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1. A business man is hiring child labor to manufacture carpet to make the produce cost
effective. Do you think it is an appropriate business practice to earn profit? Give reasons.
Answer: The issue of child labor in Indias hand-made carpet sector has received extensive
attention since the early 1990s. This is in large part due to the fact that India is the largest
exporter of hand-made carpets in the world. It is completely unethical and illegal on the part of
business man to hire child labor in order to make the produce cost effective. It is unethical
because this practice deprives children of their childhood. Child Labor is a hazard to a childs
mental, physical, social, educational, emotional and spiritual development
All of these children are poor; low-caste or dalit peasants who are either paid a pittance for
their efforts, or are exploited through outright bonded and forced labor. Children are especially
prized for carpet weaving, as their nimble fingers and good eyesight are perfectly suited for the
intricate motions required to weave carpets that may be 30 to 40 square feet in size, one
thread at a time.
The International Labor Organization estimates that 215 million children between the ages of 5
and 17 currently work under conditions that are considered illegal, hazardous, or extremely
exploitative. Underage children work at all sorts of jobs around the world, usually because they
and their families are extremely poor.

Hiring child labor for cost effective production is not an appropriate practice for business. India
has various acts against child labor out which some important laws which can be applicable in
this case are described as following:

The Factories Act of 1948: according to this act, the children below of age 14 are
prohibited for employment in the factory. It also has placed the rules on whom, when
and how long can pre adults aged 15-18 years be employed in any factory.

The Child Labor Act of 1956: It prohibits employment of children below the age of 14
years in hazardous occupations identified in a list by the law.

The Juvenile Justice of Children Act of 2000: This law made it a crime, punishable with a
prison term, for anyone to procure or employ a child in any hazardous employment or in
bondage.

Education Act of 2009: It mandates free and compulsory education to all children aged 6
to 14 years. It also mandates that 25% of seats in every private school must be allocated
for children from disadvantaged groups and physically challenged children.

According to list released by the Indian government, Carpet industry is considered as a

hazardous industry. Therefore, legally a person employing a child in a carpet industry just to
gain profit is absolutely not an appropriate business practice, neither ethically nor legally.

2. What is the procedure for registration of small scale industry? Discuss the importance of
small scale industry in India?
Answer 2: The registration certificate so issued by the concerned authority is seen as a proof of
the unit being a small scale unit. It enables the unit to get several concessions like:

Income tax exemption and Sales tax exemption as per the State Government policy.
Incentives and concessions in power tariff, etc.
Price and purchase preference for goods produced.
Availability of raw material depending on existing policy

Types of registrations
There are two types of registrations of small scale industries.
Provisional registration: A provisional registration is granted for the proposed enterprise. It is
termed provisional because the enterprise is yet to come into existence. Provisional registration
is not compulsory for getting a permanent registration. But, a provisional certificate enables the
unit to apply to the various departments and agencies for assistance in setting up of the
enterprise.
Permanent registration: Once the unit has commenced commercial production, it is granted
permanent registration. It is a life time registration given after physical inspection of the
enterprise and scrutiny of certain documents.
Procedure of registration for small scale industries
The State Directorate or Commissioner of Industries or District Industries Centres (DICs) is the
concerned authorities for registration of small scale units. This registration is based on location
specific and product specific.
A registration procedure is same for all states. However, there are may be some modifications
done by individuals states.

Documents required for provisional registration

1. Form Part I to be filled in by the applicant in detail which include, name of Proprietor,
Name of Firm, Location of Firm, Communication Address, Main Item to be
Manufactured/, Total Investment, Total Value of Plant and Machinery to be installed
etc.
2. Self Attested PAN Card copy of the Proprietor/ Partners/ Directors
3. Self Attested Address Proof of the Proprietor/ Partners/ Directors
4. PAN Card Copy of the Partnership Firm/ Company
5. Partnership Deed/ MOA-AOA of the Company
6. Proof of Land
Documents required for permanent registration
1. Form Part II to be filled in by the applicant in detail
2. Clearance from the municipal corporation
3. Copy of partnership deed/Memorandum of articles of association in case of a private
limited company
4. State pollution control board clearance
5. Ownership/tenancy rights of the premises where unit is located
6. Sale bill of product manufactured
7. Sanction from the electricity board
8. Sale bill of each end product
9. Purchase bill of each raw material, machinery installed
10. An affidavit giving status of the unit, machinery installed, power requirement.
Importance of small scale industries in India
Small scale industries are one of the most important segments of Indian economy growth. SSI
(small scale industry) contributes about 7% to the Indian GDP and providing employment to
over 28 million people.
Small Scale Industries help the economy in promoting balanced development of industries
across all the regions of the economy. Small Scale Industries are adept in distributing national
income in more efficient and equitable manner among the various participants in the process of
good production than their medium or larger counterparts. Small Scale Industries enjoy a lot of
help and encouragement from the government through protecting these industries from the
direct competition of the large scale ones, provision of subsidies in the form of capital, lenient
tax structure for this industry.

SSI Sector in India creates largest employment opportunities for the Indian populace, next only
to Agriculture. It has been estimated that 100,000 rupees of investment in fixed assets in the
small-scale sector generates employment for four persons.

3. Define marketing plan? What is the difference between entrepreneurship and

intrapreneurship?
Answer: Market means anybody of persons who are in intimate business relations and carry on
extensive transactions in any commodity. Marketing is economic process by means of which
goods and services are exchanged and their values determined in terms of money prices. It is
that phase of business activities through which human wants are satisfied by the exchange of
goods and services. Marketing is a skill of selecting and fulfilling consumer desires in such a way
that a dose of money put in brings back maximum return.
Marketing plan: marketing plan is detailed strategy of how to do successful marketing of a
product or products and earn projected amount of return from the effort. A complete
marketing plan will consider such important elements as distribution costs, production costs,
advertising expenses and any expense related to identifying and marketing the products to the
consumers in the targeted markets.

INTRAPRENEUR: intrapreneurs are employees who work within a business in an

entrepreneurial capacity, creating innovative new products and processes for the organization.
An Intrapreneur is the person who focuses on innovation and creativity and who transforms a
dream or an idea into a profitable venture, by operating within the organizational
environment. Thus, Intrapreneurs are inside entrepreneurs who follow their founders
example.
Characteristics of Intrapreneur:

They work to minimize risk in order to realize their goals

Entrepreneurs are driven by a need to realize their vision, not a desire for wealth
They can imagine what business and organizational realities will follow from the way
customers respond to their innovations; they can find their way from the idea to
actualization.
They have vision and the courage
They bridge the gap between inventors and managers; they take new ideas and turn
them into profitable realities

ENTREPRENEUR: An entrepreneur is someone who, through his or her skills and passion,
creates a business and is willing to take full accountability for its success or failure.
Entrepreneurs have many of the same character traits as leaders. Entrepreneurs are often
contrasted with managers and administrators who are said to be more methodical and less
prone to risk-taking.
Investors are often not entrepreneurs. Investors may not possess the vision to create things or
lead teams. Commission only sales people are not entrepreneurs.
Difference between entrepreneurship and intrapreneurship
INTRAPRENEURSHIP: Intrapreneurship is the practice of entrepreneurial skills and approaches
by or within a company or at home. Employees, perhaps in a special project within a larger firm
are supposed to behave as entrepreneurs, even though they have the resources and
capabilities of the larger firm to draw upon. Capturing a little of the dynamic nature of
entrepreneurial management(trying things until successful, learning from failures, attempting
to conserve resources, etc.) is claimed to be quite valuable in otherwise static organizations.
ENTREPRENEURSHIP: Entrepreneurship is the practice of starting new organizations or
revitalizing mature organizations, particularly new businesses generally in response to
identified opportunities. Entrepreneurship is often a difficult undertaking, as a vast majority of
new businesses fail. Entrepreneurial activities are substantially different depending on the type
of organization that is being started. Entrepreneurship ranges in scale from solo projects (even
involving the entrepreneur only part-time) to major undertakings creating many job
opportunities.

4. Define the term entrepreneur. Exemplify the meaning and concept of entrepreneur?
Answer: Entrepreneur: The term entrepreneur has been defined as one who detects and
evaluates a new situation in his environment and directs the making of such adjustments in the
economic system as he/she deems necessary. An entrepreneur is ordinarily called a
businessman. He is a person who combines capital and labour for the purpose of production.
He organizes and manages a business unit assuming the risk for profit. He is the artist of the
business world. She/he is a person responsible for setting up a business or an enterprise.
Entrepreneur in English is a term applied to a person who is willing to launch a new venture or
enterprise and accept full responsibility for the outcome.
Entrepreneur is responsible for the operation of a business including:-

Choice of the product

Decision
Market
Mobilization of resources
Prices
Employment of labor
Extending or reducing the scope of his business

Some more characteristics / quality of an entrepreneur:1. Hard Work: Entrepreneurs who successfully build new enterprises possess an intense level
of strong determination and willingness to work hard. They possess a capacity to work for
long hours and in spurts of several days with less than normal amount of sleep.
2. Self Confidence: Entrepreneurs must have confidence and belief in them to achieve their
desired objectives. They strongly believe that they can beat anyone in the field.

3. Initiative: An entrepreneur must have initiative seeking personal responsibility for actions
and use the available resources for optimization of objectives. They take full credit for the
success and assume full responsibility for the failure of the enterprise.
4. Optimistic: Entrepreneurs do not believe that the success or failure of a new business
venture depends mostly upon luck or fate or external uncontrollable factors. They are
highly optimistic about the success of the enterprises. They use positive knowledge to
support their thinking. They always look at the brighter side of the situation.

5. Communication Ability: An entrepreneur must be good with the art of communication. It is

that skill through which both the sender and receiver understand each other and are being
understood. Entrepreneurs are required in many situations to influence customers,
employees, suppliers, creditors, and government and make them think in his way and act
accordingly. An entrepreneur who can effectively communicate and convince the above
people will be more likely to succeed than the entrepreneur who does not.

6. Moderate Risk-Taker: An entrepreneur must be a moderate risk taker and learn from
failures. The successful entrepreneurs are neither high risk takers, nor gamblers. They work

in between the two extremes. They take moderate challenging risk to attain moderate
returns which are influenced within their abilities and decisions.
7. Motivation: An entrepreneur should have a strong motivation towards the achievement of
a task and must be able to get things done by others. He should be a person who likes
working with people and has skills in dealing with them.

8. Mental Ability: Mental ability refers to the inner strength of an entrepreneur which helps
him to reach his goal. It is that ability which helps him to quickly respond to difficult
situation. It consists of intelligence and creative thinking of an entrepreneur.
9. Independence: Successful entrepreneurs do not like to be guided by others. They prefer to
work in an environment free from interference. They like to be independent in the matters
of decision making of their own business.
10. Leadership: An entrepreneur must have an ability to lead so that he can induce the people
to work with confidence and zeal. It is an aid to authority and helps in better utilization of
manpower.

11. Good Human Relations Ability: An entrepreneur who maintains good human relations is
much more likely to succeed in his business than the individual who does not practice such
relations
The concept of the entrepreneur is to make a person to establish his own unit/industry for the
benefit of his own and to give jobs to various persons employed in industry. The term
entrepreneur itself indicates that the person can start his business by spending his own money
along with the Monday from the contribution from various sources. The person whosoever
starts business is known as an entrepreneur. The person who wants to establish industry for the
manufacture of any product by investing any amount by his own source or by collecting finance
from financial corporations or by any other means is called as an entrepreneur.
5. Suppose you want to open a factory producing ready-made garments. Which form of
business would you recommend? Give reasons in support of your answers.
Answer: The distribution channels can be classified into two main types, namely wholesale
business and retail business. If I wanted to open a factory producing ready-made garments, I
would recommend opening a retail business. To understand the reason behind my decision, let

us briefly understand the types of businesses: Wholesaler may be defined as the middlemen
who operate between the producers (from whom they purchase goods) and the retailers (to
whom
they
sell
goods).
Wholesaler refers to any individual or business firm selling goods in relatively large quantities to
buyers (retailers) other than the ultimate consumers. Thus the manufacturers who sell their
products directly to retailers may also be regarded as wholesalers. The specialized knowledge
and skill of wholesalers increases the efficiency of the distribution network. The wholesalers
provide important services and solve the problems of both the manufacturers and the retailers.

Retailing refers to all the transactions which involve sale of goods or services to the ultimate
consumers. A retailer is a middleman who procures goods from the wholesalers and sells it to
the final consumers. They form a vital link in the channel of distribution of products, neither
because without him, neither the products would sell to distant places nor would it be possible
for consumers to buy goods of their choice in shops located nearby. They have a much stronger
personal relationship with the consumers and deal directly with the people of varied tastes and
temperaments. They form the last link in the chain of distribution and give the final selling price
to the product. The retailers provide important services and solve the problems of the
manufacturers and wholesalers on one hand and the consumers on the other hand.

Therefore, if Ill be starting a factory to produce ready-made garments, Ill have to build up my
network to expand by business. Therefore, initially Ill be recommending a retail outlet of the
garments that would be manufactured in my factory.

6. What are the barriers affecting women entrepreneurs and discuss the ways to overcome
them?
Answer: Women entrepreneurs face a series of problems right from the beginning till the
enterprise functions. Being a woman itself poses various problems to a woman entrepreneur,
the problems of Indian women pertain to her responsibility towards family, society and lion
work. The tradition, customs, socio cultural values, ethics, motherhood subordinates to ling
husband and men, physically weak, hard work areas, feeling of insecurity, cannot be tough etc
are some peculiar problems that the Indian women are coming across while they jump into
entrepreneurship. Women in rural areas have to suffer still further. They face tough resistance
from men. They are considered as helpers. The attitude of society towards her and constraints
in which she has to live and work are not very conducive.

The problems and constraints experienced by women entrepreneurs have resulted in restricting
the expansion of women entrepreneurship. The major barriers encountered by women
entrepreneurs are as follows:
1. Lack of confidence: Woman generally lack confidence in their own capabilities. Having
accepted a subordinate status for long. Even at home, members of their family dont
appear to have total confidence in their abilities and on their decision making. Society in
general also lacks confidence in womens strength, traits and competence. This is quite
apparent in the familys reluctance to finance womens venture, bankers are reluctant
to take risks on projects set up by women, and individuals are unwilling to stand
guarantee for loans to a woman.
2. Problems of finance and working capital: Another problem faced by women
entrepreneurs is lack of access to funds because they do not possess any tangible
security and credit in the market Since women do not enjoy right over property of any
form, they have limited access over external sources of funds. Even the members of her
family have little confidence in the capability or the women to run a business.
Women entrepreneurs face serious problem in obtaining working capital for financing
day to day operations of the enterprises, including purchase of raw materials, meeting
pay rolls. The chronic shortage of working capital leaves women entrepreneurs
extremely vulnerable to competition and other emergencies. The complex and
complicated procedure of bank loans, the delay in obtaining the loans and running
about involved, deter many women from establishing enterprises.
3. Social barriers: A woman has to perform her family duties irrespective of her career as
a working woman or an entrepreneur. In our society more importance is given to
educating the male child as compared to the female child. This results in lack of
schooling and vocational training of women. Their lack of attaining technical skills and
thereby lack of awareness or opportunities available. This adds to the constraints in
establishing enterprises by women. Even the male labor force is generally seen as not
preferring to work under a lady boss. Women entrepreneurs are not taken seriously
enough by the labor force. All this hinders women entrepreneurship.
4. Tough competition: Usually women entrepreneurs employ low technology in the
process of production. In a market where the competition is too high, they have to fight
hard to survive in the market against the organized sector and their male counterpart
who have vast experience and capacity to adopt advanced technology in managing
enterprises

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5. Production Problems: Production in a manufacturing enterprise involves coordination

of a number of activities. While some of these activities are in the control of the
entrepreneur, there are others over which she has little control. Improper coordination
and delay in execution of any activity cause production problems in industry. The
inability of women entrepreneurs to keep pace with the latest advances in technology
and lack or technical know-how results in high cost of technology acquisition and
machinery utilization.

6. Inefficient Marketing Arrangements : Heavy competition in the market, and their lack
of mobility makes (he women entrepreneurs dependent on middlemen. For marketing
their products, women entrepreneurs are at the mercy of middleman who pockets a
major chunk of profit. Further, women entrepreneurs also find it difficult to capture the
market and make their products popular. They lack information on the changing market.
In addition, women entrepreneurs, face difficulty in collection of payments.
7. Lack of entrepreneurial aptitude: Lack of entrepreneurial aptitude is a matter of
concern for women entrepreneurs. They have no entrepreneurial bent of mind. Even
after attending various training programs on entrepreneur ship women entrepreneurs
fail to tide over the risks and troubles that may come up in an organizational working.
How to overcome above problems?

To overcome the resistance from husband and members or the family at the time of
setting up of their venture, prospective women entrepreneurs are advised to maintain
their cool and persistently convince them, without confronting them, regarding the
benefits of setting up of an enterprise. The woman requires having a strong will power
under the circumstances. The inflow of money will eventually solve this problem.

Shouldering the dual responsibilities of an entrepreneur and a homemaker can be

effectively undertaken by a women entrepreneur through better time management.
The members of the family can also be involved in the business, which will help in
sharing the burden of entrepreneurial work. Moreover, the women entrepreneur must
try to make her husband and children self-sufficient at home. With tact and diplomacy,
she should solicit cooperation in running the enterprise from the family.

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A woman can set up a home-based business. By operating her business from home,
women can better coordinate her household and business responsibilities.

A woman can start her business when her children are grown up enough to take care of
their own small needs; This gives the women enough time enough to manage her
enterprise.

Women must acquire education and go through confidence-building training to get rid
of the traditional feeling that they are inferior to men and are dependent on men.

For marketing her products. a women entrepreneur must establish her credibility in
terms of quality and competitiveness of product or service. She should acquire relevant
techniques and skills to win customer's loyalty. Ecommerce businesses will also help
greatly in this regard for publicity and advertisement, the women entrepreneur can
work on alternatives like cable TV. Pamphlets, leaflets, slide in cinema halls, banners at
strategic locations, and so on.

Workshop and seminars should be organized frequently for the officials of financial and
support agencies and for women entrepreneurs to make their relations more cordial.

Procedures for financial assistance by banks and government organizations must be

simplified. Women inspectors. if available, should be asked to inspect women
enterprises.

It has been observed that there is a tendency to project a higher value or sales,
production, and profits in project reports to impress the bankers. Such a project profile
is not appropriate from a financial management point of view. So, women
entrepreneurs need to undertake training in various aspects of financial management to
understand its finer implications.

Banks and financial institutions must maintain a minimum target of loan to be disbursed
to women entrepreneurs. Collateral security should be dispensed with in the case or
women entrepreneurs because many women hardly have any property or other assets
in their name to keep as guarantee. Margin money for projects to be undertaken by
women entrepreneurs should not exceed 10%t. Subsidies should also be given to
women entrepreneurs at the initial stage itself.

Women entrepreneurs should acquire relevant training in technology and in details or

their plant and machinery. they should be knowledgeable about the functioning or
machines and processes. They should be more assertive with their employees. They

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should employ more women workers in their enterprises. They must undergo training in
management skills to handle human resources as well as training in effective
communication skills and practices and the legal aspects of running a business.
In the present scenario due to modernization urbanization, globalization and development of
education, with increasing awareness, women are now seeking gainful employment in several
fields. Women are entering into entrepreneurship even in the face of socio-cultural, economic,
technical, financial, and managerial difficulties. Women entrepreneurship movement can gain
momentum by providing encouragement, appropriate awareness, and training environment.
And support. This would definitely enhance socio-economic status, a pre-requisite for women's
empowerment.

7. What is business plan? List out various steps involved in preparing a business plan?
What is the role of Capital market in Indias growth?
Answer: Planning is the first and the most crucial step for starting a business. A carefully
charted and meticulously designed business plan can convert a simple idea/ innovation into a
successful business venture
A business plan is the blueprint of the step by step procedure that would be followed to
convert a business idea into a successful business venture. A business plan first of all identifies
an innovative idea, researches the eternal environment to list the opportunities and threats,
identifies internal strengths and weakness, assesses the feasibility of the idea and then
allocates resources (production/ operation, finance, human resources) in the best possible
manner to make the plan successful.

To give directions to the vision formulated by entrepreneur.

To objectively evaluate the prospects of business.
To monitor the progress after implementing the plan.
To persuade others to join the business.
To seek loans from financial institutions.
To visualize the concept in terms of market availability, organizational, operational and
Financial feasibility.
To guide the entrepreneur in the actual implementation of the plan.
To identify the strengths and weakness of the plan.
To identify challenges in terms of opportunities and hre.ats from the external markets.

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To clarify ideas and identify gaps in management information about their business,
competitors and the market.
To identify the resources that would be required to implement the plan.
To document ownership arrangements, Future prospect and projected growths of the
business venture.

A plan which looks very lucrative at the First instance might actually not be when the details
are drawn. Hence documenting the business plan is one of the early steps that an
entrepreneur should take. The various steps involved in preparing a business plan are:

1. Research: Get as much information on your proposed business as possible. Talk to those
already in business, visit the library, learn all you can from trade associations and trade
publications, conduct research on-line and find out what help is available from local and
federal government agencies.
2. Make your projections: The more you know about your business, the more accurately
you can make intelligent projections of sales and potential profits for the first few years.
This knowledge is invaluable.
3. Capital: Money. Accept the fact that it always requires more money than youve
anticipated starting, or improving your business. Have enough working capital on hand and
back-up resources just in case the new business does not prosper as you had anticipated.
4. Competition: Know thy enemy. Study your competition carefully; theyve been in the
trenches and have already experienced what you are about to discover. Read their
literature. There is a reason your competitor is in business, and youd better find out what
it is and how you can turn their customers into your customers.
5. Location: If you cant go to your customer, your customer must come to you so make it
easy. Pick a prime location or invest in targeted advertising.
6. Image: What kind of public image do you want to create with your service, merchandise,
quality, dcor, packaging, personnel vehicles, advertising and pricing? How does that image
correspond with the customer you are trying to attract?
7. Keep Records: Complete, accurate records are needed to file taxes, to properly manage
your bank accounts and most importantly, to give you guidance. Always know where your
business stands financially.

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8. Professional Help: In addition to professional and confidential SCORE counseling, rely on

a competent lawyer, accountant, banker and insurance broker to fulfill your business
needs. A marketing professional in you corner may also be needed.
9. Purchasing: Knowing what, when and where to buy and how to gauge inventory can
make or break you. It allows you to conserve working capital, reduce obsolescence and
meet and beat the competition. Know what sells.
10. Profits: This is the bottom line for which you are going into business. Make sure that all
expenses are accounted for, including your own living costs, possible losses, shrinkage,
unseen costs such as fringe benefits and taxes. Then add a legitimate profit to your risk. If
the profit does not come out right, perhaps you should rethink your idea. Make sure you
consult a SCORE counselor for guidance.
The role of capital market in Indias growth
Increased efficiency in the financial sector is expected to direct financial resources into the
sectors where the productivity is the maximum. This, in turn is expected to increase the rate of
economic growth. Faster economic growth is then expected to reduce poverty. The link
between increase in income and reduction in poverty has been empirically established over
medium and long term.
The government policies have moved a substantial distance over the past five years towards
free markets for goods and finance. Countries with better policies have significantly faster rates
of economic growth. Improvements in capital markets would provide impetus to growth. The
role or capital markets in India's development can be understood in the following way:
To achieve faster economic growth, the capital market can channelize the source of finance in
the primary segment (new issues). Capital market makes two important contributions to
growth. Firstly, it signals to other providers of capital (such as banks) the prospects, and
therefore, the risk of lending to companies. Secondly, it provides opportunities for investors to
seek out and invest in companies of the future.
A country like India needs to grow at B or 9 per cent a year in order to eliminate pervasive
poverty. It is difficult for the country to achieve this without better capital markets. Improving
capital markets would have two important effects. Firstly, it would increase the quality and
quantity of investment in the economy. Indian savings rates are sufficiently high to support
faster economic growth. Better capital markets are particularly important to mobilize savings
into more efficient Investments. Secondly, efficient and transparent capital markets can attract
increased foreign savings to India (billions of dollars a year) to finance additional investment.

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Reformation of capital markets was critical to Indias long-term development. Past reliance on
government investment and bank lending led to problems because many firms did not have
access to industrial finance at affordable rate.
Role of Capital Market in Industrial Growth: The capital market played a crucial and vital role
in the Indian industrial growth. These are:
(1) Promotion of Industrial Growth: The capital market transfers the resources to the
industrial sector of the economy. The existence of such an institution encourages people to
invest in the securities of corporate. Thus, it helps in stimulating the industrial growth and
economic development of the country.
(2) Mobilization of Savings and Acceleration of Capital Formation: In the developing
countries like India, the rate of savings Is much lower than it should be. This market helps in
the mobilization of small savings from the various sections of the society. Thus it accelerates
the capital formation In the country.
(3) Raising Long-term Capital: The existence of stock exchanges or secondary market
enables the companies to raise long-term capital by issuing shares and debentures. These
exchanges help in providing the new investors every time when the old investor wants to sell
his investments.
(4) For Financing Five Year Plans: The government securities have gained the Importance
since the Second Five Year Plan as the government has had to depend on the sale of these
securities to raise resources for financing public sector projects.
(5) Ready and Continuous Market: The stock exchange provides a place where the buyers
and sellers can sell and purchase their securities easily and conveniently. This makes the
investment in securities more liquid as compared to other assets.

8. One of the distinctive characteristics of business is to earn profit. Then why is it important
for every organization to follow business ethics?
Answer: Ethics is the discipline dealing with what is good and bad and with moral duty and
obligation. It is a set of moral principles or values that guides the decisions you make. Business
ethics is defined as the study and evaluation of decision making by businesses according to

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moral concepts and judgments the focus so far in this text has been on legal ethics and the
rules of ethics that apply to attorneys, paralegal, and others within the legal profession.
The importance of business ethics
In recent years, business ethics has received much public attentionscandals in the headlines
have led to public awareness and demand for ethical business practice. An increasing number
or business leaders are recognizing the importance of sound ethical policies within their
organizations, and they are taking steps to encourage. Ethical behavior of management and
employers at all levels of the organization.
Sound ethical practices can be crucial to the success of any business, by firms must maintain
their Integrity and reputation in the community to continue to attract clients. Poor ethical
practices in a law firm can create a poor reputation in the community and cause the firm to lose
clients. For example, if a lawsuit was brought against a law firm for racial discrimination by
some of its employees, members of the wronged racial or ethnic group would probably be wry
reluctant to engage the services of the firm.
Earlier it said that business of business is businesses. Now there is a sudden change in the
slogan. In the contemporary scenario where ethics has got its due importance, the slogan has
taken the form: the business of business is ethical business. Applying ethics in business makes
good sense because it induces others to follow ethics in their behavior. Ethics is important not
only in business but also mall aspects of life. the business of a society that lacks of ethics is
likely to fail sooner or bier.
Business leaders adopt sound ethical policies because it is the right thing to do and because it is
in their own best interests to do so. Some specific reasons that organizations give for initiating
ethics programs and encouraging good business ethics include:
It is right and moral
Ethics programs lessen legal liability in the form of lawsuits against the organizations for
malpractice, product liability, or violation of federal rules and regulations
Society benefits from improved business ethics
Ethics programs aid in decision making
Ethics programs boost employer morale
Ethics programs often result in better customer relations and improved public Image

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9. Explain the journey of any successful entrepreneur and the major difficulties faced by them
in their journey.
Answer: . There have been any successful entrepreneurs till date and amongst them, that
shines one of the brightest is Henry Ford, founder of Ford Motor Co.
Henry Ford was nearly 40 when he founded Ford Motor Co. in 1903. At the time, "horseless
carriages" were expensive toys available only to a wealthy few. Yet in just four decades, Ford's
innovative vision of mass production would not only produce the first reliable, affordable
"automobile for the masses," but would also spark a modern industrial revolution.
Ford's fascination with gasoline-powered automobiles began in Detroit, where he worked as
chief engineer for the Edison Illuminating Co. The automobile offered the promise of a bright
new future. a future Ford wanted to part of. So in 1891, Ford began devoting his spare time to
building what he called the "Quadricycle"-a crude contraption that consisted of two bicycles
placed side by side, powered by a gasoline engine. After working on the Quadricycle for nearly a
decade, Ford took Detroit lumber tycoon William H. Murphy for a ride in his hand-built
automobile. By the time the ride was over, they were in business.

The Detroit Automobile Company opened in 1899 with Ford as superintendent in charge of
production. But the venture only lasted a year. Ford could build a car, but he couldn't build
them fast enough to keep the company afloat. Undaunted, Ford hatched a new plan-to build a
racer. Ford saw racing as a way to spread the word about his cars and his name. Through the
notoriety generated by his racing success, Ford attracted the attention of the backers he
needed to start Ford Motor Co. in June 1903.

Ford set up shop in a converted wagon factory, hired workers, then designed and produced the
Model A, the first of which he sold to a Chicago dentist in July 1903. By 1904, more than 500
Model A's had been sold.

While most other automakers were building luxury-laden automobiles for the wealthy, Ford
had a different vision. His dream was to create an automobile that everyone could afford. The
Model T made this dream a reality. Simpler, more reliable and cheaper to build than the Model
A, the Model T-nicknamed the "Tin Lizzie"-went on sale in 1908 and was so successful within
just a few months that Ford had to announce that the company couldn't accept any more

18

orders-the factory was already swamped. Ford had succeeded in making an automobile for the
masses

Major Challenge faced by Henry Ford:

1. His production facility fell short to satisfy demand of the customers
After much thinking, he finally found a solution to the problem i.e. moving assembly line.
Ford reasoned that if each worker remained in one assigned place and performed one specific
task, they could build automobiles more quickly and efficiently. To test his theory, in August
1913, he dragged a chassis by rope and windlass across the floor of his Highland Park plant-and
modern mass production was born. At peak efficiency, the old system had spit out a finished
Model T in 12 and a half working hours. The new system cut that time by more than half. Ford
refined and perfected the system, and within a year it took just 93 minutes to make a car.
Because of the more efficient production, Ford was able to cut hundreds of dollars off the price
of his car.
2. Doing the same task hour after hour, day after day quickly burned out his work force
The turnover rate became such a problem that the company had to hire close to 1,000 workers
for every 100 jobs it hoped to fill. To solve the problem, Ford decided to pay his employees $5
per day-nearly twice the going rate. Workers flocked to Ford's gates.
3. Fords current model started getting outdated and a change was needed, but it
wouldn't come without cost. In May 1927, Ford laid off thousands of workers while
he figured out a way to get back into the marketplace. At the age of 64 he was
starting over. With the release of a brand new Model A, Ford came roaring back to
life. When the stock market crashed in October 1929, Ford Motor Co. was better off
than most of its competitors because of the success of his Model A.

4. Started facing stiff competition from competitors:

In 1931, the Depression caught up with Ford. After three years on the market, Model A sales
fell dramatically. Chevrolet, with its new six-cylinder engine, and a new model from Plymouth
cut into Ford's market share. Once again Ford was forced to shut down production and send
workers home. To retain the left over workers, Ford had a plan. The young, humanistic idealist
had become a hardened industrialist who believed the average worker wouldn't do a day's
work unless he or she was trapped and couldn't get out of it. To ensure his workers put in a full

19

day's work, Ford created the Service Department, a foreman and a group of supervisors, many
of whom were ex-cons and boxers, who ruled the plant through fear and coercion.
Therefore, ethical or unethical, Ford devised various ways to keep his company alive.
With just a small starting capital, Ford made his company a big success and is now a world
renowned brand which has a presence in almost every country of the world.

10. Mr. X once owned a single shop in the shopping complex. Due to his skills and expertise
he is now the owner of 5 shops and earning around Rs. 50,000 from these shops on a daily
basis. Can you identify the form of business ownership in which he is running his business?
Can you also list the relative merits and demerits of this form of business ownership?
Answer: According to the condition describe in the question I think Mr. X running an
independent business. It is also called Freelance business. An independent business may be a
business, which is free from outside control. It always consists of in private owned
establishments as critical public restricted firms, which are owned by investment shares on the
exchange. In most cases, the independent businesses sometimes take the form of sole
ownership firms.

Merits of the Independent business

There are adequate benefits to being an independent business owner as compared to in
operation a franchise. Such benefits are:
1. Financial management - With a smaller business like independent, finances may be managed
easier because of smaller operations and fewer workers.
2. Higher client relations - Once in operation a smaller business, client relations become
additional valuable and sustain because the client is that the one who is primarily keeping the
business alive, it's crucial as an independent that the client relations are of fine volume.
3. Decision making - Decision making may be made easier in smaller operations as there is a
smaller amount pressure as critical a bigger company-based business. With nearer worker
relations in addition as client relations, independents will build easier and quicker choices to
learn all.
4. Product change - An independent business will build changes in terms of product so as to
learn themselves in addition as their customers. An example of this might be a more robust line

20

of product to interchange a not thus well existing line. Franchise primarily based businesses but
do not forever have this freedom as there are additional people concerned within the decisionmaking method.

Demerits of Independent business

Despite the numerous benefits of an independent business, there are several disadvantages
that should be accepted. These have an effect on each the businessman in addition the
purchasers.
1. Financial risk - The financial sources needed to sustain a business may be substantial.
Proprietors tent to commit most of their savings or maybe falling into debt so as to start. If
things dont go well, the businessman might face substantial loss. Also, theres no warranted
financial gain to start with. There may be times, particularly within the initial few years, once
the business isnt generating enough profit for the businessman to measure on.
2. Less control over workers - Whereas workers are able to direct the outcome of the work, the
businessman has control over the way to complete the task, together with the tools and
processes used. you need to be willing to give up this control, one thing a number of us
business owners have bother doing, as a result of failing to do might mean the IRS re-classifies
your employee as an worker and imposes penalties.
3. High commitment - Once owning an independent business, it will take time for the business
to become totally established and for it to form a adequate profit so as to fulfill the wants of
the businessman in addition because the workers. This implies being committed to the business
in the least times so as for it to figure.
4. Competition - Independent businesses typically face competition with native independents
which suggests having to cost agree on things so as to share custom. Generally but, custom may
be taken from one independent to a different attributable to substantial value changes, the
standard of product and additionally client service.

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11. Based on the success stories of some entrepreneurs, comment whether entrepreneurs are
born or made?
Answer: Entrepreneurs are made and are not born. There is no specific concept like born
entrepreneurs. When someone says somebody is a born entrepreneur, it is not to be taken
literally. It means the traits that favour entrepreneurship are maximized in that individual. If an
entrepreneur is considered as being born with this trait, then every other single human trait can
also be considered to be born or inherent.
Thus, when an individual is born all the traits are inherent. It is only the environment,
background, genetics, focus, training, practice, support systems and capitalized opportunities
which decide who becomes a successful entrepreneur. There will always be shades of a better
entrepreneur and a less successful entrepreneur even though both the individuals have been
exposed to the same set of factors. This again depends on the individual approach to the issue.
It may be more appropriate in cases where genetic factors may favour an individual to a certain
extent, but still the trait has to be honed and practiced in order for the individual to be
successful. E.g. A successful athlete may have a good genetic background (parents may be
successful athletes), but if he does not practice, he is not going to be a successful athlete. Thus,
entrepreneurs are made and not born.
Examples of entrepreneurs are made not born
Dhirubhai ambani a big example of an entrepreneur made! What did He have? a meager Rs.
20,000 and when he Left, He was roughly estimated at around 1,00,000 Crores. Thats how
Entrepreneurs are MADE.

12. E-commerce suitable for products such as apparels and jewellery. Give reasons in support
of your answers.
Answer: Ecommerce websites have been mushrooming all over the web. These websites are
no more restricted to exhibiting a certain category of products. Every product category is
available online, starting from clothes, accessories, appliances, makeup, shoes, jewelry,
groceries, electronics, toys, sports goods and the list is endless. Among this never-ending list of
products sold online, which goods and services would serve as a good business opportunity for
you? Here is a list of products that always sell online, well most of the times. Understand the
market dynamics around the new products and know what could be your million-dollar
business prospect.

22

Clothes and Apparels

Clothes, for man, woman or child are most sold products on ecommerce websites today. There
are tons of apparel websites that sell every kind of clothing. Even wholesale apparels and
clothes e-shops offer great discounts. These discounts and coupons make the clothes shopping
work out to be much cheaper than buying clothes by shopping physically. Most clothes and
apparels run discounts and sales, especially for women and children clothing. To make it even
more lucrative major retail outlets like Sears offer sears coupons that allow affordable apparel
purchases. Every price range of clothing is sold online. A particular piece of clothing can be sold
at ten different prices across a host of online shops. Clothes are a basic necessity. The demand
for clothes will never drop. But yet, to enter a jam-packed market category a
business entrepreneur can try breaking the market to find sub-categories that could be a
potential market while being profit yielding at the same time.
Jewellery
This market category is primarily dedicated to women. Jewellery includes fashion jewellery and
real or fine jewellery. Starting form neckpieces, to earrings, bangles to bracelets, watches to
sunshades and rings to toe rings, everything is available online across all metal bases, real or
alloys. Even cufflinks and other small jewellery popularly worn by men and children are
available online. The real market of course lies in womens jewellery. However, data and
statistics show that fashion jewellery is sold more easily online as people dont always believe
the quality and reliability of the claimed fine jewellery sold online. Major trustworthy retail
websites like Sears do manage to sell fine jewellery online. But at the same time Sears also
makes sure to make their customers purchases are pocket friendly while buying real or fine
jewellery by presenting the coveted sears promo codes. Customers are assisted in making the
tough choice to opt for fine jewellery from equally good artificial jewellery options with
employment of vouchers like the sears coupon codes.
I am a user of ecommerce; i really like online shopping because we can get interactive offers on
online shopping. We can get verity of cloths and jewelleries. If they send us wrong order or
wrong size of cloth there is no need to worry about, because we can replace, return or
exchange our order without paying any extra money. We can pay instant with shopping card or
we can pay cash on delivery. But we cant return used product. So there are limitations and
advantages of ecommerce.

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13. Explain the Essentials of project Report what are the steps involved in preparing of
report?
Answer: A project report is a written document pertaining to any investment proposal. It
contains relevant data, on the basis of which the project has been appraised and found relevant
to the entrepreneur. This project report can be shown to the bankers or other financial
institutions to acquire financial assistance. The efficiency of the project is decided by other
organizations and suppliers on the basis of the project report. It is also used by the
entrepreneur to check if he is deviating from what was decided earlier.
A project report helps to understand the opportunities, problems and weakness of the
business. It guides the entrepreneur in actually starting up and running the business venture. It
helps him to monitor whether the business is growing as was projected in the business plan or
not. It helps in documenting the cost estimates of the business. It can be used as a handy tool
to persuade investors and financial institution to fund the project. It cans help in proper
utilization of all the resources. It can keep the morale of employees, owners and investors up. It
can finally lead to a sustainable development of the organization.
Essentials of project Report
1. The project report should be sequentially arranged.
2. The project report should be exhaustive (covering all the details about the proposed
project).
3. The project report should not be very lengthy and subjective.
4. The project report should logically and objectively explain the projections.
5. The projections should be appropriately be made from two to ten years.
6. The project report should be professionally made to demonstrate that the promoters
possess entrepreneurial acumen and sound experience
7. The project report should also justify market prospects and demands.
8. The project report should justify the financial needs and financial projections.
9. The project report should be attractive to the financial agencies and investors.
10. The project report should also have a high aesthetic value

Various steps involved in the preparation of a project report

1. General information: it should contain general information regarding the
company/enterprise. The project report should also contain an analysis of the industry
to which the project belongs. It should contain the past performance of the industry, the

24

priority or the industry, role of the industry, change in production over a period of time,
allocation or investment of funds, Choice of technique, etc.
2. Preliminary Analysis of Alternatives: the report should next present data on the gap
between demand and supply for the outputs which are to be produced, data on the
capacity that would to be available from the projects are in production or under
implementation at the time the report is prepared. a complete list or all existing plants
in the industry, giving their capacity and Level of production actually attained, a list or all
projects for which letters or intents/licenses have been issued and a list of proposed
projects. All options that are technically feasible should be considered at this
preliminary stage. The location or the project as well as its implication should also be
shown. An account of the foreign exchange requirements should also be taken. The
profitability of different options should also be given. The rate of return on investment
should be calculated and presented in the report. Also, the alternative cost calculations
against the returns should be presented.
3. Project Description: the project report should provide a brief description of the
technology/process chosen for the project. Information relevant to determining
optimality or the location chosen should also be included. To assist in the assessment of
the environmental effects of a project, every report must present the information on
specific project. I.e. Population, water, air, land, flora and fauna, effects arising out of
project pollution, other environmental descriptions, etc. The report should contain a list
of the operational requirements of the plant, requirements or water and power.
Personnel, organizational structure envisaged. Transport costs activity-wise phasing of
construction and factors affecting it.
4. Marketing Plan: it should contain data on marketing plan, i.e., demand and prospective
supply in each or the areas to be served. The methods and data used for making
estimates or domestic supply and selection of the market areas should be presented.
Estimates of the degree of price sensitivity should also be shown. It should also contain
an analysis or past trends in prices.
5. Capital Requirement and Costs: Information on all items of costs should be carefully
collected and presented. The estimates or costs should be reasonably complete and
properly classified.
6. Operating Requirements and Costs: Operating costs are essentially those costs which
are incurred after the commencement of commercial production. Information about all
items or operating costs should be collected. Operating costs relate to the cost of raw

25

materials and intermediates, fuel, utilities, labor, repair and maintenance, setting
expenses and other expenses.
7. Financial Analysis: the purpose of this analysis is to present some measures to assess the
financial viability of the project. A Performa Balance Sheet for the project data should be
presented. Depreciation should be allowed for, on the basis specified by the Bureau of
Public Enterprises. Foreign exchange requirements should be cleared by the
Department or Economic Affairs. The report should take into account income-tax
rebates for priority industries, incentives and subsidy for backward areas, accelerated
depreciation, etc. The report most also analyze the sensitivity or the rate of return to
changes in the level and pattern or product prices.
8. Miscellaneous Aspects: other aspects relevant to the enterprise, which is collected.
Should also be included. For e.g. Cash flow statements, methods of accounting, use or
computers or any new technology used, must be specified.
9. Economic Analysis: Social profitability analysis needs some adjustment in the data
relating to the costs and returns to the enterprise. The enterprise should try to assess
the impact or its operations on foreign trade. Indirect costs and benefits should also be
included in the report. If they cannot be quantified. They should be analyzed and their
importance emphasized.
14. One of your friends has brought a new bike. The company claimed that the bike would
give an average of 50 km/l. After using the vehicle for one week, he noticed that the bike
gave an average of 35 km/l which was less than the average in the claim. Do you think it was
ethical on the part of the company? Why do you think so?
Answer: Most of time the automobile companies claims the more average of product in the
marketing brochures of the product which much differ from the actual average of that product.
The average claims by the companies are according to the ideal conditions at the particular
speed. This ideal condition for average test is very different from the actual road condition. So it
is mentions in the claim brochures that fuel average can vary if the optimum driving conditions
are not achieved.
So, according to me if the company mentions the condition then it is ethical on the part of the
company but if the company claims more average and not mentions about any conditions then
it very unethical on the companys part to play such trick to sell their product.

26

15. Discuss the nature and objectives of Self -Help Groups, in entrepreneurship development.
Answer: SELF HELP GROUPS: SHG is group of rural poor who have volunteered to organize
themselves into a group for eradication of poverty of the members. They agree to save
regularly and convert their savings into a Common Fund known as the Group corpus. The
members of the group agree to use this common fund and such other funds that they may
receive as a group through a common management. Generally a self-help group may consist of
10 to 20 persons. However, in difficult areas like deserts, hills and areas with scattered and
sparse population and in case of minor irrigation and disabled persons, this number may be
from 5-20. The difficult areas have to be identified by the State Level SGSY Committee and the
above relaxation in membership will be permitted only in such areas.
Generally all members of the group should belong to families below the poverty line. However,
if necessary, a maximum of 20% and in exceptional cases , where essentially required, up to a
maximum of 30% of the members in a group may be taken from families marginally above the
poverty line living contiguously with BPL families and if they are acceptable to the BPL members
of the group. This will help the families of occupational groups like agricultural laborers,
marginal farmers and artisans marginally above the poverty line, or who may have been
excluded from the BPL list to become members of the Self Help Group. However, the APL
members will not be eligible for the subsidy under the scheme. The group shall not consist of
more than one member from the same family. A person should not be a member of more than
one group. The BPL families must actively participate in the management and decision making,
which should not ordinarily be entirely in the hands of APL families. Further, APL members of
the Self Help Group shall not become office bearers (Group Leader, Assistant Group Leader or
Treasurer) of the Group.
The group should devise a code of conduct (Group management norms) to bind itself. This
should be in the form of regular meetings (weekly or fortnightly), functioning in a democratic
manner, allowing free exchange of views, participation by the members in the decision making
process.
The group should be able to draw up an agenda for each meeting and take up discussions as
per the agenda.
The members should build their corpus through regular savings. The group should be able to
collect the minimum voluntary saving amount from all the members regularly in the group
meetings. The savings so collected will be the group corpus fund.
The group corpus fund should be used to advance loans to the members. The group should
develop financial management norms covering the loan sanction procedure, repayment
schedule and interest rates.
The members in the group meetings should take all the loaning decisions through a
participatory decision making process.

27

The group should be able to priorities the loan applications, fix repayment schedules, fix
appropriate rate of interest for the loans advanced and closely monitor the repayment of the
loan installments from the loaner.
The group should operate a group account preferably in their service area bank branch, so as to
deposit the balance amounts left with the groups after disbursing loans to its members.
The group should maintain simple basic records such as Minutes book, Attendance register,
Loan ledger, General ledger, Cash book, Bank passbook and individual passbooks. The sample
Performa for maintenance of above records by the group is in the Annexure II for guidance.
These could be used with necessary changes/ modifications wherever required.
Objectives of Self Help Groups
The SHGs comprise very poor people who do not have access to formal financial institutions.
They act as the forum for the members to provide space and support to each other. It also
enables the members to learn to cooperate and work in a group environment. The SHGs
provide savings mechanism, which suits the needs of the members. It also provides a cost
effective delivery mechanism for small credit to its members. The SHGs significantly contribute
to the empowerment of poor women.
Advantages of Self-Help Groups

The advantages of SHGs are:

Low transaction cost;
Effectiveness in supervision;
Easy credit delivery to the poor;
Minimum procedures; and,
Better recycling of funds.

16. Discuss break even analysis and its importance in assessing the financial viability of a
project?
Answer: Break-even analysis shows the relationship between costs and profits with the sales
volume. It determines the activity where total cost is equal to total sales i.e. point of zero profit
and zero loss. It can be used mo determine probable profits at any level of activity.
Mathematical calculation of break-even analysis
Break-even point (Rs) = Fixed cost/ P/V ratio

28

Break-even pint (units) = Fixed cost/ Contribution per unit

P/V Ratio = Contribution*100/ Net sales
Contribution = sales- Marginal cost
Margin of safety = Actual sales revenue-Break=even sales revenue
Margin of safety ratio = Margin of safety/ Actual sales (Rs)
Profit = Margin of safety * P/V Ratio

Importance of break even analysis in assessing the financial viability of a project:

1.
2.
3.
4.

It measures profit and loss at different levels of sales.

It helps to predict the effect of changes in price of sales.
It helps to analyze the relationship between fixed cost and variable cost
It also helps to predict the effect on profitability if changes in cost and efficiency.

17. Write the importance of foreign trade in economic development of a country?

Answer: Foreign trade of India is the trade between residents of India and residents of other
countries of the world. For example trade between India and United States is called
International trade or foreign trade. The goods consigned from India to other countries will be
known as Indias Exports on the other hand goods coming from other countries to India will be
called as Indias Imports.
Importance of foreign trade
Foreign trade plays a significant role in the economy of each country. In the words of
Robertson, foreign Trade is an engine of economy growth. Foreign trade helps a country to
utilize its natural resources and to export its surplus production. It can import technical knowhow. At the time of natural calamity it can import food grains and other goods from abroad. A
country can industrialize itself by importing necessary capital. Machines and raw materials from
more advanced and industrialized nation. By proper control of foreign trade, employment,
output, prices, industrialization and economic development of the country can be influenced
favorably. It is again foreign trade that enables a country to acquire necessary assistance and
other equipments for its economic development from abroad. That is the reason why Planning

29

Commission of India has given great importance to the development of foreign trade In the Five
Year Plans.
Beneficial effects of foreign trade on economic development
Foreign trade helps in breaking vicious circle of poverty: Underdeveloped countries are
characterized by the existence of vicious circle of poverty. In other words, low income accounts
for deficiency or demand and lack of demand accounts for low supply and low supply in its turn
accounts for low income. Trade enables underdeveloped countries to produce more of those
goods in which they enjoy greater comparative advantage. Consequently, production, income
and employment in these countries increase leading to increase in demand. This increased
demand is partially met by domestic production and partially by foreign imports. In this way,
exports and imports or goods help break the vicious circle of poverty and accelerate the rare or
economic development.
Inducement to invest: Rate of economic development is very slow in underdeveloped countries
on account or low demand, lack of technological improvement and shortage or social overhead
cost. Investment is encouraged under the impact or international trade. Export industries are
set up. New industries are installed with the help or foreign technical know-how or in
collaboration with foreign companies. With the help or foreign capital and technology
necessary infrastructure, like roads, railways, power, irrigation facilities etc. is created to
promote economic development. As a result or all this expected profitability of the
entrepreneurs increases and they are induced to invest more. Because or increase in
investment, rate of capital formation accelerates which in turn leads to increase in the rate of
economic development.
Technical Progress: Trade affords opportunity to the underdeveloped countries to make use of
the technology, innovations and latest inventions of developed countries. As a result basic and
heavy industries like, iron and steel, heavy machines, ship-yards etc. are established. Use of
new technology reduces cost of production and hence price of the finished product. Thus,
production of the country has an easy access to foreign markets. As a result or it, income and
employment increase and economic development accelerate.
Important Educational Effects: Underdeveloped countries are short of efficient engineers,
capable managers and competent technical experts etc. On account of trade, there is expansion
or technical education and training in these countries. There is increase in the efficiency and
scientific knowledge of the people.

30

Import of Capital Goods and Export or Primary goods: Another advantage of foreign trade for
the economic development of underdeveloped countries is that these countries can
industrialize themselves by importing necessary capital goods like, machinery: semi-finished
products and industrial raw materials from industrialized developed countries. In return, they
can export primary goods and mineral resources produced in their countries and thus solve the
problem of I balance of payments. The result is that the underdeveloped countries increase the
pace of their economic development by setting up direct productive activities.

18. Write short notes on

National bank for agriculture and rural development
Small industries development bank of India
Answer: National bank for agriculture and rural development
National Bank for Agriculture & Rural Development (NABARD) came into Existence on 12d July
1982 by an act of parliament. Its objective is providing focused and undivided attention to the
development of rural India. NABARD mission statement underscores to
promote sustainable & equitable agricultural & rural prosperity through effective support,
related services, institution development and other innovative initiatives.
NABARD at present has 28 regional offices at the state capitals, a sub-office at Port Blair and
376 district development offices. NABARD is an apex institution accredited with all matters
concerning policy, planning and operations in the field of credit for agriculture and other
economic activities in rural areas. It is an apex refinancing agency for the institutions providing
investment and production credit for promoting the various developmental activities in rural
areas. It takes measures towards institution building for improving absorptive capacity of the
credit delivery system, including monitoring, formulation of rehabilitation schemes,
restructuring of credit institutions, training of personnel, etc. It Co ordinaries the rural financing
activities of all the institutions engaged in developmental work at the field level and maintains
liaison with Government of India, State Governments, Reserve Bank of India and other national
level institutions concerned with policy formulation. It also prepares, on annual basis, rural
credit plans for all districts in the country; these plans form the base for annual credit plans of
all rural financial institutions. It further undertakes monitoring and evaluation of projects
refinanced by it. It promotes research in the field of rural banking, agriculture and rural
development.

31

Small industries development bank of India

The Small industries Development Bank of India was established in 1989 as a wholly owned
associate Institution of Industrial Development Bank of India. It started functioning on 2nd April
1990. It paid up capital is Rs 45o crores. The total assets of the bank are 15,299 crores. The
Reserve Funds of the bank in 2001 amounted to Rs 3.611 crores. lt collected Rs 3297 crores in
20o1 by Issuing bounds and debentures.
The main objective of this bank is to provide adequate financial and non-financial aid to small
scale industries. Some of the main functions of these banks are
1. To initiate the process of modernization and technical up gradation of the present units.
2. To facilitate the marketing of the products of the small scale sector in India and abroad.
3. To provide special aid to labor Intensive Industries to enable they top mote employment.
4. To provide refinancing, factoring, leasing services to the small sector.
In 2006-2007 the bank sanctioned loans worth Rs 11.184 crores and distributed loans worth Rs
10,129 crores. The total sanctions and disbursements of this institution by the end of 2012
were Rs 45,144 crores and Rs 32,987 crores respectively. SLDBI raised resources during 2002 to
the extent of Rs 323 crores from the Overseas Economic Cooperation Fund (OECF) Japan and
Germany.
Recent Development
For strengthening the small scale sector, the following measure has been taken with SIDBI as
the focal Point.
1. SIDBI will finance the Stale Financial Corporations (SFC) and commercial banks for
modernization projects up to Rs 5O lakh from Its Technology Development and Modification
fund Scheme.
2. SIDBI's refinance ceiling of Rs 50 Iakh For the single Window Scheme of SFCs etc. For
composite loans will be doubled to Rs 100 lakh.
3. SIDBI will participate In venture capital funds set up by public sector institutions as well as
private companies up to 5o per cent of the total fund. Such a Fund must be dedicated to
financing of small scale Industry.
4. SIDBI will provide refinance to lending institutions which are now permitted to lend of SSI
units seeking ISO certification of quality.

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