrial Policy.
Answer:
In 1991, the new Industrial Policy was adopted. It improved the structure of Indian industries.
Here are some of its achievements and failures:

Its achievements are :

1. The rate of industrial development increased after adopting this policy. In the decade prior to economic reforms, this was 7.8 per cent in 1980-90, which increased to 13.0 per cent in 1995-96. It remained at 11.5 percent in 2006-2007.
2. The foreign capital investment increased as a result of the new industrial policy. Both, FDI and FII increased.
3. According to UNCTAD investment report of 2010, it was 34.6 billion dollars in 2009.
4. Foreign technology was encouraged by which India became world famous and productivity of industries increased by the import of foreign technology.
5. Foreign Exchange Resieve of India increased. After that, the IMF included India in the category of creditor nations.
6. The industries in the public sector got a competitive atmosphere, which improved their performance and execution.

Failures of New industrial Policy :

1. After the adoption of this policy, unemployment did not decrease substantially. The rate and magnitude of unemployment both are increasing.
2. Many industries became sick or closed down under the new Industrial Policy. They could not arrange sufficient resources to adopt expensive foreign technology.
3. Indian industries could not compete with foreign industries, which posed a threat to their existence and many industries went out of the competition.
4. The dependence of Indian industries on foreign technology increased, which has been termed
   as Economic Colonialism by various experts.
5. Foreign investments could not even touch some sectors.
6. Small scale industries and cottage industries could not compete with foreign industries.

Conclusion :
Thus, we can say that under the new Industrial Policy, many reformative and stabilizing efforts were made. Indian industries were able to exhibit their capabilities in the global market. But, decline of Indian cottage and small scale industries, increased dependence on foreign capital, problem of unemployment etc. emerged as the negative effects of the new Industrial Policy upon the Indian economy.

Question 5.
Clarify the obstructions present in the path of development of small scale and cottage industries.
Answer:
Obstacles present in the path of development of small and cottage industries are :

• Problem of raw material :
  Indian weavers have to struggle more with this problem. On one hand, traders supply them raw materials at higher prices, while on the other hand, they buy the cloth, thread made by them at lower prices. They have to import raw materials from abroad, which causes a decline in our foreign exchange reserves.
• Lack of capital :
  They need long term capital loans to buy machinery and tools, while they also need short term loans to buy raw materials. They have to approach the moneylenders for loans, which they easily get, but they have to pay a high rate of interest.
• Lack of modern technology :
  Small and cottage industries are using old and traditional technology. The quality of products made by them has not improved due to use of obsolete and old machines.
• Problem of marketing and standardization :
  Small and cottage industries have to face too many difficulties in selling their goods. The number of such reserved goods has increased from 77 to 836. The government established National Small Industries Corporation in 1955 to search for market for minor goods.
• Problem of sickness :
  The problem of sickness in small and cottage industries is assuming alarming proportions. According the report of ‘Inter Ministerial Committee for Accelerating Manufacturing in Micro, Small and Medium Enterprise Sector’ published in September, 2013, there were 2,49,903 sick small scale and Tiny units at the end of 2013 in the country, in which 12,300 crore rupees of bank investments were held up. Out of these, 2,32,525 small scale, medium and Tiny units were such, where re-establishing them was difficult.
• Lack of infrastructure :
  It is not possible to speedily transport small scale goods to the markets due to the lack of development of sufficient roads. They have to go through unnecessary documentation and paper work when establishing a new unit.
• Lack of availability of Data :
  Two institutions provide the data related to small scale and tiny industries- Small Industries Development Organization and Central Statistical Organization. Neither of these have the data available regarding small scale industries.
• Delay in Payments :
  A major problem of non-payment of sales amount for goods in time is there. The goods produced by these units are mostly bought by government departments and big units which make delay in payment.
• Other problems :
  The problem of additional managerial and technical skills, incomplete knowledge of market conditions, unorganized and unsystematic format of operation etc.
• Effect of economic reform :
  The economic reform of 1991, had a deleterious effect on India’s small scale and cottage industries. The rapid dispersal of Chinese products in Indian markets has created a crisis for small scale industries. Indian toy and electronics industry is on the verge of closure and their 40 per cent units have even been closed.

RBSE Class 11 Economics Chapter 18 Other Important Questions

RBSE Class 11 Economics Chapter 18 Objective Type Questions

Question 1.
Which is the backbone of Economy?
(a) Agricultural sector
(b) Industrialization
(c) Service sector
(d) None of these
Answer:
(b) Industrialization

Question 2.
The contribution of coal in supply of energy is-
(a) 50%
(b) 52%
(c) 55%
(d) 60%
Answer:
(c) 55%

Question 3.
At present, dumping is being done by which country?
(a) China
(b) India
(c) Pakistan
(d) America
Answer:
(a) China

Question 4.
According to the Industrial Policy of 1948, which sector was not kept under Government control?
(a) Security
(b) Rail transport
(c) Coal
(d) Atomic power
Answer:
(c) Coal

Question 5.
According to Industrial Policy of 1956, how many industries were included in the government sector?
(a) 16
(b) 17
(c) 18
(d) 20
Answer:
(b) 17

RBSE Class 11 Economics Chapter 18 Very Short Answer Type Questions

Question 1.
When was the new industrial policy adopted?
Answer:
In 1991, the new industrial policy was adopted.

Question 2.
What is fiscal deficit?
Answer:
A fiscal deficit occurs when a government’s total expenditure exceeds the revenue that it generates, excluding money from borrowings.

Question 3.
State the names of two international financial institutions.
Answer:
Two international financial institutions are-

1. World Bank.
2. International Monetary Fund.

Question 4.
State two problems of industrial development.
Answer:

1. Under-utilization of industrial capacity.
2. Performance of public sector.

Question 5.
Under the Industrial Policy of 1956, how many industries were kept it Jointly in the private and public sector?
Answer:
12 industries were kept in it which included – chemicals, fertilizers, road transport etc.

Question 6.
The reservation of small scale industries was initiated under which policy?
Answer:
Under Industrial License Policy, 1970.

Question 7.
State the full form of MRTP.
Answer:
Monopolistic and Restrictive Trade Practices.

Question 8.
When was MRTP Act abolished and the Competition Act was formed?
Answer:
In the year 2002.

Question 9.
In which sectors, FDI is restricted at present?
Answer:
In retail business, (apart from monopolistic brand retail business) atomic energy, trade of lottery and gambling.

Question 10.
When was an independent small scale industrial policy announced?
Answer:
On August 6, 1991.

Question 11.
The decentralization of industries was emphasized in which year?
Answer:
In the Industrial Policy Resolution of 1977.

Question 12.
MSME Development Regulation Act was passed in which year?
Answer:
In, 2006.

Question 13.
According to census of India 2011, how much per cent of India’s total population lives in rural areas?
Answer:
68.8%.

Question 14.
Who firstly performed the study related to the efficiency of industries?
Answer:
Dhar and Laidal.

Question 15.
Which major things are exported by MSME?
Answer:
Leather made items, woollen clothes, games and sports items, ready-made clothes, engineering goods, etc.

Question 16.
Which scheme was launched by the government for providing loans to the provide the facility of finance and refinance to the traders of the unorganised sector?
Answer:
MUDRA scheme.

Question 17.
Under the new small scale industrial policy of 1991, the limit for Tiny sector has been raised to what amount?
Answer:
The limit for Tiny sector has been raised from 2 lakh rupees to 5 lakh rupees.

Question 18.
Which scheme was launched for technical enhancement?
Answer:
Credit Linked Capital Subsidy Scheme was launched for technical enhancement.

Question 19.
The idea of fuelling by integrating the MSME Industries is been declared legal under which Act?
Answer:
Under MSME Act, 2006.

Question 20.
Write the full form of WTO.
Answer:
World Trade Organization.

Question 21.
Government to Business portal is established under which scheme?
Answer:
Under E-business project.

Question 22.
What is economic reform? Also state the major reasons of the need of economic reform.
Answer:
Economic reform is the process by which a nation improves the economic, political, and social well-being of its people.
Reasons for the need of the same are :

1. Job creation
2. Industry diversification
3. Business retention and expansion
4. Economic fortification
5. Increased tax revenue
6. Improved quality of life.

Question 23.
What is liberalization? State its measures.
Answer:
Liberalization is a general term for any process whereby a state lifts or reduces restrictions on several private individual activities.
Measures of liberalisation are :

1. Dissolution of licensing and registration.
2. Rebate from the monopolistic law.
3. Freedom of growth and expansion.
4. Increase in investment in small scale industries.
5. Freedom to import capitalist goods.
6. Freedom to import technical know how.
7. Independent fixation of interest rates.

Question 24.
What is privatization? State its measures.
Answer:
Privatization is the purchase of all outstanding shares of a publicly traded company by private investors, or the sale of a state-owned enterprise to private investors.
Its measures are :

1. Contraction of public sector.
2. Disinvestment of enterprises of public sector.
3. Selling of public sector company shares.

Question 25.
What is Globalization? State its measures.
Answer:
The process by which businesses or other organizations of the country develop international influence or start operating on an international scale.
Its measures are :

1. Partial transformation.
2. Deficiency in tariffs.
3. Growth in foreign investment.
4. Long-term trade policy.

Question 27.
In your opinion, should, only those governmental ventures be privatized which are suffering from loss? Why?
Answer:
Those governmental ventures which are suffering from loss should be privatized according to the priority, but, disinvestment of the ventures running in profits is also beneficial, because after disinvestment, enough capital is gained by the institutions and good services are also provided to them.

Question 28.
The cover of losses earned by the public sector should be provided by the government budget. Do you agree? Explain.
Answer:
The cover of losses earned by the public sector should not be provided by the government budget because India is a developing country. It is even difficult to collect the money for the public welfare. Therefore, it won’t be good to spend the government budget on this.

Question 29.
State 5 companies that provide business services in India.
Answer:

1. TCS
2. Reliance Insurance Company
3. Infosys
4. WIPRO
5. Bajaj Allianz.

Question 30.
India has gained from integration of liberalization and world markets. Do you agree?
Answer:
Along with the spread of liberalization in India, service sector has been improvised vividly, but it has posed a negative effect on agriculture and industrial sector. The gap between the poor and the rich has increased. Therefore, it can be said that liberalization is good for a short period, but not for a long period of time.

Question 31.
Can call centre guarantee a static job? What qualities should be there to work in a call centre on a permanent basis?
Answer:
Yes, call centre can guarantee a static job. Following qualities should be there to work in a call centre on permanent basis :

1. Good command on English.
2. Good communication skills.
3. Good listening skills.
4. Good command on internet and computer.
5. Full knowledge of work.
6. The capability of listening to others with patience.

Question 32.
What is the use of industrialization in national security?
Answer:
With the help of industrialization, we can now produce security equipment and various other machinery in our country itself. Now, we don’t have to spend our money on foreign currency. And this has resulted in the growth of our national income.

Question 33.
State the recent 6 schemes initiated by the government for encouraging industrial development?
Answer:
Recent 6 schemes initiated by the government for encouraging industrial development :

1. Ease in doing business.
2. Make In India.
3. E-business scheme.
4. Skill development.
5. Making environment and forest-related approval effective and quick.
6. Reforms in the labour sector.

Question 34.
Explain the objectives of Make In India campaign.
Answer:
The major objective behind this initiative is to focus on job creation and skill enhancement in 25 sectors of the economy. The initiative also aims at maintaining high quality standard and minimizing the impact on the environment. The initiative hopes to attract foreign capital and technological investment in India.

Question 35.
Under the Industrial Policy of 1948, which basic industries were included in the mixed sector?
Answer:
Coal, iron, aircraft manufacturing, telephone and telegraph and mineral oil.

Question 36.
According to the Industrial policy of 1948, which industries were kept in the third category?
Answer:
Eighteen industries were kept in the “Important Industries” third category. Such important industries included heavy chemicals, sugar, cotton textile and woolen industry, cement, paper, salt, machine tools, fertilizer, rubber, air and sea transport, motor, tractor, electricity etc.

Question 37.
What was done under the Industrial Licensing Policy of 1970?
Answer:
The major outcome of the Industrial License Policy of 1970 was that the role of the large business houses was confined to the core under which a policy of reservation for small industries was implemented.

Question 38.
State the characteristics of the Industrial Policy of 1980.
Answer:
Through the industrial Policy of 1980, the government emphasised upon the establishment of industries in rural areas, so that a faster growth of the rural areas could be made possible. The government also decided to raise the efficiency of public sector undertakings to lessen the dissimilarities of the public and private sector.

Question 39.
Which provisions were made under the Industrial Policy of 1991?
Answer:

1. Abolition of Industrial Licensing.
2. De-reservation of industries for public sector.
3. Reduced reservation for public sector.
4. Relaxation in upper limit of foreign investment.
5. Changes in the MRTP Act.
6. The new Industrial Policy of 1991 aims to unshackle India’s industrial economy from the cobwebs of unnecessary bureaucratic control.

Question 40.
When was MRTP act amended and why?
Answer:
MRTP was amended in 1969 and it was abolished and converted into Competition Act in 2002. Now, for the establishment, expansion of industries, and to control their merger and recognition, MRTP act is referred to.

Question 41.
What was the impact of the Industrial Policy of 1991 on foreign exchange reserve?
Answer:
After the implementation of the Industrial Policy in 1991, there was a huge increase in foreign exchange reserves. This resulted in a huge profit for the Indian economy and the foreign exchange reserve increased to such core that IMF included India in the list of creditor nations.

Question 42.
What was the impact of the new Industrial Policy on Indian industries?
Answer:
Many industries became sick or closed down under the new Industrial Policy. They could not arrange sufficient resources to adopt expensive foreign technology. Indian industries could not compete with foreign industries, which posed a threat to their existence and many industries went out of the competition.

Question 43.
Explain the effect of new Industrial Policy on small scale and cottage industries.
Answer:
Small and cottage industries could not compete with foreign companies due to the new Industrial Policy. Therefore, private sectors scale were opened for their reserved items. At present, the reserved items for them has increased to 20, hence many of the small and cottage industries have been shut down.

Question 44.
Under the Industrial Policy of 1977, which industries have kept under ancillary units?
Answer:
Those units were included in small scale industries in which the investment on plant and machinery was less than 10 lakh. The investment for Ancillary industrial units was kept at a maximum upper limit of 15 lakh and the maximum investment limit for Tiny units was 1 lakh.

Question 45.
What is the contribution of MSME in exports?
Answer:
The contribution of MSMEs in total exports has been increasing continuously. In 1971-72, the total exports from MSME were 155 crore rupees which increased to 6,77,318 crores in 2012-13. In the same way, the contribution of MSMEs in exports in 1971-72 was 9.6%, which increased to almost 41.4% in 2012-13.

Question 46.
What is the maximum investment limit for industries under the MSME Development Act?
Answer:
The maximum investment limit for industries is :

Unit	Investment Limit (In Rupees)
	Manufacturing sector	Service sector
Micro	Maximum 25 lakh	Maximum 10 lakh
Small Scale	More than 25 lakh and less than 5 crore	More than 10 lakh and less than 2 crore
Medium Scale	More than 5 crore and less than 10 crores	More than 2 crore and less than 5 crores

RBSE Class 11 Economics Chapter 18 Long Answer Type Questions

Question 1.
Why were economic reforms initiated in India?
Answer:
In the year 1991, India was severely under the burden of foreign loans. The Government didn’t have the capacity to pay off the loans. The foreign exchange reserve kept for import for 15 days was not enough to pay off the loans. The things that were required urgently made the matter worse and thus economic reforms were initiated to overcome these difficulties.

Question 2.
“The public enterprises that are earning profits should be privatized”. Do you agree with this statement? Why?
Answer:
Nowadays, privatization is being seen as a solution towards the problems of public enterprises, as these enterprises, on being transferred from the public to the private hands, will become less politicized, which will help in ceasing the administrative corruption. It will also help in increasing the tax revenues from profits and strengthening the public treasury. The advantages of privatization can be perceived from both micro-economic and macroeconomic impacts that privatization exerts.

Question 3.
Since 1991, what measures have been taken by the Indian government to upheave the country from economic instability?
Answer:
Following measures have been taken by the Indian government to upheave the country from economic instability :

1. Abolition of Industrial Licensing and adopting a competitive policy.
2. Instead of quota for big industrialists, privatization was adopted.
3. Globalization was given importance instead of export and import permit.

Question 4.
Explain the advantages and disadvantages of privatization.
Answer:
Advantages of Privatization :

1. The main argument in favour of privatization is that private companies have a profit incentive to cut costs and be more efficient. If you work for a government-run industry, managers do not usually share any profits. However, a private firm is interested in making profit, and so it is more likely to cut costs and be more efficient.
2. Privatization reduces the government’s political interference. The government sometimes seems incapable of making hard decisions, especially when it impacts its political footing such as layoffs and pay cuts which are bound to attract negative publicity.
3. Industries of the private sector are more profitable in comparison to those of the public sector. Multinational companies are its example.
4. Privatization urges improvements in the company through competition.

Disadvantages of Privatization :

1. As well as the government being motivated by short term pressures, this is something private firms may do as well. To please the shareholders, they may seek to increase short-term profits and avoid investing in long-term projects.
2. Privatization of certain state entities such as water and electricity authorities may just create single monopolies. These may eventually seek to increase prices at the detriment of the consumer with no control upon it.

Question 5.
Define globalization. Also state that what is an external source?
Answer:
Globalization is the trend of increasing interaction between people or companies on a worldwide scale due to advances in transportation and communication technology. Through liberalization and privatization, Government policies designed to open economies domestically and internationally to boost development in poorer countries and raise standards of living for their people are what drive globalization.

External source is known as a very important source of globalization. Under this, business related services are taken on rent, like call center, transcription, for medical allotment, as invigilator of an exam. India is becoming an important structure of external sources. Two reasons for this are :

1. India has hardworking and less expensive labour class.
2. Developing nature of Indian economy.

Question 6.
Industrial development has resulted in the growth of income. Explain.
Answer:
Industrial development results in the growth of income of every individual. Industrial sector earns more in comparison to agriculture sector, the effect of which is enjoyed by all. Industrial development results in growth of income of every individual that further results in the increase in national income. The share of industrial sector in Gross Domestic Product has increased from 16.6 per cent in 1950-51 to 26.2 per cent in 2013-14.

Question 7.
What is the role of industrial development in employment?
Answer:
Industrial sector has an important contribution in employment. As industries develop, employment opportunities are increased. Indian Industrial sector is a big employer in the organized sector and employment has increased as a result of the establishment of industries.

Question 8.
How does industrial development help in the development of basic infrastructure and use of resources?
Answer:
We inherited a less-developed infrastructure at the time of independence. The government rapidly developed the infrastructure, the benefit of which was received by the industries and they grew. It was necessary to develop the infrastructure rapidly to achieve rapid industrialization. Also, unskilled resources are trained to increase their productivity, and for this purpose, industrial units organize training camps from time to time, so that complete utilization of resources is made.

Question 9.
What can be said about industrial morbidity of the sixth five year plan?
Answer:
The document of the sixth five year plan says that; “The structure of industrial development does not depend upon its desired criteria. To protect from the international competition, the expenses on industrial establishment was not focused. The improvement in technicalities and type of products was also not paid proper attention. Therefore, some industries demolished”.

Question 10.
Due to lack of structural format, how is industrial development blocked?
Answer:
Rail transport has not been sufficiently developed, the condition of roads is not good and there is excessive pressure of traffic on them. Interstate expressways and four lane highways, which connect industrial centres, have undergone very less development. Due to insufficient development of structural framework, the concept of industrial development is proving to be baseless.

Question 11.
State the future problems of industrial development.
Answer:
Since 1991, India is under the competition with the international threats. And if the condition remains the same, then, many domestic industries would have to be shut down. The rapid dispersal of Chinese products in Indian markets has created a crisis for small scale industries. Indian toy and electronics industry is on the verge of closure and 40 per cent units out of them have even been closed, which may create a negative impact on these industries in the future.

Question 12.
Explain E-biz scheme in detail.
Answer:
As a part of Government’s initiative to improve the business environment and the ease of doing business in the country, the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, launched the e-Biz portal on 28.01.2013 comprising License and Permits Information Services component. This will allow business users to obtain a customized list of licenses, permits, and regulations that they require or need to comply with across all levels of government. E- Biz will serve as a 24×7 online single-window system for providing efficient and convenient Government to Business (G2B) services to the business community in India .Since, business users will get services from single contact point, it will result in saving of time, effort and cost. The benefits will accrue across all sectors-including manufacturing, information technology, construction services, among others.

Question 13.
What do you understand by skill development scheme?
Answer:
The objective of the Skill Development Scheme is to enable a large number of Indian youth to take up industry-relevant skill training that will help them in securing a better livelihood. Individuals with prior learning experience or skills will also be assessed and certified under Recognition of Prior Learning (RPL). Under this Scheme, training and assessment fees is completely paid by the government. The Special Projects component of PMKVY envisages the creation of a platform that will facilitate training in special areas and/or premises of Government bodies, corporate or industrial bodies, and training in special job roles not defined under the available Qualification Packs. It has been integrated with the 25 sectors of “Make in India”.

Question 14.
What measures have been taken to make the forest and environment effective for clearances industrial development?
Answer:
Environment, coastal regulatory zone (CRZ) and forest related clearances are being made online, and the process for this has been started. The process of decision making by making federalism strong has been decentralized. In order to ensure industrial development, the pre-requisites of acquiring environment related clearance for projects of construction of such industrial sheds have been removed where plants and machinery, educational institutes and hostels exist.

Question 15.
In context to industrial development, how are reforms being made in the labour sector?
Answer:
A labour facilitation portal has been set up, so that online registration of units, submission of self certified simplified single online returns, initiation of transparent labour inspection plan through compromised system in accordance with risk based parameters and uploading of inspection reports within 72 hours is made possible and complaints are redressed in time. The Apprentice Regulation, Act of 1961, has been made more flexible, and in order to make it more attractive for youth and industry, amendments have been made in it and Appreciate Incentive Plan has been started for assistance to MSME in employing apprentices in the manufacturing sector.

Question 16.
How was foreign investment encoveraged by the new Industrial Policy?
Answer:
Industries were categorized on the basis of investment under the new Industrial Policy, and industries which required high investments were listed and 51 per cent foreign investment was permitted without governmental clearance in them. For industries in service sector, the limit for foreign investment was raised from 51 per cent to 74 per cent and later to 100 per cent. In recent time, foreign investment is fully restricted in certain sectors, such as- retail business, atom energy, trade of lottery and gambling.

Question 17.
State four achievements of the new industrial policy.
Answer:
Four achievements of the new industrial policy :

1. The rate of industrial development increased after adopting this policy. In the decade prior to economic reforms, this was 7.8 per cent in 1980-90, which increased to 13.0 per cent in 1995-96. It was 11.5 per cent in 2006-2007.
2. The foreign capital investment increased as a result of the new Industrial Policy. Both, FDI and FII increased. According to UNCTAD investment report of 2010, it was 34.6 billion dollars in 2009.
3. Increase has been recorded in the foreign exchange reserve, due to which IMF has included India in the list of creditor nations.
4. Foreign technology received encouragement, which enables Indian industrialists to establish . their identity in the global market.

Question 18.
State four failures of the new Industrial Policy.
Answer:
Four failures of the new Industrial Policy are :

1. Under this, unemployment did not decrease substantially. The rate and magnitude of unemployment both are increasing.
2. Many industries became sick or closed down under the new Industrial Policy. They could not arrange sufficient resources to adopt expensive foreign technology.
3. Indian industries could not compete with foreign industries, which posed a threat to their existence and many industries went out of the competition.
4. The dependence of Indian industries on foreign technology increased, which has been termed as Economic Colonialism by various experts.

Question 19.
State the contribution of small and cottage industries in industrial production.
Answer:
The contribution of small and cottage industries in industrial production is continuously increasing. About 6000 goods are produced by them, ranging from traditional goods to goods having higher technology and quality.

Year	Total value of Production (in crore Rs)	Contribution to GDP (in per cent)
2006-07	11,98,818	35.13
2011-12	17,88,584	37.97
2012-13	18,09,976	37.54

Source :
government of India, Ministry of MSME, Annual report 2013-14

The total production value of MSMEs was 11,98,818 crore rupees, and their contribution in GDP was 35.13 per cent in 2006-07. In 2012-13, the total production value of MSMEs increased to 18,09,976 crore rupees while their contribution in GDP increased to 37.54 per cent. Even today, the contribution of MSMEs in the GDP is one-third.

Question 20.
State the contribution of small and cottage industries in increasing in employment.
Answer:
The MSMEs employed 805.23 lakh people in 2012-13, while in 2013-14, the number of people employed in MSME sector increased to 1114.29 lakh. The rate of employment in this sector has been higher than the total employment rate.

Year	Employment (in lakh)
2006-07	805.23
2012-13	1061.40
2013-14	1114.29

(Source : Govt, of India, Ministry of MSME, Annual Report 2013-14, Table 2.1, P.15.)

Question 21.
What did Ram Singh K. Ashar study in context to the efficiency of small scale industries?
Answer:
Ram Singh K.Ashar, in his study, proved that on investment of 1 rupee of fixed capital, small scale industries provide employment to maximum workers. Upon investment of one rupee in fixed assets, seven fold production takes place, as compared to large scale sectors and an investment of 1 rupee in small scale industries provides three times more value added price as compared to large scale industries.

Question 22.
Explain the third survey done in the small scale sector.
Answer:
In the third survey done in the small scale sector, it was found that whereas in large scale sector, an investment of 1 lakh rupee creates 0.20 employment, the same investment creates 1.39 employment in the small scale sector. In other words, where, in order to provide employment to one person in large scale sector, 5 lakh rupees have to be invested, at the same time, in the small scale sector, an investment of 5 lakh rupees employs 7 persons. Small scale sector is way ahead of large scale sector in creating employment, while its investment production ratio is lower than large scale industries.

Question 23.
State four problems of small scale and cottage industries.
Answer:
Four problems of small scale and cottage industries are :

• Problem of raw material :
  On one hand, traders supply them raw materials at higher prices, while on the other hand, they buy the cloth, thread made by them at lower prices. They have to import raw materials from abroad, which causes a decline in our foreign exchange reserves.
• Lack of capital :
  They need long term capital loans to buy machinery and tools, while they also need short term loans to buy raw materials. They have to approach the moneylenders for loans, which they easily get but they have to pay a high interest rate on them.
• Lack of modern technology :
  Small and cottage industries are using old and traditional technology. The quality of products made by them has not improved due to use of obsolete and old machines.
• Problem of marketing and standardization :
  Small and cottage industries have to face too many difficulties in selling their goods. The number of such reserved goods has been increased from 77 to 836. The government established National Small Industries Corporation in 1955 to search for market for minor goods.

Question 24.
State four provisions of the new Industrial Policy, 1991.
Answer:
Four provisions of new Industrial Policy, 1991 are :

1. The limit for Tiny sector has been raised from 2 lakh rupees to 5 lakh rupees and apart from this, local restrictions have been removed from these industries.
2. According to the new policy, other industrial units have also been allowed to invest up to 24 per cent of equity in small scale units.
3. A package was announced for tiny units, in which an assurance of providing continued assistance was given to them, whereas small scale units are to be given assistance on a priority basis.
4. Under this policy, emphasis has been laid upon ‘availability of credit’ in place of ‘cheap credit’.

Question 25.
State four steps taken for the development of small scale Industries.
Answer:
Four steps taken for the development of small scale industries are :

1. The limit for investment in small scale industries was increased to 1 crore rupees from 5 crore rupees in 2006.
2. Credit Linked Capital Subsidy Scheme was launched for technology enhancement.
3. The exemption limit in production tax for small scale sector was raised from 3 crore rupees to 4 crore rupees.
4. Credit Guarantee Fund was started for the small scale sector.

Question 26.
What was the effect of economic reforms on small and cottage industries?
Answer:
The economic reform of 1991 had a deleterious effect on India’s small scale and cottage industries. The rapid dispersal of Chinese products in Indian markets has created a crisis for small scale industries. Indian toy and electronics industry is on the verge of closure and their 40 per cent units have even been closed down. China is selling its products in Indian markets at less than their production cost (dumping) which has put the entire MSME sector under threat. The MUDRA plan has been started by the government to provide the facilities of finance and refinance to small businessmen in the unorganized sector.

Question 27.
What is said about Limited Partnership in small and cottage industries in the new Industrial Policy?
Answer:
A new legal arrangement for business organizations was made under the new industrial policy, which was called Limited partnership. Under this arrangement, the responsibility of at least one partner was kept unlimited, while the responsibilities of other partners were kept limited.

Question 28.
What four characteristics were identified under the “Make In India” programme?
Answer:
Following four characteristics were identified under the “Make In India” programme :

1. High level productivity which could increase income.
2. Rapid growth rate in productivity on both external and domestic front.
3. Capability to attract resources, which could facilitate extension of benefit of the economy.
4. Increasing capacity of non- skill resources present in the country.
5. Adjustment of skill-deficient resources along with other resources of the country.

Question 29.
In order to make “Make In India” successful, what means have been provided according to the Economic Survey?
Answer:
In order to make “Make In India” successful, measures which have been initiated are given below as arranged in descending order on the basis of effect and in ascending order of dispute, and could be divided into 3 categories on these bases :

i. In order to increase private investment in Indian domestic and foreign sectors, the following steps have to be taken:

1. Simplifying rules.
2. Reducing quantity and rate of taxes.
3. Preparing infrastructure.
4. Reforming labour laws.

ii. These mediums are also called ‘Industrial Policy’. Under these, the following attempts have been made to increase production :

1. Reducing capital costs.
2. Increasing subsidies and availability.
3. Establishing Special Economic Zones in all manufacturing activities.

iii. The last category of mediums have generally been termed “protective”.

1. Providing export related benefits to domestic producers.
2. Protecting domestic products from foreign competition through increase in customs duty.
3. Compelling foreign companies to supply local products.

RBSE Class 11 Economics Chapter 18 Long Answer Type Questions

Question 1.
What do you understand by evaluation of LPG policies? Also explain its positive and negative impacts.
Answer:
Evaluation of LPG policies means the evaluation of new industrial policy and the economic improvement of 1991.

• Increase in GDP growth rate :
  India’s GDP growth rate is increased. During 1990-91, India’s GDP growth rate was only 1.1%, but after the 1991 reforms due to the LPG policy, India’s GDP growth rate has increased year on year, and in 2015, it was recorded at 7.26%, and in 2015-16, it was estimated to be 7.5% by the IMF. Due of the abolition of Industrial licensing, privatization, advanced foreign technology and reduction of taxes, India’s GDP has increased after 1991 reforms.
• India is now recognised as an emerging power :
  India has already marked its presence as one of the fastest growing economies of the world. It is ranked among the top 3 attractive destinations for inbound investments. Since 1991, the regulatory environment in terms of foreign investment has been consistently eased to make it investor-friendly. India has also firmly established itself as a lucrative foreign investment destination.
• Increase in Per Capita Income :
  In 1991, India’s per capita Income was Rs. 11235, but in 2014-15, per capita income has reached to Rs. 85533. Per capita income has increased due to increase in employment and due to new economic policy of globalization and privatization, many job opportunities have been created so, people’s income has also increased.
• Unemployment rate has reduced :
  In 1991, unemployment rate was 4.3%, but after India adopted the new LPG policy, more employment has been generated. Because of globalization, many new foreign companies came in India, and due to liberalization, many new entrepreneurs have started new companies because of abolition of industrial licensing/Permit Raj, so, employment is generated, and due to which India’s unemployment rate has reduced.
• Privatization has resulted into the reduction of the government’s financial and administrative burden.
• Foreign capital investment has increased as a result of the new industrial policy. Both, FDI and FII have increased.
• Check on Inflation- after being impacted by the policies, inflation has gradually reduced. Till 2007-08, it was 4.5% which is not much issue of concern.
• Foreign technology has received encouragement, which has enable Indian industrialists to establish their identity in the global market.

Negative impacts are :

i. Low Growth of Agriculture Sector :
Agriculture has been and still remains the backbone of the Indian economy. It plays a vital role not only in providing food and nutrition to the people, but also in the supply of raw material to industries and items of exports. In 1991, agriculture provided employment to 72 per cent of the population and contributed 29.02 per cent to the Gross Domestic Product. However, in 2014, the share of agriculture in the GDP went down drastically to 17.9 per cent. This has resulted in lowering the per capita income of the farmers and increasing rural indebtedness.

ii. Threat from foreign competition :
Due to opening up of the Indian economy to foreign competition through liberalization and FDI policy, more MNCs have been attracted towards India after 1991 reforms and they are competing with local businesses and companies. Since, these MNCs have massive financial capacity and advanced foreign technology, so, they have extremely greater production capacity and huge money for promotion and other research activities, and therefore they are easily defeating our Indian domestic companies.

iii. Adverse impact on Environment :
Globalization has also contributed to the destruction of the environment through pollution and clearing of vegetation cover. With the construction of companies, the emissions from manufacturing plants are causing environmental pollution which further affects the health of people.

iv. Increase in income disparity :
Globalization leads to widening income gaps within the country. Globalization benefits only to those who have the skills and the technology in the country. The higher growth rate achieved by an economy can be at the expense of declining incomes of people who may be rendered redundant. Globalization has widened the gap between the rich and the poor, and has increased inequalities among people.

Question 2.
What do you understand by liberalization? Under this, what measures have been taken to develop the Indian economy?
Answer:
Liberalization is a general term for any process whereby a state lifts or reduces restrictions on some private individual activities. Liberalization occurs when something which used to be banned is no longer banned, or when government regulations are relaxed. Following measures have been taken to develop the Indian economy :

• Regulation of agriculture field :
  Instead of quota for big industrialists, privatization was adopted.
• Abolition of Licensing :
  Before the advent of the new Industrial Policy, the Indian industries were operating under strict licensing system. Now, most industries have been freed from licensing and other restrictions.
• Less dependence on imports :
  MSME sector has less dependence on imports, which enables saving of our valuable foreign exchange reserves. They use local technology and foreign technology is used at the minimum.
• Freedom to Import of Technology :
  The use of latest technology has been given priority in the new Industrial Policy. Therefore, foreign technological collaboration has been allowed.
• Free Entry of Foreign Investment :
  Many steps have been taken to attract foreign investment. Some of these are as follows:
  1. In 1991,51 % foreign investment in 34 high priority industries was allowed without seeking government permission.
  2. Non-Resident Indians (NRIs) were allowed to invest 100% in export houses, hospitals, hotels, etc.
  3. Foreign Investment Promotion Board (FIPB) was established with a view to speedily clear foreign investment proposals.
  4. Restrictions which were previously imposed to regulate dividend repatriation by the foreign investors have been removed. They can now carry dividends to their native countries.

Question 3.
State the effect of new economic reforms on the Indian economy.
Answer:
The effect of new economic reforms on Indian economy has been illustrated through the following points-

• Growth in Employment :
  There is growth in gross domestic product, but still, employment has not increased in the way it should have been, which is a sign of failure of these reforms.
• Growth in agriculture :
  Less development has been visualized in Indian agriculture, which is a sign of failure of these reforms.
• Growth in Industrialism :
  The development of industries have been obstructed due to the increase in imports. Today, even the industrial sector is not getting sufficient profits.
• Disinvestment :
  The government is making disinvestment in public enterprises to compensate for the budget deficit, and the public is not gaining anything through this. Only big industrialists are gaining through disinvestment.
• Improvement in treasury policies :
  Whatever improvement has been made in treasury policies, the Government has not been able to gain anything from it. Like, rate of taxes has been reduced to increase revenues, it couldn’t match the expectations.
• Growth in Gross Domestic Product :
  The economic reforms have shown good impact on gross domestic product. The rate of GDP that was 5.6% in 1980-81, has increased to 6.4% in 1992-2001. Due to this, the target of GDP in the tenth five year plan was put at 8%.
• Improvement in service sector :
  India has developed a lot in the service sector. India is now identified as the center of service providers in the world.

Question 4.
Explain New Small Enterprise Policy, 1991 for small scale industries.
Answer:
A New Small Enterprise Policy, 1991 for small, medium and large scale industries was initiated. Following provisions were made under this :

1. The limit for tiny sector has been raised from 2 lakh rupees to 5 lakh rupees. Earlier, these units could only be established in places having a population of less than 50,000. According to the new policy, the commercial activities related to service sector were also included in these industries.
2. A package was announced for tiny units, in which assurance of providing continued assistance was given to them, whereas small scale units were to be given assistance on priority basis.
3. According to the new policy, other industrial units were also allowed to invest up to 24 per cent of equity in small scale units. This permitted both the industrial extremities to come closer to each other and also the large scale industrial units will assist them in their development and existence.
4. A new legal arrangement for business organizations was made under the new policy, which was called Limited partnership. Under this arrangement, the responsibility of at least one partner was kept unlimited, while the responsibilities of other partners were kept limited.
5. ‘Sufficiency of credit’ was emphasized in the new policy instead of‘cheap credit’.
6. It was arranged to give priority to small scale sector in government purchase.
7. To identify new markets for small scale and tiny sectors, cooperative institutions, public institutions and commercial organisations were formed.
8. Great emphasis was laid upon establishing small scale and tiny industrial units in rural and backward areas.

Question 5.
Comment on MUDRA Scheme.
Answer:
It is a scheme launched by the Hon’ble Prime Minister on April 8,2015 for providing loans upto 10 lakh to the non-corporate, non-farm small/micro enterprises. These loans are classified as MUDRA loans under PMMY. These loans are given by Commercial Banks, RRBs, small financial banks, Cooperative Banks, MFIs and NBFCs. The borrower can approach any of the lending institutions mentioned above or can apply online through this portal.

For the unorganised sector, before the establishment of MUDRA Bank, NABARD, established in 1982, and SIDBI, established in 1990, used to play an important role. NABARD has proved to be unable to undertake unique activities and SIDBI has also not been able to do something concrete for micro enterpreneurs. For this reason, MUDRA Bank was established.

The interventions have been named ‘ Shishu’, ‘Kishor ’ and ‘Tarun’ to signify the stage of growth and funding needs of the beneficiary micro units, entrepreneurs and also provide a reference point for the next phase of graduation / growth to look forward to :

1. Shishu : covering loans up to 50,000/-
2. Kishor : covering loans above 50,000/- and up to 5 lakh
3. Tarun : covering loans above 5 lakh and up to 10 lakh

About 5.77 crore (57.6 million) small businesses have been identified as target clients using the NSSO surey of 2013. Only 4% of these businesses get finance from regular banks. The banks will also ensure that their clients do not fall into indebtedness and will lend responsibly.

RBSE Solutions for Class 11 Economics