2017 – Solved Question Paper | Entrepreneurship Development | Previous Year – Masters of Commerce (M.Com) | Dibrugarh University

2017 – Solved Question Paper | Entrepreneurship Development | Previous Year – Masters of Commerce (M.Com) | Dibrugarh University

2017

COMMERCE

Course: 104

(Entrepreneurship Development)

Full Marks: 80

Time: 3 hours

The figures in the margin indicate full marks for the questions.

1. (a) Define the term Entrepreneur. What are the differences of entrepreneur with manager?

-> An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.

Entrepreneur play a key role in any economy, using the skills and initiative necessary to anticipate needs and bring good new ideas to market. Entrepreneur who proves to be successful in taking on the risks of a start-up are rewarded with profits, fame, and continued growth opportunities. Those who fail suffer losses and became less prevalent in the markets.

TYPES OF ENTREPRENEUR

Based on the types of business:

1) Trading Entrepreneur– As the name itself suggests, the trading entrepreneur undertakes the trading activities. They procure the finished products from the manufacturers and sell these to the customers directly or through the retailer. These serve as the middlemen as wholesalers, dealers, and retailers between the manufacturers and customers.

2) Manufacturing Entrepreneur– The manufacturing entrepreneurs manufacture products. They identify the needs of the customers and, then, explore the resources and technology to be used to manufacture the products to satisfy the customers’ needs. In other words, the manufacturing entrepreneurs convert raw materials into finished products.

3) Agricultural Entrepreneur– The entrepreneurs who undertake agricultural pursuits are called agricultural entrepreneurs. They cover a wide spectrum of agricultural activities like cultivation, marketing of agricultural produce, irrigation, mechanization, and technology.

Based on the use of technology:

1) Technical Entrepreneur– The entrepreneur who establish and run science and technology-based industries are called ‘technical entrepreneur.’ These are the entrepreneurs who make use of science and technology in their enterprises. Expectedly, they use new and innovative methods of production in their enterprises.

2) Non-Technical Entrepreneur– Based on the use of technology, the entrepreneurs who are not technical entrepreneurs are non-technical entrepreneurs. They are concerned with the use of alternative and imitative methods of marketing and distribution strategies to make their business survive thrive in the competitive market.

Based on ownership:

1) Private Entrepreneur– A private entrepreneur is one who is an individual sets up a business enterprise. He/she it’s the sole owner of the enterprise and bears the entire risk involved in it.

2) State Entrepreneur– When the trading or industrial venture is undertaken by the state or the government, it is called ‘state entrepreneur.’

3) Joint Entrepreneur– When a private entrepreneur and the government jointly run a business enterprise, it is called ‘joint entrepreneurs.’

Based on Gender:

1) Men Entrepreneurs– When business enterprises are owned, controlled, and managed by men, these are called ‘men entrepreneurs.’

2) Women Entrepreneurs– Women entrepreneurs are defined as the enterprises owned and controlled by a woman or women having a minimum financial interest of 51 per cent of employment generated in the enterprises to women.

Based on the Size of enterprise:

1) Small-Scale Entrepreneur– An entrepreneur who has made investment in plant and machinery up to Rs 1.00 crore is called ‘small-scale entrepreneur.’

2) Medium-Scale Entrepreneur: The entrepreneur who has made investment in plant and machinery above 1.00 crore but below Rs. 5.00 crore is called ‘medium-scale entrepreneur.’

3) Large-Scale Entrepreneurs: The entrepreneur who has made investment in plant and machinery more than Rs 5.00 crore is called ‘large-scale entrepreneur.’

CHARACTERISTICS OF ENTERPRENEUR

1. Self-Motivation- One of the most important traits of entrepreneurs is self-motivation. When you want to succeed, you need to be able to push yourself. You aren’t answerable to anyone else as an entrepreneur, and that sometimes means that it’s hard to get moving without anyone to make you. You need to be dedicated to your plan and keep moving forward- even if you aren’t receiving an immediate pay check.

2. Understand what you offer – As an entrepreneur, you need to know what you offer, and how it fits into the market. Whether its product or a service, you need to know where you fit in. This also includes knowing whether you are high end, middle of the road or bargain. Being able to position you and then adjust as needed is an important part of entrepreneurship.

3. Take Risks- Successful entrepreneurs know that sometimes it’s important to take risks. Playing it safe almost never leads to success as a business owner. It’s not about taking just any risk, though. Understanding calculated risks that are more likely to pay off is an important part of being an entrepreneur. You’ll need to be willing to take a few risks to succeed.

4. Know How to Network- Knowing how to network is an important part of entrepreneurship. Sometimes who you know is an important part of success. Being able to connect with others and recognize partnership opportunities can take you a long way as a business owner. Figure out where to go for networking opportunities and make it a point to learn how to be effective.

5. Basic Money Management Skills and Knowledge – We often think of successful entrepreneurs as “ big pictures” people who don’t worry so much about managing the day to day. And it’s true that you might have an accountant or other team members to help you manage the business. However, if you want to be successful, you still have basic money management skills and knowledge. Understand how money works so that you know where you stand, and so that you run your business on sound principles.

6. Flexibility – To a certain degree, you need to be flexible as an entrepreneur. Be willing to change as needed. Stay on top of your industry and be ready to adopt changes in processes and product as they are needed. Sometimes, you also need flexibility in your thinking. This is an essential part of problem-solving. You want to be able find unique and effective solutions to issues.

7. Passion- Finally, successful entrepreneurs are passionate. They feel deeply about their product or service or mission. Passion is what will help you find motivation when you are discouraged and it will drive you forward. Passion is fuel for successful entrepreneurship. There are many serial entrepreneurs that create successful businesses, sell them, and then create something else.

The differences of entrepreneur with manager:-

Entrepreneur-

Very basically speaking, an entrepreneur is a one-man show that runs entrepreneurship. However, such a person usually has some unique attributes that allow him to be successful in his endeavours. He is essentially an initiator and a leader. He brings business ideas to fruition thus starting off his venture.

A successful entrepreneur is usually a responsible person. He is accountable for the success or the failure of his venture, and he takes this responsibility very seriously. And since he is the only person in-charge he is automatically the leader. In fact, leadership qualities are one of the main aspects of an entrepreneur.

Manager-

A manager, on the other hand, is not an owner of an enterprise. Instead, he is the one that is responsible for the management and administration of a group of people or a department of the organization. His day to day job is to manage his employees and ensure the organization runs smoothly.

A manager must possess some of the same qualities as an entrepreneur, like leadership, accountability , decisiveness etc. He must also be a good manager of people. So qualities such as warmth and empathy are also very important in a manager.

Now that we have a brief idea about their qualities and roles, let us take a look at the difference between them

Difference between Entrepreneur and Manager

· The key difference between an entrepreneur and a manager is their standing in the company. An entrepreneur is a visionary that converts an idea into a business. He is the owner of the business, so he bears all the financial and other risks. A manager, on the other hand, is an employee, he works for a salary. So he does not have to bear any risks.

· The focus of an entrepreneur lies in starting the business and later expanding the business. A manager will focus on the daily smooth functioning of the business.

· For an entrepreneur the key motivation is achievements. But for the managers, the motivation comes from the power that comes with their position.

· The reward for all the efforts of an entrepreneur is the profit he earns from the enterprise. The manager is an employee, so his remuneration is the salary he draws from the company.

· The entrepreneur can be informal and casual in his role. However, a manager’s approach to every problem is very formal.

· The entrepreneur by nature is a risk taker. His has to take calculated risks to drive the company further. A manager, on the other hand, is risk-averse. His job is to maintain the status quo of the company. So he cannot afford risks.

(b) Describe four functions of entrepreneurs in small firms.

-> An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.

Entrepreneur play a key role in any economy, using the skills and initiative necessary to anticipate needs and bring good new ideas to market. Entrepreneur who proves to be successful in taking on the risks of a start-up are rewarded with profits, fame, and continued growth opportunities. Those who fail suffer losses and became less prevalent in the markets.

CHARACTERISTICS OF ENTERPRENEUR

1. Self-Motivation- One of the most important traits of entrepreneurs is self-motivation. When you want to succeed, you need to be able to push yourself. You aren’t answerable to anyone else as an entrepreneur, and that sometimes means that it’s hard to get moving without anyone to make you. You need to be dedicated to your plan and keep moving forward- even if you aren’t receiving an immediate pay check.

2. Understand what you offer – As an entrepreneur, you need to know what you offer, and how it fits into the market. Whether its product or a service, you need to know where you fit in. This also includes knowing whether you are high end, middle of the road or bargain. Being able to position you and then adjust as needed is an important part of entrepreneurship.

3. Take Risks- Successful entrepreneurs know that sometimes it’s important to take risks. Playing it safe almost never leads to success as a business owner. It’s not about taking just any risk, though. Understanding calculated risks that are more likely to pay off is an important part of being an entrepreneur. You’ll need to be willing to take a few risks to succeed.

4. Know How to Network- Knowing how to network is an important part of entrepreneurship. Sometimes who you know is an important part of success. Being able to connect with others and recognize partnership opportunities can take you a long way as a business owner. Figure out where to go for networking opportunities and make it a point to learn how to be effective.

5. Basic Money Management Skills and Knowledge – We often think of successful entrepreneurs as “ big pictures” people who don’t worry so much about managing the day to day. And it’s true that you might have an accountant or other team members to help you manage the business. However, if you want to be successful, you still have basic money management skills and knowledge. Understand how money works so that you know where you stand, and so that you run your business on sound principles.

6. Flexibility – To a certain degree, you need to be flexible as an entrepreneur. Be willing to change as needed. Stay on top of your industry and be ready to adopt changes in processes and product as they are needed. Sometimes, you also need flexibility in your thinking. This is an essential part of problem-solving. You want to be able find unique and effective solutions to issues.

7. Passion- Finally, successful entrepreneurs are passionate. They feel deeply about their product or service or mission. Passion is what will help you find motivation when you are discouraged and it will drive you forward. Passion is fuel for successful entrepreneurship. There are many serial entrepreneurs that create successful businesses, sell them, and then create something else.

Functions of Entrepreneurs are:

1) Decision Making– The primary task of an entrepreneur is to decide the policy of production. An entrepreneur is to determine what to produce, how much to produce, how to produce, where to produce, how to sell and’ so forth. Moreover, he is to decide the scale of production and the proportion in which he combines the different factors he employs. In brief, he is to make vital business decisions relating to the purchase of productive factors and to sale of the finished goods or services.

2) Management Control– Earlier writers used to consider the management control one of the chief functions of the entrepreneur. Management and control of the business are conducted by the entrepreneur himself. So, the latter must possess a high degree of management ability to select the right type of persons to work with him. But, the importance of this function has declined, as business nowadays is managed more and more by paid managers.

3) Division of Income– The next major function of the entrepreneur is to make necessary is to make necessary arrangement for the division of total income among the different factors of production employed by him. Even if there is a loss in the business, he is to pay rent, interest, wages and other contractual incomes out of the realised sale proceeds.

4) Risk-Taking and Uncertainty-Bearing– Risk-Taking is perhaps the most important function of an entrepreneur. Modern production is very risky as an entrepreneur is required to produce goods or services in anticipation of their future demand.

Broadly, there are two kinds of risk which he has to face. Firstly, there are some risks, such as risks of fire, loss of goods in transit, theft, etc., which can be insured against. These are known as measurable and insurable risks. Secondly, some risks, however, cannot be insured against because their probability cannot be calculated accurately. These constitute what is called uncertainty. The entrepreneur undertakes both these risks in production.

2. (a) Critically examine the theory of entrepreneurial supply forwarded by Thomas Cochran.

-> Thomas Cochran in his theory had tried to discuss the supply of entrepreneurship from the sociological point of view.

We can understand the crux of his theory by discussing some of the principle elements of his theory.

Cochran had suggested that the cultural values of a society, social expectations and role expectations play an important role in determining the supply of entrepreneurs. The basic problems associated with economic development include non-economic issues. The social factors are responsible in determining the entrepreneurial dynamism and the supply of entrepreneurs.

As far as the entrepreneur is concerned, Cochran opined that the entrepreneurs are not extraordinary persons or super normal persons and they are not abnormal individuals deviant from the society. Rather the entrepreneurs represented role models of the society. An entrepreneur represents a society’s model personality.

The entrepreneur plays an important social role. The role played by the entrepreneur is highly influenced by the model personality that crops up depending on the social conditioning. The role of an entrepreneur is defined by the defining group in corporate world which include the members of board of directors and other top officials.

Cochran was of the opinion that the intrinsic character and behaviour of the executive is highly dependent and conditioned by the type of childbearing and schooling. Thus all social and cultural factors play an important role in influencing the expectation levels, personality, behaviour of everyone in the society and entrepreneur’s role specially.

The level of dynamics associated with entrepreneurial depends on social factors. These factors result in major changes. The model of Cochran was built on American experience of entrepreneurial dynamism. In the nineteenth century, American economy had experienced major changes as a result of the dynamism exhibited by the entrepreneurs.

Thomas Cochran held the view that the factors having a profound influence on the performance of the entrepreneurs include- First, the attitude of a person towards his/her own occupation. Second, the role expectations conceived and expected by the sanctioning group. And third, the operational requirements of the concerned job.

Criticisms:

Cochran’s theory despite having earned high appreciations has been criticized on the following counts:

i. The theory doesn’t provide a satisfactory explanation of the supply of entrepreneurs in an economy.

ii. The theory concentrates only on the social factors and their impact.

iii. The theory ignores the influence of important elements like risk, profit and innovation.

iv. The multiple roles associated with the entrepreneur have not been focused in the theory.

Cochran has propounded a sociological theory of entrepreneurship. Starting with the premise that fundamental problems of economic development are non-economic, he emphasises cultural values, role expectations, and social sanctions as the key elements that determines the supply of entrepreneur. According to him, an entrepreneur is neither a super-normal individual nor a deviant person but represents a society’s model personality. The executive, therefore, plays a social role partly shaped by the model type of personality that comes from the social conditioning of his generation. While the unusual characters will always depart from the norms, in general, invention and innovation will tend to be along lines congenial to the type of conditioning. In a well established corporation, senior officers or the board have well-formed expectations. These constitute the defining groups and the entrepreneurial role is ‘closely defined’ by them. “It is obvious that the primarily cultural factors operating on the personality of the executive and the defining of his role by those involved must accommodate to some degree to the necessities of the operations to be carried out. There is no guarantee accommodation always takes place there that proper the executive’s inner character is largely conditioned by the type of child-rearing and schooling common to the 76 culture. “This relatively simple framework of an entrepreneurial role defined by the personality of the actor, the expectations of groups with power to sanction deviations from expected behaviour, and the operational needs of the function to be performed, subsumes all the social or cultural factors”. 47 He tried to demonstrate the dynamics of his entrepreneurial model by selecting instances from American economic history. He points to important changes that have taken place in the last 150 years in the U.S. economy. First, the rapid adoption of industrial machinery in first half of the 19th century; second the rise of professional management in the large corporation, starting in the second half of the century; and the third, the spread of mass production techniques in the 19th century. In each of these major changes the social factors in American culture operating through the entrepreneur appear to be well marked. The analysis may also be used to answer questions to why corresponding changes did not occur in other cultures. 48 Thus the individual’s performance as entrepreneur will be influenced by his own attitude toward his occupation the role expectations held by sanctioning groups and the operational requirements of the job. The former two elements are determined largely by the society’s values, 77 while the last element will be influenced by changes over time in such exogenous variables as population, technology, consumer demand or merely “cumulative institutional drift”.

(b) Explain the features of entrepreneurship as given by Schumpeter.

-> Schumpeter’s Theory:

The innovative theory is one of the most famous theories of entrepreneurship used all around the world. The theory was advanced by one famous scholar, Schumpeter , in 1991.

Schumpeter believes that creativity or innovation is the key factor in any entrepreneur’s field of specialization. He argued that knowledge can only go a long way in helping an entrepreneur to become successful. He believed development as consisting of a process which involved reformation on various equipment’s of productions, outputs, marketing and industrial organizations.

However, Schumpeter viewed innovation along with knowledge as the main catalysts of successful entrepreneurship. He believed that creativity was necessary if an entrepreneur was to accumulate a lot of profits in a heavily competitive market.

The concept of innovation and its corollary development embraces five functions:

1. Introduction of a new good

2. Introduction of a new method of production

3. Opening of a new market

4. Conquest of a new source of supply of raw materials and

5. Carrying out of a new organization of any industry

Schumpeter represents a synthesis of different notions of entrepreneurship. His concept of innovation included elements of risk taking , superintendence and co-ordination.

According to Schumpeter

· Development is not an automatic process; bur must be deliberately and actively promoted by some agency within the system. Schumpeter called the agent who initiates the above as entrepreneur

· He is the agent who provides economic leadership that changes the initial conditions of the economy and causes discontinuous dynamic changes

· By nature he is neither technician, nor a financier but he is considered an innovator

  • Entrepreneurship is not a profession or a permanent occupation and therefore, it cannot formulate a social class like capitalist

· Psychological, entrepreneurs are not solely motivated by profit

Features of Schumpeter Theory

· High degree of risk and uncertainty in Schumpeterian World

  • Highly motivated and talented individual

· Profit is merely an part of objectives of entrepreneurs

· Progress under capitalism is much slower than actually it is

· It is leadership rather than ownership which matters.

· Schumpeter’s concept of entrepreneurship is both wide and narrow. It is wide in the sense that it includes not only the independent businessmen but also company directors and manager who actually carry out innovative functions. It is narrow to the extent than individuals who merely operate an established business without performing innovative functions are excluded.

· Schumpeter’s innovating entrepreneur represents the most vigorous type of enterprise. But this type of entrepreneurs is a rare species in developing countries. The type of entrepreneur who exploits possibilities as they present themselves within a limited time horizon and mostly on a small scale can only produce limited time horizon and mostly on a small scale can only produce limited results. Society must produce innovators with a long time horizon and who are capable of achieving substantial transformations.

3. (a) Elucidate the role of NABARD in financing small firms.

-> It is the apex banking institution to provide finance for Agriculture and rural development. National Bank for Agriculture and Rural Development (NABARD) was established on July 12, 1982 with the paid up capital of Rs. 100 cr. by 50: 50 contribution of government of India and Reserve bank of India. It is an apex institution in rural credit structure for providing credit for promotion of agriculture, small scale industries, cottage and village industries, handicrafts etc.

Functions of NABARD:

NABARD was established as a development bank to perform the following functions:

1. To serve as an apex financing agency for the institutions providing investment and production credit for promoting various developmental activities in rural areas;

2. To take measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions and training of personnel;

3. To coordinate the rural financing activities of all institutions engaged in developmental work at the field level and liaison with the Government of India, the State Governments, the Reserve Bank and other national level institutions concerned with policy formulation; and

4. To undertake monitoring and evaluation of projects refinanced by it.

5. NABARD gives high priority to projects formed under Integrated Rural Development Programme (IRDP).

6. It arranges refinance for IRDP accounts in order to give highest share for the support for poverty allevia­tion programs run by Integrated Rural Development Programme.

7. NABARD also gives guidelines for promotion of group activities under its programs and provides 100% refinance support for them.

8. It is setting linkages between Self-help Group (SHG) which are organized by voluntary agencies for poor and needy in rural areas.

9. It refinances to the complete extent for those projects which are operated under the ‘National Watershed Development Programme ‘and the ‘National Mission of Wasteland Development‘.

10. It also has a system of District Oriented Monitor­ing Studies, under which, study is conducted for a cross section of schemes that are sanctioned in a district to various banks, to ascertain their performance and to identify the constraints in their implemen­tation, it also initiates appropriate action to correct them.

11. It also supports “Vikas Vahini” volunteer programs which offer credit and development activities to poor farmers.

12. It also inspects and supervises the cooperative banks and RRBs to periodically ensure the development of the rural financing and farmers’ welfare.

13. NABARAD also recommends about licensing for RRBs and Cooperative banks to RBI.

14. NABARD gives assistance for the training and development of the staff of various other credit institutions which are engaged in credit distributions.

15. It also runs programs for agriculture and rural development in the whole country.

16. It is engaged in regulations of the cooperative banks and the RRB’s, and manages their talent acquisition through IBPS CWE conducted across the country.

Role of NABARD:

NABARD has been instrumental in grounding rural, social innovations and social enterprises in the rural hinterlands. It has in the process partnered with about 4000 partner organisations in grounding many of the interventions are it, SHG-Bank Linkage programme, and tree-based tribal communities’ livelihoods initiative, watershed approach in soil and water conservation, increasing crop productivity initiatives through lead crop initiative or dissemination of information flow to agrarian communities through Farmer clubs. Despite all this, it pays huge taxes too, to the exchequer – figuring in the top 50 tax payers consistently. NABARD virtually ploughs back all the profits for development spending, in their unending search for solutions and answers. Thus the organisation had developed a huge amount of trust capital in its 3 decades of work with rural communities.

1. NABARD is the most important institution in the country which looks after the development of the cottage industry, small scale industry and village industry, and other rural industries.

2. NABARD also reaches out to allied economies and supports and promotes integrated development.

3. NABARD discharges its duty by undertaking the following roles:

1. Serves as an apex financing agency for the institutions providing investment and production credit for promoting the various developmental activities in rural areas

2. Takes measures towards institution building for improving absorptive capacity of the credit delivery system, including monitoring, formulation of rehabilitation schemes, restructuring of credit institutions, training of personnel, etc.

3. Co-ordinates the rural financing activities of all institutions engaged in developmental work at the field level and maintains liaison with Government of India , state governments, Reserve Bank of India (RBI) and other national level institutions concerned with policy formulation

4. Undertakes monitoring and evaluation of projects refinanced by it.

5. NABARD refinances the financial institutions which finances the rural sector.

6. NABARD partakes in development of institutions which help the rural economy.

7. NABARD also keeps a check on its client institutes.

8. It regulates the institutions which provide financial help to the rural economy.

9. It provides training facilities to the institutions working in the field of rural upliftment.

It regulates and supervise the cooperative banks and the RRB’s, throughout entire India.

NABARD has its head office at Mumbai, India.

NABARD Regional Office[RO] has a Chief General Manager [CGMs] as its head, and the Head office has several top executives viz the Executive Directors[ED], Managing Directors[MD], and the Chairperson. It has 336 District Offices across the country, one special cell at Srinagar . It also has 6 training establishments.

NABARD is also known for its ‘SHG Bank Linkage Programme’ which encourages India’s banks to lend to self-help groups (SHGs). Largely because SHGs are composed mainly of poor women, this has evolved into an important Indian tool for microfinance . By March 2006, 22 lakh SHGs representing 3.3 crore members had to be linked to credit through this programme.

NABARD also has a portfolio of Natural Resource Management Programmes involving diverse fields like Watershed Development, Tribal Development and Farm Innovation through dedicated funds set up for the purpose.

(b) Describe briefly the various institutional sources of finance.

-> Sources of finance for business are equity, debt, debentures, retained earnings, term loans, working capital loans, letter of credit, euro issue, venture funding etc. These sources of funds are used in different situations. They are classified based on time period, ownership and control, and their source of generation. It is ideal to evaluate each source of capital before opting for it.

Sources of capital are the most exportable area especially for the entrepreneurs who are about to start a new business. It is perhaps the toughest part of all the efforts. There are various capital sources, we can classify on the basis of different parameters.

Having known that there are many alternatives to finance or capital, a company can choose from. Choosing the right source and the right mix of finance is a key challenge for every finance manager. The process of selecting the right source of finance involves in-depth analysis of each and every source of fund. For analyzing and comparing the sources, it needs the understanding of all the characteristics of the financing sources. There are many characteristics on the basis of which sources of finance are classified.

On the basis of a time period, sources are classified as long-term, medium term, and short term. Ownership and control classify sources of finance into owned and borrowed capital. Internal sources and external sources are the two sources of generation of capital. All the sources have different characteristics to suit different types of requirements.

According to Time Period

Sources of financing a business are classified based on the time period for which the money is required. The time period is commonly classified into the following three:

Long-Term Sources of Finance

Long-term financing means capital requirements for a period of more than 5 years to 10, 15, and 20 years or maybe more depending on other factors. Capital expenditures in fixed assets like plant and machinery, land and building, etc of business are funded using long-term sources of finance. Part of working capital which permanently stays with the business is also financed with long-term sources of funds. Long-term financing sources can be in the form of any of them:

Medium Term Sources of Finance

Medium term financing means financing for a period of 3 to 5 years and is used generally for two reasons. Once when long-term capital is not available for the time being and second when deferred revenue expenditures like advertisements are made which are to be written off over a period of 3 to 5 years. Medium term financing sources can in the form of one of them:

  • Preference Capital or Preference Shares
  • Debenture / Bonds
  • Medium Term Loans from

o Financial Institutes

o Government, and

o Commercial Banks

Short Term Sources of Finance

Short term financing means financing for a period of less than 1 year. The need for short-term finance arises to finance the current assets of a business like an inventory of raw material and finished goods, debtors, minimum cash and bank balance etc. Short-term financing is also named as working capital financing. Short term finances are available in the form of:

· Fixed Deposits for a period of 1 year or less

According to Ownership and Control:

Sources of finances are classified based on ownership and control over the business. These two parameters are an important consideration while selecting a source of funds for the business. Whenever we bring in capital, there are two types of costs – one is the interest and another is sharing ownership and control. Some entrepreneurs may not like to dilute their ownership rights in the business and others may believe in sharing the risk.

Owned Capital

Owned capital also refers to equity. It is sourced from promoters of the company or from the general public by issuing new equity shares. Promoters start the business by bringing in the required money for a start-up. Following are the sources of Owned Capital:

  • Equity
  • Preference
  • Retained Earnings
  • Convertible Debentures
  • Venture Fund or Private Equity

Further, when the business grows and internal accruals like profits of the company are not enough to satisfy financing requirements, the promoters have a choice of selecting ownership capital or non-ownership capital. This decision is up to the promoters. Still, to discuss, certain advantages of equity capital are as follows:

· It is a long-term capital which means it stays permanently with the business.

· There is no burden of paying interest or instalments like borrowed capital. So, the risk of bankruptcy also reduces. Businesses in infancy stages prefer equity for this reason.

Borrowed Capital

Borrowed or debt capital is the finance arranged from outside sources. These sources of debt financing include the following:

  • Financial institutions,
  • Commercial banks or
  • The general public in case of debentures

In this type of capital, the borrower has a charge on the assets of the business which means the company will pay the borrower by selling the assets in case of liquidation. Another feature of the borrowed fund is a regular payment of fixed interest and repayment of capital. Certain advantages of borrowing are as follows:

· There is no dilution in ownership and control of the business.

· The cost of borrowed funds is low since it is a deductible expense for taxation purpose which ends up saving on taxes for the company.

· It gives the business the benefit of leverage.

ACCORDING TO SOURCE OF GENERATION:

Based on the source of generation, the following are the internal and external sources of finance:

Internal Sources

The internal source of capital is the one which is generated internally by the business. These are as follows:

  • Retained profits

· Reduction or controlling of working capital

  • Sale of assets etc.

The internal source of funds has the same characteristics of owned capital. The best part of the internal sourcing of capital is that the business grows by itself and does not depend on outside parties. Disadvantages of both equity and debt are not present in this form of financing. Neither ownership dilutes nor does fixed obligation/bankruptcy risk arise.

External Sources

An external source of finance is the capital generated from outside the business. Apart from the internal sources of funds, all the sources are external sources.

Deciding the right source of funds is a crucial business decision taken by top-level finance managers. The usage of the wrong source increases the cost of funds which in turn would have a direct impact on the feasibility of the project under concern. Improper match of the type of capital with business requirements may go against the smooth functioning of the business. For instance, if fixed assets, which derive benefits after 2 years, are financed through short-term finances will create cash flow mismatch after one year and the manager will again have to look for finances and pay the fee for raising capital again.

4(a) Explain in details the role of government in organising EDPs.

-> Government plays a very important role in developing entrepreneurship. Government develop industries in rural and backward areas by giving various facilities with the objective of balances regional development. The government set programmes to help entrepreneurs in the field of technique, finance, market and entrepreneurial development so that they help to accelerate and adopt the changes in industrial development. Various institutions were set up by the central and state governments in order to fulfil this objective.

Institutions set up by Central Government:

1. Small industries development organization (SIDO)

SIDO was established in October 1973 now under Ministry of Trade, Industry and Marketing. SIDO is an apex body at Central level for formulating policy for the development of Small Scale Industries in the country, headed by the Additional Secretary & Development Commissioner (Small Scale Industries) under Ministry of Small Scale Industries Govt. of India. SIDO is playing a very constructive role for strengthening this vital sector, which has proved to be one of the strong pillars of the economy of the country. SIDO also provides extended support through Comprehensive plan for promotion of rural entrepreneurship.

2. Management development Institute (MDI)

MDI is located at Gurgaon (Haryana).It was established in 1973 and is sponsored by Industrial Finance Corporation of India, with objectives of improving managerial effectiveness in the industry. It conducts management development programs in various fields. In also includes the programmes for the officers of IAS, IES, BHEL, ONGC and many other leading PSU’s.

3. Entrepreneurship development institute of India (EDI)

Entrepreneurship Development Institute of India (EDI), an autonomous and not-for-profit institute, set up in 1983, is sponsored by apex financial institutions – the IDBI Bank Ltd., IFCI Ltd., ICICI Bank Ltd. and the State Bank of India (SBI). EDI has helped set up twelve state-level exclusive entrepreneurship development centres and institutes. One of the satisfying achievements, however, was taking entrepreneurship to a large number of schools, colleges, science and technology institutions and management schools in several states by including entrepreneurship inputs in their curricula. In the international arena, efforts to develop entrepreneurship by way of sharing resources and organizing training programmes have helped EDI earn accolades and support from the World Bank, Commonwealth Secretariat, UNIDO, ILO, British Council, Ford Foundation, European Union, ASEAN Secretariat and several other renowned agencies. EDI has also set up Entrepreneurship Development Centre at Cambodia, Lao PDR, Myanmar and Vietnam and is in the process of setting up such centres at Uzbekistan and five African countries.

4. All India Small Scale Industries Board (AISSIB)

The Small Scale Industries Board (SSI Board) is the apex advisory body constituted to render advice to the Government on all issues pertaining to the small scale sector. It determines the policies and programmes for the development of small industries with a Central Government Minister as its president and the representatives of various organization i.e. Central Government, State Government, National Small Industries Corporations, State Financial Corporation, Reserve Bank of India, State Bank of India, Indian Small Industries Board, Non government members such as Public Service Commission, Trade and Industries Members.

5. National Institution of Entrepreneurship and Small Business Development (NIESBUD),New Delhi

It was established in 1983 by the Government of India. It is an apex body to supervise the activities of various agencies in the entrepreneurial development programmes. It is a society under Government of India Society Act of 1860.The major activities of institute are:

i) To make effective strategies and methods

ii) To standardize model syllabus for training

iii) To develop training aids, tools and manuals

iv) To conduct workshops, seminars and conferences.

v) To evaluate the benefits of EDPs and promote the process of Entrepreneurial Development.

vi) To help support government and other agencies in executing entrepreneur development programmes.

vii) To undertake research and development in the field of EDPs.

6. National Institute of Small Industries Extension Training

It was established in 1960 with its headquarters at Hyderabad. The main objectives of national Institute of Small Industries Extension Training are:

i) Directing and coordinating syllabi for training of small entrepreneurs.

ii) Advising managerial and technical aspects.

iii) Organizing seminars for small entrepreneurs and managers.

iv) Providing services regarding research and documentation.

7. National Small Industries Corporation Ltd. (NSIC)

The NSIC was established in 1995 by the Central Government with the objective of assisting the small industries in the Government purchase programmes. The corporation provides a vast-market for the products of small industries through its marketing network. It also assists the small units in exporting their products in foreign countries.

8. Risk Capital and Technology Finance Corporation Ltd.(RCTFC)

RCTFC was established in 1988 with an authorized capital of 15 crores rupees. The main objectives of RCTFC are provision of risk capital for the extension and expansion of entrepreneurial development and venture capital for the projects with high techniques for technology development and transfer.

9. National Research and development corporation (NRDC)

NRDC was established in 1953 under Department of Science and Industrial Research under Government of India. Its main objectives are:

i) Providing assistance in technology transfer

ii) Transfer of technology

iii) Establishing relations with various technology institutions and collecting various indigenous techniques developed by them.

10. Indian Investment Centre

This is an autonomous organization established by Central Government. Its main objective is to assist in promoting foreign cooperation with Indian entrepreneurs and providing necessary information to foreign entrepreneurs.

11. Khadi and village industries Commission (KVIC)

Khadi and Village Industries Commission established by an Act of Parliament in 1956.It is a service organization engaged in promotion and development of Khadi and Village Industries in rural areas. Its main objectives are:

i) Providing employment in rural areas.

ii) Improvement of skills

iii) Rural Industrialisation

iv) Transfer of Technology

v) Building strong rural community base and self reliance among rural people.

12. Indian Institute of Entrepreneurship (IIE)

It was established by the Department of Small Scale Industries and Agro and Rural Industries in 1953.It is autonomous organization with its headquarters at Guwahati. Its main objective is to undertake research, training and consultancy activities in the field of small industry and entrepreneurship.

13. Miscellaneous Organisation

In addition to above various organizations at all India level are assisting and are engaged in entrepreneur development. These include ICICI, IFCI, SIDBI, UTI, IDBI, IIBI etc.

14. National Alliance of Young Entrepreneurs (NAYE)

It has sponsored number of entrepreneurial development scheme in collaboration with various public sector banks. The main objective of the scheme is to encourage young entrepreneurs to explore investment and self –employment opportunities .It arranges for their training and assists them in procuring necessary finance. In 1975 NAYE also set up a Women’s Wing to make women self-reliant and to raise their status.

15. Centre for Entrepreneurial Development (CED) Ahmadabad

It was sponsored by the Government of Gujarat and public financial institutions operating in the State. It conducts entrepreneurial development programmes at various centres. The important features of training programme are:

i) Training programmes were conducted after survey for opportunities was made.

ii) Appropriate linkage was established with supporting agencies supplying finance, factory sheds, raw materials, etc.

iii) Behavioural tests were conducted to select the entrepreneurs.

iv) Training programmes covered theoretical and practical aspects.

v) Full time project leader took follow up action after the training was over.

16. Institute for Entrepreneurial Development (IED)

It was set up by the IDBI in association with other financial institutions, public sector banks and the State Governments. The IEDs was set up to fulfil the entrepreneurial development needs of the industrially backward States in the country.

17. Technical Consultancy Organisation (TCOs)

A network of TCOs has been established by All India Financial Institutions and State Government throughout the country. These organizations have been set up to provide comprehensive package of services to entrepreneurs in general and to small business entrepreneurs in particular. Their main functions include the following:

i) Identifying potential industrial project.

ii) Preparing project reports, feasibility reports and pre-investment status.

iii. Identifying potential entrepreneurs.

Providing technical and administrative support.

Conducting techno-economic studies of the projects.

Conducting market research and surveys.

Rendering advice to set up laboratories and design centre.

18. Public Sector Banks.

Public sector banks in association with NAYE have been conducting entrepreneurial development programmes. The main thrust of these banks has been to identify potential entrepreneurs in rural and backward areas. For example Punjab National Bank started entrepreneurial assistance programme in March 1977 in the States of West Bengal and Bihar. Similarly, Bank of India started entrepreneurial assistance programme since August 1972 in the States of Punjab, Rajasthan, Himachal Pradesh and the Union Territories of Chandigarh and Delhi.

The important Forms of entrepreneurial assistance are:

i) Identifying potential entrepreneurs

ii) Identifying viable projects.

iii) Assisting in preparation of project profiles

iv) Helping in project evaluation.

v) Arranging practical training.

vi) Financing the projects.

B) Institutions set up at State Level

There are a number of institutions establishes at state level for organizing, developing, developing, assisting and making successful entrepreneurial development programmes. Prominent among these are:

i) Small Industries Service Institute (SISI)

ii) State Financial Corporation (SFC)

iii) State Small Industries Corporation (SSIC)

iv) District Industries Centres (DIC)

v) Technical Consulting Organisation Ltd. (TCO)

vi) Industrial Directorates

vii) Commercial and Cooperative Banks

viii) State Industrial Development Corporation

ix) Industrial Estates

x) State Industries Corporation

The above mentioned State and Central level Institutions have provided a number of concessions and facilities to promote entrepreneur development in India. They have also played an important role in balanced industrial development in the country.

(b) Elucidate the importance of EDP for entrepreneurial development.

-> EDP is a programme meant to develop entrepreneurial abilities among the people. In other words, it refers to inculcation, development, and polishing of entrepreneurial skills into a person needed to establish and successfully run his / her enterprise. Thus, the concept of entrepreneurship development programme involves equipping a person with the required skills and knowledge needed for starting and running the enterprise.

Objectives of EDP:

The major objectives of the Entrepreneurship Development Programmes (EDPs) are to:

a. Develop and strengthen the entrepreneurial quality, i.e. motivation or need for achievement.

b. Analyse environmental set up relating to small industry and small business.

c. Select the product.

d. Formulate proposal for the product.

e. Understand the process and procedure involved in setting up a small enterprise.

f. Know the sources of help and support available for starting a small scale industry.

g. Acquire the necessary managerial skills required to run a small-scale industry.

h. Know the pros and cons in becoming an entrepreneur.

i. Appreciate the needed entrepreneurial discipline.

j. Besides, some of the other important objectives of the EDPs are to:

k. Let the entrepreneur himself / herself set or reset objectives for his / her enterprise and strive for their realization.

l. Prepare him / her to accept the uncertainty in running a business.

m. Enable him / her to take decisions.

n. Enable to communicate clearly and effectively.

o. Develop a broad vision about the business.

p. Make him subscribe to the industrial democracy.

q. Develop passion for integrity and honesty.

r. Make him learn compliance with law.

Importance of EDP for entrepreneurial development is:-

Entrepreneurs possess certain competencies or traits. These competencies or traits are the underlying characteristics of the entrepreneurs which result in superior performance and which distinguish successful entrepreneurs from the unsuccessful ones.

Then, the important question arises is: where do these traits come from? Or, whether these traits are in born in the entrepreneurs or can be induced and developed? In other words, whether the entrepreneurs are born or made? Behavioural scientists have tried to seek answers to these questions.

A well-known behavioural scientist David C. McClelland (1961) at Harvard University made an interesting investigation-cum-experiment into why certain societies displayed great creative powers at particular periods of their history? What was the cause of these creative bursts of energy? He found that ‘the need for achievement (n’ ach factor)’ was the answer to this question. It was the need for achievement that motivates people to work hard. According to him, money- making was incidental. It was only a measure of achievement, not its motivation.

In order to answer the next question whether this need for achievement could be induced, he conducted a five-year experimental study in Kakinada, i.e. one of the prosperous districts of Andhra Pradesh in India in collaboration with Small Industries Extension and Training Institute (SIET), Hyderabad.

This experiment is popularly known as ‘Kakinada Experiment’. Under this experiment, young persons were selected and put through a three-month training programme and motivated to see fresh goals.

One of the significant conclusions of the experiment was that the traditional beliefs did not seem to inhibit an entrepreneur and that the suitable training can provide the necessary motivation to the entrepreneurs (McClelland & Winter 1969). The achievement motivation had a positive impact on the performance of entrepreneurs.

In fact, the ‘Kakinada Experiment’ could be treated as a precursor to the present day EDP inputs on behavioural aspects. In a sense, ‘Kakinada Experiment’ is considered as the seed for the Entrepreneurship Development Programmes (EDPs) in India.

The fact remains that it was the ‘Kakinada Experiment’ that made people appreciate the need for and importance of the entrepreneurial training, now popularly known as ‘EDPs’, to induce motivation and competence among the young prospective entrepreneurs.

Based on this, it was the Gujarat Industrial Investment Corporation (GIIC) which, for the first time, started a three-month training programmes on entrepreneurship development. Impressed by the results of GIIC’s this training programme, the Government of India embarked, in 1971, on a massive programme on entrepreneurship development. Since then, there is no looking back in this front. By now, there are some 686 all-India and State level institutions engaged in conducting EDPs in hundreds imparting training to the candidates in thousands.

Till now, 12 State Governments have established state-level Centre for Entrepreneurship Development (CED) or Institute of Entrepreneurship Development (lED) to develop entrepreneurship by conducting EDPs. Today, the EDP in India has proliferated to such a magnitude that it has emerged as a national movement. It is worth mentioning that India operates the oldest and largest programmes for entrepreneurship development in any developing country.

The impact of India’s EDP movement is borne by the fact that the Indian model of entrepreneurship development is being adopted by some of the developing countries of Asia and Africa. Programmes similar to India’s EDPs are conducted in other countries also, for example, ‘Junior Achievement Programme’ based on the principle of ‘catch them young’ in USA and ‘Young Enterprises’ in the U. K.

5(a) Describe entrepreneurship development in the North East.

-> In India efforts to promote and develop entrepreneurship among the youth began with Industrial Campaign during the early 1960s. It has now taken the form of a nationwide movement. While Gujarat is credited as being the first state in the country to make planned and systematic efforts in entrepreneurship development, in the North East India, Assam is the pioneer in this field. In 1973, Assam started a novel experiment on entrepreneurship development by setting up district level agencies known as entrepreneurial motivational training centres (EMTC) to identify, select, and train prospective entrepreneurs and provide them all support services to start and run their enterprises. The EMTCs did commendable work in promoting entrepreneurship in the state during the early years of their functioning. After more than 25 years of their operation the EMTCs have now been merged with District Industries Centres. Thus, an important chapter in the history of entrepreneurship movement in the North East is closed forever.

Training Organisations:-

There are now other agencies such as Small Industries Services Institutes (SISIs) and branch SISIs, North Eastern Industrial and Technical Consultancy Organisation (NEITCO), North Eastern Industrial Consultant (NECON), and National Small Industries Corporation (NSIC). In addition, in 1993 the Government of India set up Indian Institute of Entrepreneurship (IIE), a national institute at Guwahati to act as catalyst on entrepreneurship development with its focus on the North East. Entrepreneurship development has become a major concern of all these organisations and institutions, apart from their other regular activities. Among other agencies, the State Bank of India is one of the first few organisations to take up Entrepreneurship Development Programme (EDP) in the North East. It, however, stopped to organise training for entrepreneurs for about one and half decades but has again started a fresh initiative from 2001 to train prospective entrepreneurs in the region. Rotary Club of Guwahati South, Faraday Bicentenary Science Park of Cotton College, Assam Engineering College, Assam Engineering Institute etc. also occasionally organise training for promotion of entrepreneurship. The implementation of Prime Minister’s Rozgar Yojana (PMRY) from 1993 led the District Industries Centres (DICs), Small Industries Development Corporations, National Productivity Council (NPC), small industries associations and non-governmental organisations, consultants etc. to take up training of PMRY beneficiaries. There are now voluntary organisations also who are directly involved in promotion of entrepreneurship through training and support. But the major role in the entrepreneurship development in the states of the North East is still played by NEITCO, NECON, NSIC and IIE.

North Eastern Council and Entrepreneurship Development
The North Eastern Council (NEC), set up in 1972, recognised the important role of entrepreneurship in the economic and industrial development of the region. One of the first important works of it was to get a study done on the entrepreneurial and managerial needs of the region through SIET Institute (now NISIET). Based on the study the NEC took a number of steps for promoting entrepreneurship in the region. In 1985, the NEC drew up an ambitious plan to train and develop 5000 entrepreneurs during the seventh plan (1985-90). In its efforts Industrial Development Bank of India (IDBI) and its sister organisations, Industrial Finance Corporation of India (IFCI) and Industrial Credit and Investment Corporation of India (ICICI) also participated. As against the target of training 5000 entrepreneurs the four organisations, namely NEITCO, NISIET, NECON and EDII together could train 3609 participants. An evaluation study by NEC (1990) revealed that overall rate of success of EDPs organised during the 7th Plan (1985-90) was 20.88 per cent.

The initiative taken by the NEC in 1985 still continues. In its efforts there are now new partners. SIDBI also started participating in entrepreneurship development efforts, particularly in respect to rural and women entrepreneurs. During April 1990 to March 1996 NEC and IDBI and NEC and SIDBI together sponsored 212 EDPs in the North East in which 5375 participants participated. An evaluation study of these programmes revealed that 25.2 per cent of the participants trained could set up their enterprises. Now the Khadi and Village Industries Commission (KVIC) have also started to participate in rural entrepreneurship development programme.

Apart from NEC, IDBI and SIDBI and KVIC, there are now several other organisations that is supporting initiative for promotion of new entrepreneurs and/or creation of awareness of entrepreneurial opportunities in the North East. Among them are the offices of the Development Commissioner (SSI) under the Union Ministry of SSI and Agro and Rural Industries, Department of Science and Technology with focus on promoting science and technology entrepreneurs, Union Ministry of Non-Conventional Energy Sources for promoting entrepreneurship in non-conventional energy sector, NABARD for promoting rural and women entrepreneurship, Council for Advancement of People’s Action and Rural Technologies (CAPART) under the Union Ministry of Rural Development, for involving voluntary organisations in entrepreneurship development effort.

IIE and Entrepreneurship Development :-


IIE has been following a multi-pronged approach in entrepreneurship development – organising and conducting training for prospective entrepreneurs, (Promotion of New Entrepreneurs), for existing entrepreneurs (Growth of Existing Entrepreneurs), for personnel from promotional and developmental organisations, (Creation of Entrepreneurial Environment), for educated sons and daughters of entrepreneurs, businessmen and artisans (Continuity of Family Business) and students and teachers from school, college and university and technical institutes (Entrepreneurship Education). Each group of programmes is meant for separate target group and is aimed at achieving specific objectives. Programmes for students, started in 1997, are aimed at creating awareness of entrepreneurial opportunities and interest in entrepreneurial career among students. Later on the Institute started teachers’ programmes to involve them in creating awareness of opportunities for self-employment and entrepreneurial career among the students. Besides, the teachers are also expected to guide and counsel students for career in entrepreneurship and self-employment. The Institute has gone a step ahead to induce the college and university teachers to set up information and career guidance cell (ICGC) in their respective institutions, pending introduction of entrepreneurship as an element of academic curriculum.

Besides, organising and conducting training for different target groups, the Institute has also been experimenting different approaches on entrepreneurship development. During November 1996 to November 1998 the Institute adopted an area approach (known as Rural Industries Programme or RIP) on entrepreneurship development in Nagaon District of Assam with the objective to promote 100 entrepreneurs in the district in a period of two years. The experiment made with support from SIDBI was implemented in two phases – in the first phase it identified a list of about 110 viable projects in the district. It also set up a field office at Nagaon, which identified and selected prospective entrepreneurs and trained them. In the second phase it provided post-training support to the trainees. At the end of March 1999, eighty seven trainees could set up enterprises, some of them on their own and many with bank finance. Based on the results of this experiment the Institute has now taken up another RIP in the Barpeta district of Assam. It also made an experiment of a 12 week turnkey EDP to improve the success rate of EDPs. This turnkey approach has now been adopted by NEITCO and NECON also. Besides, the Institute also designed a Crash Course on Entrepreneurship for graduate and postgraduate youth in search of opportunities for self-employment or salaried employment. This experiment revealed that awareness creation of entrepreneurial opportunities could go a long way in the promotion of entrepreneurship and self-employment among educated youth in the North East. The Institute has also started a 12 week certificate course in Entrepreneurship and Management for graduate and post graduate youth for promoting new entrepreneurs and developing entrepreneurial managers that are now in demand from industry and others alike.

Apart from training the Institute also made a number of research studies to enrich the knowledge of the critical factors in the process of entrepreneurship development.

Social and Institutional Issues:-

Training and research done by the Institute brought out a number of social and institutional issues that need to be addressed to have better impact of the efforts to promote entrepreneurship. Socio-cultural environment and values have an important bearing in the emergence of entrepreneurship in any society. While the individual may like to take up entrepreneurial career, the family may not like to encourage him/her to take up such a career. It is a fact that majority of parents want their children to take up salaried employment. Preference for salaried employment is not peculiar to the states of the North East. This can be found in other states also. But preference for salaried employment in the North East is very high. There are, of course, youth taking up entrepreneurial career against the wishes of the parents. But their number is very small.

It is not the family pressure or family expectation alone for which the youth in the North East have developed a preference for salaried employment. It is also socio-cultural environment that has been a hindrance in the growth of entrepreneurship in the region. It is social status that counts most while making a choice of a career.

Organisational Environment:-

In addition to socio-cultural environment, organisational environment has also much to do with the emergence of entrepreneurship in a society. There are many organisations and institutions to provide support to entrepreneurs such as training institutes, small industry development corporations, marketing organisations, consultancy organisations and banks and financial institutions. Apart from these organisations, there are regulatory organisations to give clearance, say for construction of factory shed, or for taking up entrepreneurial activities in certain line of activity, say drugs and pharmaceutical units, or organisation to supply of power, electricity board/department etc. All organisations have their policy and programme to provide necessary help and support to entrepreneurs. However, there is much to be desired in the support provided by the support organisations. Getting clearance for construction of factory shed or permission for starting specific line of activity or even for getting power connection takes unduly long time. Among various organisations banks and financial institutions have an important role to play in the development of entrepreneurship in the region. But bank finance continues to remain a major problem for the entrepreneurs. There are marketing organisations to provide marketing support. There are also marketing schemes to help the entrepreneurs. However, the organisational climate in support organisations is yet to be entrepreneur-friendly. The DICs have also not been able to function as a single window clearance agency.

Emerging Trends:-

The efforts to promote and develop entrepreneurship during the last more than two and half decades have resulted in some changes in the entrepreneurial scenario in the North East. Again, more and more women are now taking up entrepreneurial career that was not found even in late 1980s and there are now women entrepreneurs associations in the region. Colleges and Universities are gradually taking interest to create awareness of career option in entrepreneurial activities among the students. Many colleges have already set up information and career guidance cells (ICGC) to guide and counsel students for career in entrepreneurial activities and self-employment and getting their teachers trained for this purpose. Universities have also been considering introduction of entrepreneurship as an element in academic curriculum. Dibrugarh University and Guwahati University have already taken steps to introduce entrepreneurship in post-graduate commerce course. Entrepreneurs have been emerging in new areas, particularly in service sector. Many new entrepreneurs are taking up franchise for being business owners. The region does have entrepreneurs, may be micro entrepreneurs. This can be seen from the fact that it has two important sectors, namely, handloom and handicraft sectors. Women weavers predominate in the vast handloom sector in the region. In fact the highest number of amateur weavers in the country is concentrated in the North East. The existence of the artisan sectors is a positive condition for promoting entrepreneurship. Besides new entrepreneurs are also emerging. The average size of units that are being set up by the new entrepreneurs is with Rs.1 to Rs.2 lakh investment. The types of enterprises that are emerging are still traditional and conventional like weaving cotton and silk sfabrics.

(b) Elucidate the role of IIE towards industrial development of North East India.

-> IIE has been following a multi-pronged approach in entrepreneurship development – organising and conducting training for prospective entrepreneurs, (Promotion of New Entrepreneurs), for existing entrepreneurs (Growth of Existing Entrepreneurs), for personnel from promotional and developmental organisations, (Creation of Entrepreneurial Environment), for educated sons and daughters of entrepreneurs, businessmen and artisans (Continuity of Family Business) and students and teachers from school, college and university and technical institutes (Entrepreneurship Education). Each group of programmes is meant for separate target group and is aimed at achieving specific objectives. Programmes for students, started in 1997, are aimed at creating awareness of entrepreneurial opportunities and interest in entrepreneurial career among students. Later on the Institute started teachers’ programmes to involve them in creating awareness of opportunities for self-employment and entrepreneurial career among the students. Besides, the teachers are also expected to guide and counsel students for career in entrepreneurship and self-employment. The Institute has gone a step ahead to induce the college and university teachers to set up information and career guidance cell (ICGC) in their respective institutions, pending introduction of entrepreneurship as an element of academic curriculum.

Besides, organising and conducting training for different target groups, the Institute has also been experimenting different approaches on entrepreneurship development. During November 1996 to November 1998 the Institute adopted an area approach (known as Rural Industries Programme or RIP) on entrepreneurship development in Nagaon District of Assam with the objective to promote 100 entrepreneurs in the district in a period of two years. The experiment made with support from SIDBI was implemented in two phases – in the first phase it identified a list of about 110 viable projects in the district. It also set up a field office at Nagaon, which identified and selected prospective entrepreneurs and trained them. In the second phase it provided post-training support to the trainees. At the end of March 1999, eighty seven trainees could set up enterprises, some of them on their own and many with bank finance. Based on the results of this experiment the Institute has now taken up another RIP in the Barpeta district of Assam. It also made an experiment of a 12 week turnkey EDP to improve the success rate of EDPs. This turnkey approach has now been adopted by NEITCO and NECON also. Besides, the Institute also designed a Crash Course on Entrepreneurship for graduate and postgraduate youth in search of opportunities for self-employment or salaried employment. This experiment revealed that awareness creation of entrepreneurial opportunities could go a long way in the promotion of entrepreneurship and self-employment among educated youth in the North East. The Institute has also started a 12 week certificate course in Entrepreneurship and Management for graduate and post graduate youth for promoting new entrepreneurs and developing entrepreneurial managers that are now in demand from industry and others alike.

Apart from training the Institute also made a number of research studies to enrich the knowledge of the critical factors in the process of entrepreneurship development.

Social and Institutional Issues:-

Training and research done by the Institute brought out a number of social and institutional issues that need to be addressed to have better impact of the efforts to promote entrepreneurship. Socio-cultural environment and values have an important bearing in the emergence of entrepreneurship in any society. While the individual may like to take up entrepreneurial career, the family may not like to encourage him/her to take up such a career. It is a fact that majority of parents want their children to take up salaried employment. Preference for salaried employment is not peculiar to the states of the North East. This can be found in other states also. But preference for salaried employment in the North East is very high. There are, of course, youth taking up entrepreneurial career against the wishes of the parents. But their number is very small.

It is not the family pressure or family expectation alone for which the youth in the North East have developed a preference for salaried employment. It is also socio-cultural environment that has been a hindrance in the growth of entrepreneurship in the region. It is social status that counts most while making a choice of a career.

Organisational Environment:-

In addition to socio-cultural environment, organisational environment has also much to do with the emergence of entrepreneurship in a society. There are many organisations and institutions to provide support to entrepreneurs such as training institutes, small industry development corporations, marketing organisations, consultancy organisations and banks and financial institutions. Apart from these organisations, there are regulatory organisations to give clearance, say for construction of factory shed, or for taking up entrepreneurial activities in certain line of activity, say drugs and pharmaceutical units, or organisation to supply of power, electricity board/department etc. All organisations have their policy and programme to provide necessary help and support to entrepreneurs. However, there is much to be desired in the support provided by the support organisations. Getting clearance for construction of factory shed or permission for starting specific line of activity or even for getting power connection takes unduly long time. Among various organisations banks and financial institutions have an important role to play in the development of entrepreneurship in the region. But bank finance continues to remain a major problem for the entrepreneurs. There are marketing organisations to provide marketing support. There are also marketing schemes to help the entrepreneurs. However, the organisational climate in support organisations is yet to be entrepreneur-friendly. The DICs have also not been able to function as a single window clearance agency.

Emerging Trends:-

The efforts to promote and develop entrepreneurship during the last more than two and half decades have resulted in some changes in the entrepreneurial scenario in the North East. Again, more and more women are now taking up entrepreneurial career that was not found even in late 1980s and there are now women entrepreneurs associations in the region. Colleges and Universities are gradually taking interest to create awareness of career option in entrepreneurial activities among the students. Many colleges have already set up information and career guidance cells (ICGC) to guide and counsel students for career in entrepreneurial activities and self-employment and getting their teachers trained for this purpose. Universities have also been considering introduction of entrepreneurship as an element in academic curriculum. Dibrugarh University and Guwahati University have already taken steps to introduce entrepreneurship in post-graduate commerce course. Entrepreneurs have been emerging in new areas, particularly in service sector. Many new entrepreneurs are taking up franchise for being business owners. The region does have entrepreneurs, may be micro entrepreneurs. This can be seen from the fact that it has two important sectors, namely, handloom and handicraft sectors. Women weavers predominate in the vast handloom sector in the region. In fact the highest number of amateur weavers in the country is concentrated in the North East. The existence of the artisan sectors is a positive condition for promoting entrepreneurship. Besides new entrepreneurs are also emerging. The average size of units that are being set up by the new entrepreneurs is with Rs.1 to Rs.2 lakh investment. The types of enterprises that are emerging are still traditional and conventional like weaving cotton and silk fabrics.


Conclusion:
Beginning from the early 1970s, there have been planned and systematic efforts to promote entrepreneurship in the North East, initially by the Government of Assam and later on by the North Eastern Council. The efforts still continue. But more efforts are still required to promote and develop entrepreneurship in the region to bring it at par with the level of development of the rest of the country. In any approach to entrepreneurship development in the North East, due care is to be given to the removal of the problems and also for using the potential for entrepreneurship. This will mean taking effective steps for creation of awareness of entrepreneurial opportunities among the youth, developing their knowledge and skill and raising their level of motivation for entrepreneurial career. In addition, efforts are also needed for creation of an entrepreneurial environment in the support system and social environment. There will be more opportunities for small entrepreneurs in business and service sectors than in the industry sector in future partly because of economic liberalisation and partly due to development of information technology. Greater emphasis should be laid on developing entrepreneurship in these sectors. Besides, there is also need to give due emphasis on women entrepreneurship, especially from SC/ST and OBC categories. In order to create an environment for entrepreneurship it is also necessary to introduce entrepreneurship as an element of the academic curriculum. These steps may help in the emergence of entrepreneurship in the North East.




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