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Which of the following is/are incorrect? 1. Karve Committee is related to the MSME sector. 2. The Micro, Small, and Medium Enterprises (MSME) are classified into two enterprises as per the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006. 3. Small scale enterprise is one in which investment in Plant and Machinery is more than twenty-five lakh rupees but does not exceed ten crore rupees

Which of the following is/are incorrect? 1. Karve Committee is related to the MSME sector. 2. The Micro, Small, and Medium Enterprises (MSME) are classified into two enterprises as per the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006. 3. Small scale enterprise is one in which investment in Plant and Machinery is more than twenty-five lakh rupees but does not exceed ten crore rupees Correct Answer 1 and 3 only

The correct answer is 1 and 3 only.

Key Points

  • In 1955, the Village and Small-scale Industries Committee, also called the Karve Committee, noted the possibility of using small-scale industries for promoting rural development. Hence, Statement 1 is incorrect.
  • A ‘small-scale industry’ is defined as the maximum investment allowed on the assets of a unit.
  • This limit has changed over a period of time. In 1950 a small-scale industrial unit was one which invested a maximum of rupees five lakh.
  • It was believed that small-scale industries are more ‘labor-intensive’ i.e. they use more labor than the large-scale industries, therefore, generate more employment.
  • For this purpose, the production of several products was reserved for the small-scale industry; the criterion of the reservation being the ability of these units to manufacture the goods.
  • They were also given concessions such as lower excise duty and bank loans at lower interest rates.

Important Points

  •  The Micro, Small, and Medium Enterprises (MSME) are classified into two enterprises as per the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006. Hence, Statement 2 is correct.
  • These are
    • Manufacturing Enterprises
    • Service Enterprises
Service Enterprises Investment in plant & machinery Investment in equipment
Micro Enterprises Does not exceed twenty-five lakh rupees. Does not exceed ten lakh rupees.
Small Enterprises More than twenty-five lakh rupees but does not exceed five crore rupees. Hence statement 3 is not correct. More than ten lakh rupees but does not exceed two crore rupees.
Medium Enterprises More than five crore rupees but does not exceed ten crore rupees. More than two crore rupees but does not exceed five crore rupees.

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