Consider the following statements: Small-scale industries are, in most cases, not as efficient and competitive as the large-scale ones. Yet the Government pro- vides preferential treatment and reservations in a range of prod- ucts to the small firms because small-scale industries: 1. provide higher employment on a per unit capital deployment basis 2. promote a regional dispersion of industries and economical activities 3. have performed better in export of manufactured products than the large scale ones 4. provide jobs to low-skill workers, who otherwise may not find employment avenues elsewhere Which of the above statements are correct?

Question

YESPYQ · Accepted Answer

Correct answer: 1 and 2. Statement 1 is correct: Small-scale industries tend to be more labor-intensive compared to large-scale indus- tries, meaning they create more jobs with less capital invest- ment. This feature is particularly valuable in economies with a high labor supply, as it helps reduce unemployment and fosters inclusive growth. Statement 2 is correct: Small-scale industries help in spreading industrial activities across different regions, thus contributing to the decentralization of economic growth. This helps in reducing regional inequalities, promotes balanced development, and prevents industries from being concentrated in a few urban areas. Statement 3 is incorrect: Large-scale industries(not Small- scale industries ) generally perform better in export markets due to economies of scale and better access to global mar- kets. Statement 4 is incorrect: Although SSIs provide jobs to low- skill workers, this is not their primary reason for preferential treatment. 98

Practice more Economy PYQs

More UPSC Economy PYQs