Explain in brief the impact of capital, on Small Scale industries.

Major problem faced by small scale industries is insufficient capital, which creates following difficulties with them.

(i) Borrowings of Capital from Landlords and Money Lenders : Nationalised and Cooperative banks are not ready to finance Small Scale Industries without security. Thus, they are forced to borrow from money lenders, where they have to pay very high rate of interest.

(ii) Storage of Raw material: Small Scale Industries are agro based. Raw material is available seasonally. To stock goods they required huge finance. Due to lack of finance, they run industry only in seasons.

(iii) Lack of Skilled Labour : Only unskilled and semi skilled labourer are available. Small Scale Industries cannot afford labour cost of skilled labourer which affect quality and quantity of production and profitability.

(iv) Outdated technology : Due to insufficient capital, production methods used by SSI are old, which results in poor quality and quantity of output. 

(v) Weaker Marketing Skill : In todays world marketing plays an important role. Rural area is facing marketing problem due to lack of facilities and knowledge and they are exploited by middlemen too.