Module: General Practice
Q186: Consider the following statements regarding the evolution of the MSME definition:
Assertion (A): The 2020 revision (maintained in 2025) abolished the distinction between Manufacturing and Service enterprises for definition purposes.
Reason (R): The earlier definition based solely on investment created a "fear of growth," preventing enterprises from modernizing to keep their investment value low.
Reason (R): The earlier definition based solely on investment created a "fear of growth," preventing enterprises from modernizing to keep their investment value low.
✅ Correct Answer: A
Correct Option: A. Concept: Policy Rationale.
Logic: Assertion is True: Historically, Manufacturing and Services had different investment limits.
Since 2020, they share the exact same limits.
Reason is True: The old "Investment-only" definition punished efficiency.
If a Small firm bought better machines, its investment value rose, and it lost "Small" status.
The Link: To solve this (Reason), the government introduced the Composite Criteria (adding Turnover) and merged the sectors (Assertion), allowing firms to invest in technology without immediate penalty.
Logic: Assertion is True: Historically, Manufacturing and Services had different investment limits.
Since 2020, they share the exact same limits.
Reason is True: The old "Investment-only" definition punished efficiency.
If a Small firm bought better machines, its investment value rose, and it lost "Small" status.
The Link: To solve this (Reason), the government introduced the Composite Criteria (adding Turnover) and merged the sectors (Assertion), allowing firms to invest in technology without immediate penalty.