Correct Option
The correct option is 2 and 3 only.
Explanation
Small-Scale Industries (SSIs), now largely categorized under Micro, Small, and Medium Enterprises (MSMEs), are defined by their investment limits in plant and machinery. In India's economic planning history, particularly following the Karve Committee (1955) recommendations, SSIs were promoted to foster rural development and employment.
Statement-wise Analysis
- Statement 1 is Incorrect: Small-scale industries are inherently labour-intensive, meaning they use more labour per unit of capital compared to large-scale industries. Consequently, they generate more employment relative to the investment made. This high employment potential was a primary reason for the Indian government's focus on promoting SSIs.
- Statement 2 is Correct: By definition, SSIs operate with smaller infrastructure and lower investment limits compared to large-scale industries. They are designed to function with limited capital resources, making them suitable for mobilizing small savings and entrepreneurial talent.
- Statement 3 is Correct: Historically, it was recognized that small-scale industries could not compete directly with established large-scale firms due to economies of scale and resource disparities. To ensure their survival and growth, the government adopted a policy of protectionism. This included reserving the production of certain goods exclusively for the small-scale sector and providing concessions such as lower excise duties and bank loans at lower interest rates.
Key Takeaway
Key Takeaway: Small-Scale Industries are characterized by low capital intensity and high labour intensity, necessitating government protection (historically via reservation of items) to survive competition against capital-intensive large-scale firms.