The correct option is 2 and 3 only.
Explanation
In 1955, the Village and Small-Scale Industries Committee, also known as the Karve Committee, highlighted the potential of small-scale industries (SSIs) for promoting rural development. The policy framework was designed to utilize the labor-intensive nature of SSIs to generate employment and ensure a more equitable distribution of resources.
Statement-wise Analysis:
- Statement 1 is Incorrect. Small-Scale Industries are defined by their labor-intensive nature, meaning they use more labor per unit of capital compared to large-scale industries. Large-scale industries are typically capital-intensive. The promotion of SSIs was specifically aimed at generating employment for the abundant labor force in India.
- Statement 2 is Correct. To ensure that small firms could survive and grow, the government adopted a policy of reservation. The production of a number of specific products was reserved exclusively for the small-scale sector to protect them from competition with established large-scale firms.
- Statement 3 is Correct. Recognizing that small industries lacked the financial muscle of large corporations, the government provided various concessions. These included lower excise duties and access to bank loans at lower interest rates (often categorized under priority sector lending) to facilitate their operations and expansion.
Key Takeaway:
Small-Scale Industries are labor-intensive sectors that were historically protected through product reservation and supported via fiscal concessions (tax breaks and cheap credit) to foster employment and regional equity.