B.B.A. LL.B. (Five Years) Sem 2 Entrepreneurship Development 2015 Dec (100 marks) Question Paper with Solutions

1. As bearing risk and uncertainty. Richard Cantillon (died 1734) saw the entrepreneur as one who buys at a known price and sells at an unknown one. Frank H. Knight, in Risk, Uncertainty and Profit (1921), separated insurable risk from true uncertainty. He held that profit is the reward for bearing uncertainty.
2. As innovation. J. A. Schumpeter, in The Theory of Economic Development (English edition 1934), called "the carrying out of new combinations" enterprise. A new good, a new method, a new market, a new source of supply or a new organisation of an industry are all such combinations.
3. As a practice that can be learned. Peter F. Drucker, in Innovation and Entrepreneurship (1985), wrote that the entrepreneur "always searches for change, responds to it, and exploits it as an opportunity".
4. As a drive within the person. David McClelland, in The Achieving Society (1961), traced entrepreneurship to a strong need for achievement.

Working definition. Entrepreneurship is the process by which a person or a team perceives an opportunity and gathers the resources to pursue it. They bear the uncertainty of the outcome and build an enterprise that creates value and grows.

Importance of entrepreneurship in India

The importance of entrepreneurship in India is best seen against the country's own development challenges.

1. Jobs for a young and growing workforce

Every year millions of young people enter the labour market. Government and large companies cannot absorb them all. Entrepreneurship lets young people create their own work and employ others. India's MSMEs, nearly all of them owner-run, employ over 40 crore people according to the Ministry of MSME (August 2026).

2. Moving labour out of farming

Many people in rural India depend on small farms that cannot support them fully. Non-farm enterprises such as food processing, repair services, transport and retail give them better work close to home. The Prime Minister's Employment Generation Programme (PMEGP) pays a higher margin money subsidy for rural units than for urban ones. For the general category it is 25 per cent of project cost in rural areas and 15 per cent in urban areas.

6. Building manufacturing

Make in India, launched on 25 September 2014, aims to make India a hub for manufacturing. Small and medium manufacturers supply parts to large factories and make finished goods themselves. The Economic Survey 2025-26 puts MSMEs at 35.4 per cent of manufacturing output.

7. Exports and foreign exchange

The same Survey puts MSMEs at 48.58 per cent of India's exports. Garments, leather goods, handicrafts, processed foods and engineering components from small firms earn foreign exchange. They also replace imports.

8. Innovation and startups

The Startup India initiative began in January 2016. In February 2026 the Government revised the recognition framework, raising the turnover limit from Rs 100 crore to Rs 200 crore. It also created a "Deep Tech Startup" category with a 20-year age limit. Young firms in software, digital payments, health technology and clean energy show how entrepreneurship brings new technology into Indian markets.

An illustration

Consider a graduate in a small Karnataka town who starts a millet-processing unit with a MUDRA loan. She buys grain from nearby farmers, employs eight women from the village and sells packed flour to city shops and online buyers. Within a few years she registers on Udyam, wins a supply order from a government canteen and begins to export a small quantity. One enterprise has touched jobs, farm incomes, women's work, formalisation, public purchase and exports.

The official evidence at a glance

1. MSMEs contribute 31.1 per cent of GDP (Economic Survey 2025-26, quoted by the Government in August 2026).
2. They contribute 35.4 per cent of manufacturing output and 48.58 per cent of exports (same source).
3. Udyam registrations reached 9.16 crore by August 2026, up from 1.65 crore on 1 April 2023 (Ministry of MSME).
4. CGTMSE had issued 1.35 crore guarantees worth Rs 12.39 lakh crore from 2001 to 31 December 2025 (MSME Annual Report 2025-26).

Conclusion. Entrepreneurship is the process of perceiving an opportunity, organising resources and bearing uncertainty to create value. Economists stress risk and innovation, management writers practice, and psychologists the drive to achieve. In India its importance is especially great. It answers the country's central challenges of jobs, rural transformation, regional balance, inclusion, formalisation, manufacturing, exports and innovation. Official figures for MSMEs show how much of the economy already rests on entrepreneurs. Removing the obstacles they face is therefore central to India's development.