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

1. 1 and 2 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2 and 3

The correct answer is 1 and 3 only.

• 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.

•  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