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Class : 11
Unit : Economics

What is Cottage and Small Scale Industries? Explain its importance.

Ans : Cottage industries are those industries which are carried on at home using on resources. Cottage industries are home based rather than factory based. In other words, cottage industry is one which is carried with the help of family members either as a whole or part time occupation. The cottage industry of Nepal includes the making of Nepal paper, shoemaking, carpet making, khukuries and so on. Small scale industries are generally operated as a full-time occupation in both rural and urban areas. Small scale industries can’t be operated only by family members so they are mostly run by hired labors. Cloth weaving, blanket weaving, wood carving, furniture making, agro based industries etc. are the some of the examples of small scale industries. According two industrial policy 2011, “those industries which have fixed capital investment up to 5 crore are called small scale industries.” # Importance of cottage and small scale industries. Ans:- Nepal is an agricultural based country. This agriculture is also dependent on season. Due to this there is high unemployment and disguised unemployment in Nepal. In this situation Cottage and small scale industries has played an important role in solving the problem of unemployment and raising the national income. The main importance of Cottage and small scale industries are explained below: i) Easy to establish:- Cottage and small scale industries do not required more capital. These industries can be easily established in different parts of country even with small amount of capital. ii) Employment opportunities:- Agriculture provides only seasonal employment and rest of the time people remain unemployed. The development of Cottage and small scale industries can be generated employment opportunities and can solve the problem of unemployment. iii) Basis of large scale industries:- Cottage and small scale industries are the basis of large scale industries. People learn management skills, techniques from such industries. The development of Cottage and small scale industries will increase the income and purchasing power of people. This extends the market for large scale industries. iv) Utilization of local raw-materials:- Various types of raw materials are found in different parts of country. The local raw materials like a stone, wood, etc. can be used by utilizing these resources in cottage and small scale industries. v) Subsidiary source of income:- If cottage industries could be developed in rural area, seasonal employment could be made available to most of the rural people. They can get extra work which help to earn additional income. Therefore Cottage and small scale industries are additional source of income of rural areas people. vi) Source of foreign exchange:- The various kinds of goods like carpet, khukuries, furniture etc. are sold in international market. They have to earn foreign currencies by exporting these goods. vii) Preservation of traditional art, skill and culture:- Cottage and small scale industries plays an important role in preserving local arts, skills and culture. The productions of goods from these industries represent local art and culture of different part of the country. The handicraft goods of Nepal have become popular in foreign market. viii) Source of national income:- Small scale industries provides employment opportunities which lead to increase per capita income and national income of the country. The products of Cottage and small scale industries can be exported to be foreign countries which also help to increase national income. The government also receives free charge and tax from Cottage and small scale industries. ix) Reduction of regional disparities:- Cottage and small scale industries increase the income of the people and reduces the gap between rich and poor. We can reduce the poverty by expanding small scale industries.
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