Rural entrepreneurship refers to initiatives and activities of the entrepreneurs related to the establishment of industrial and business units in the rural areas. Rural entrepreneurship can be the panacea for the problems of poverty, migration, economic disparity, unemployment and underdevelopment associated with rural areas and backward regions.
Rural entrepreneurship concentrates on finding and stimulating rural entrepreneurial talents and thereby promotes the growth of indigenous enterprises. Rural entrepreneurship augments the economic value of the rural areas by introducing new methods of production, new markets, and new products. Moreover, it also generates employment opportunities in the rural areas and thus ensures rural development.
In simple words, entrepreneurship emerging in rural areas is called rural entrepreneurship. In other words, establishing industries in rural areas refers to rural entrepreneurship. This means rural entrepreneurship is synonymous to rural industrialisation.
In simple words, entrepreneurship emerging in rural areas is called rural entrepreneurship. In other words, establishing industries in rural areas refers to rural entrepreneurship. This means rural entrepreneurship is synonymous to rural industrialisation.
Here, it seems pertinent to define rural industry and rural industrialisation. According to the Khadi and Village Industries Commission (KVIC), “village industry or rural industry means any industry located in rural area, population of which does not exceed 10,000 or such other figure which produces any goods or renders any services with or without use of power and in which the fixed capital investment per head of an artisan or a worker does not exceed a thousand Rupees”.
The Government of India has recently modified the definition of village industry as any industry located in rural area, village or town with a population of 20,000 and below an investment of Rs. 3 crores in plant & machinery. With this wider definition of village industries, a total of 41 new village industries have been added to the category of village industries.
All village industries have been classified into the following six categories:
- Mineral-based industries
- Forest-based industries
- Agro-based industries
- Engineering and non-conventional industries
- Textile industry (including Khadi), and
- Service industry
Why rural entrepreneurship?
The Indian situation is such that there is a great need to generate employment opportunities. Resource utilisation at its origin has to be optimised.
1. The Grim Scenario:
There are about 100.5 million households in rural India, compared to 34 million in cities. The population distribution between rural and urban areas is 521.4 million and 162.3 million respectively. About 36 per cent rural households own less than 50 per cent capital and about 33 per cent possess one to five acres of land.
Agriculture and agriculture-based activities are the main sources of employment in Indian villages, where the service sector is weak with only 6.62 per cent households as against 26.23 per cent in urban areas. The trade sector also presents a grim picture with only 4.35 per cent households in rural areas, while in urban areas the corresponding figure is 16.55 per cent.
This only shows how much sectoral shifts and labour participation rates have to improve to result in entrepreneurial dynamism in rural areas. Also the unemployment situation in modern sectors in rural areas is serious. It is widely believed that over 10 crore people remain without work today. Majority of these belong to rural areas directly or indirectly.
Numbers apart, critical aspects of unemployment situation in India are:
i. Unlike the cyclic unemployment problem of developed economies, India faces chronic under-employment. Majority of the farming population is restricted to a single crop dependent upon monsoon. The scene becomes worse as there are no part-time productive activities near their places.
ii. Due to over investment in a few mega cities, distressed migration of vastly unskilled poor villagers from far-flung areas to mega-cities has resulted in the shift of rural poverty to urban slums. Migration is triggered by deprivation and not due to growth in skills. Contrary to common belief 54 to 73 per cent of rural migrants or displaced people end up in tertiary jobs like domestic servants, hawkers, porters, labourers, construction workers, etc.
iii. Livelihood of highly skilled artisans trained over centuries of tradition stands threatened due to lack of their organisation and access to markets. The craze for modern goods and modern market systems has further put the rurally produced goods at a disadvantage.
iv. The neglect of adequate and appropriate primary rural industrialization has caused serious damages such as follows:
a. While villages remain deserted and underdeveloped for want of adequate economic activities – cities are overcrowded and have become uninhabitable and unaffordable for a vast majority.
b. The purchasing power of both villagers and urban people is reduced to such an extent that over 90 per cent of households are constantly struggling for survival for food, shelter, health, children’s education, etc. The infrastructure in urban areas is bursting at its seams.
c. Dominated by traditional informal activities, the productivity levels in the industrial sector in rural areas are low. Technological intervention is moving at a slow pace; also the IT revolution has not brought significant dividends to the rural masses. The school dropouts and the literate classes search for white collared jobs.
Frustrated at the lack of such opportunities, they are on the lookout for new systems to change their plight. This trend is widely traceable among the youth. The education levels are even more depressing.
The above facts underline the necessity for promoting entrepreneurship, especially among the semi-literate groups who are neither fit for jobs nor can be left out of the economic mainstream. They need to be motivated to perform an entrepreneurial function, by stimulating their latent enterprising initiatives so as not to weigh down on the social conscience.
In the entrepreneurial building approach the target groups are semi-literate youth and women. While the highly educated potential entrepreneurs could utilise the services of technical and consultancy organisations, entrepreneurship development institutions and the support services of institutions like the DIC, SFC, SIDO, SISI, IDBI, etc., the rural masses have to depend only on grass root level organisations which are seldom active.
As the economy cannot respond to a situation of growing unemployment and tackle the problem of chronically unemployed, the need to strengthen the grass root level organisations to respond suitably to the emerging needs of entrepreneurship in rural areas has to take priority.
Thus, a strategy of entrepreneurship building needs to be integrated with the development process. It has to be category-specific, area-specific, and has to be woven around practical aspects and ground realities. These include social and economic inputs, training and motivation, functional inputs in credit, technology markets and information, and above all, an umbrella organisation to provide a security cover.
The only answer to enhance rural purchasing power is to create a vast scale of production related economic activity directly under the control of rural entrepreneurs and artisans. This is possible by setting up thousands of viable tiny village industries spread all over the country.
With the potential to generate 100 to 300 times employment per unit of investment as compared to the large-scale sector, the village industries sector could have accomplished the primary task for the economy in time ensuring full employment in the country. Mahatma Gandhi did understand this primary need of the Indian economy and therefore emphasised upon the critical role of village industries as the indispensable linkage between agriculture and the growth of the secondary economy.
2. Policy Initiatives:
Organised efforts are necessary to ensure success of the village industries to survive.
Some of the desired policy initiatives are as follows:
i. Creation of entrepreneurial environment:
Successful models such as group entrepreneurship or self-help groups can become the primary enterprising systems.
ii. Market linkages:
Incentives for setting up of regional marketing enterprises only for village industries sector products, and networking among such market enterprises through village industries federation all over the nation.
iii. National brand recognition:
Village industry units should not be allowed to suffer on account of their inability to create a brand for their products individually. As such common national brands should be made available to all tiny village industries units at a fraction of the cost linked to their sales.
iv. Easy to make daily use products for rural sector:
In order to provide thrust to rural industries, national policy makers must appreciate the importance of reserving easy to make daily use products for village industries.
Rural Industrialization in Retrospect:
Rural industrialization did not receive any significance before Independence of India. The reason is not difficult to find. The British Government encouraged imports and discouraged development of indigenous industries. The Indian art and culture during this period was at stake in the hands of the British Government.
Rural industries started getting importance only after the independence. This got expressions in the major policy pronouncements on development in India. For example, the first Industrial Policy of Independent India, the Industrial Policy Resolution of 1948 emphasised the utilisation of local resources and the achievement of local self-sufficiency in respect of certain essential “consumer goods” as the most suitable characteristics of cottage and small industries.
There was no looking back since then. While emphasising the creation of employment, equitable distribution of incomes and an effective mobilisation of capital and skills, the Industrial Policy Resolution, 1956 pointed out that the characteristics of cottage, village and small-industries are favourable to the achievement of these objectives.
The major policy plank of the Third Five-Year Plan was to provide employment and increase the supply of consumer goods and some producer goods through the development of village and small industries sector. Development of village and rural industries, including ancillary units of large-scale units was the thrust areas to achieve the balanced regional development. Introduction of Backward Area Development Programme including industrial development was a new dimension attached to rural industrialisation during the Fourth Five-Year Plan.
The Fifth Five-Year Plan gave importance to industrial development of backward/rural areas in the country. With this emphasis in mind, District Industry Centres (DICs) were set up in the Fifth Five-Year Plan to provide all the required guidance and help under one roof. The Sixth Five-Year Plan, continuing its concern for rural industrialisation, redefined small-scale industry so as to make it broad- based by including those manufacturing and repairing units as having investment in plant and machinery up to Rs. 20 lakh and in case of ancillary units Rs. 25 lakh.
The Seventh and Eighth Plans changed their gears to rural industrialisation by assigning importance to the role of institutions in marketing, credit, technology, etc. A number of projects covering a variety of rural industries, viz., food processing, pottery, leather items, readymade garments, etc., were taken up by the Khadi and Village Industries Commission (KVIC) to boost rural industrialisation.
The Ninth Plan envisaged the following development strategies for village and small-scale industries in the country:
- Provision for incentives and support to small-scale industries.
- Providing factoring services and facility of discounting bills to solve financial problems of small industries.
- Raising investment limit to Rs. 3 crore to broad-based small-sector. The present investment limit is Rs. 1 crore.
- Promotion and up gradation of technology in the small sector.
- Special attention to the sericulture sector in small-scale industries.
That the Government of India has shown its increasing concern for the development of rural and small industries in India.
The vibrant role small-scale sector enjoys in the national economy is well reflected by its production, sales, earnings and employment continuously on increase (Table 24.1). At the same time, this also implies the need for and scope of further development of small and village industries in the country.
Need for Rural Entrepreneurship
The need for developing rural entrepreneurship is to promote rural development in the country.
This is justified as follows:
1. Rural industries being labour intensive serve as an antedate to the widespread problems of rural disguised unemployment and underemployment stalking the rural areas.
2. The development of rural industries by providing jobs to rural unemployed helps in reducing disparities in income between rural and urban areas.
3. These industries promote balanced regional development by dispersing industries to rural areas.
4. Development of rural industries serves as an effective means to build up village republics.
5. Rural industries also help preserve the age-old rich heritage of the country by protecting and promoting art and creativity.
6. Rural industrialisation fosters economic development in rural areas. This checks migration from rural to urban areas, on the one hand, and lessens the disproportionate growth in the cities, reduces growth of slums, social tensions, and atmospheric pollution, on the other.
7. Rural industries also lead to development without destruction of the environment.
Rural Entrepreneurship in India
Rural entrepreneurship refers to initiatives and activities of the entrepreneurs related to the establishment of industrial and business units in the rural areas. Rural entrepreneurship can be the panacea for the problems of poverty, migration, economic disparity, unemployment and underdevelopment associated with rural areas and backward regions.
Rural entrepreneurs can be considered as an important catalyst in bringing about the economic development of a country and of rural areas within the country. Rural entrepreneurs are that class of entrepreneurs who carry out entrepreneurial activities by establishing Industrial and business units in the rural sector of the economy.
Rural entrepreneurship concentrates on finding and stimulating rural entrepreneurial talents and thereby promotes the growth of indigenous enterprises.
Rural entrepreneurship augments the economic value of the rural areas by introducing new methods of production, new markets, and new products. Moreover, it also generates employment opportunities in the rural areas and thus ensures rural development.
In India as per the Census of 2011, out of the 121.2 million population in India, the size of the rural population is 833.1 million which is about 68.84 percent of the total population. The economic development of India largely depends on the progress of rural areas and the improvement of the standard of living of rural masses. Rural entrepreneurship can significantly contribute to the national economy by enhancing the pace of rural development.
It recognizes opportunity in the rural areas and accelerates a unique blend of resources either inside or outside of agriculture.
According to the Government of India, “Any industry located in rural areas, village or town with a population of 20,000 and. below and an investment of 3 crores in plant and machinery is classified as a village industry”.
Rural Entrepreneurship Success Stories
Indian growth story is directly linked with rural entrepreneurship development. Farming community is now quite aware about the value of their resources and their usefulness. Similarly, agro based industries are emerging in the rural areas giving a powerful base for rural entrepreneurship.
Diversification into non-agricultural uses of available resources such as catering for tourists, blacksmithing, carpentry, spinning etc. as well as diversification into activities other than those solely related to agricultural usage, for example, the use of resources other than land such as water, woodlands, buildings, available skills and local features, all fit into rural entrepreneurship.
The entrepreneurial combinations of these resources are, for example- tourism, sport and recreation facilities, professional and technical training, retailing and wholesaling, industrial applications (engineering, crafts), servicing (consultancy), value added (products from meat, milk, wood, etc.) and the possibility of off-farm work. Equally entrepreneurial, are new uses of land that enable a reduction in the intensity of agricultural production, for example, organic production.
Dynamic rural entrepreneurs can also be found. They are expanding their activities and markets and they find new markets for their products and services in rural areas.
Now, the farming community is also interested in converting their land for industrial purposes. In the changed scenario, they are ready to develop agro based units. Industrial units promoted by rural entrepreneurs are in a position to use the available resources at local level by diversification of their land for non-agricultural usage.
This type of entrepreneurial venture is an example of straightforward entrepreneurship and not so much an example of on-farm diversification. It is an example of how seeing and seizing the opportunity are vital ingredients of entrepreneurial success.
These areas are quite popular. They include trade, food processing, handicrafts, production of basic consumer articles, catering, running tourist establishments, and bed and breakfast arrangements.
Although agriculture today still provides income to rural communities, rural development is increasingly linked to enterprise development.
Since the Indian economy is more and more globalised and competition is intensifying at an unprecedented pace, affecting not only industry but any economic activity including agriculture, it is not surprising that rural entrepreneurship is gaining in its importance as a force of economic change that must take place if many rural communities are to survive. However, rural entrepreneurship demands an enabling environment in order to flourish.
Classification of Rural Entrepreneurship
The entrepreneur who brings in overall change through innovation, new ideas for the maximum social good in rural areas is a rural entrepreneur. Thus, the rural entrepreneur is one of the segments of rural growth. Basically, he is a person responsible for effecting change, add value to art and crafts.
In rural areas, except agricultural labourers, all are entrepreneurs with a degree of differences. Rural entrepreneurship sustains in agriculture, agricultural related activities, micro industries, small business, rural artisans and others. However, rural entrepreneurship is in a dormant stage for lack of awareness, encouragement and training.
Rural entrepreneurs are broadly classified into:
- Agricultural Entrepreneurs
- Micro Entrepreneurs
- Small Business Entrepreneurs
- Rural Artisans.
1. Rural Artisans:
Rural artisans are creative workers living in rural areas, playing a key role in the growth of the rural economy. An artisan is a doer, skilled craftsman of either gender.
He may be a machinist, operator, driver, mechanic, minder, or simply a craftsman.
An artisan has been defined as an “artmaster”, designer or draughtsman. He may be an artificer, tradesman, technician, skilled or semi-skilled worker or a pastmaster.
He may be proficient, a journeyman or an apprentice. The categories of craftsmen specifically mentioned are – turner, potter, joiner, cabinetmaker, carpenter, carver, woodworker etc. He can be an architect, master mason, house builder, bricklayer, smith, blacksmith, coppersmith, to name a few.
2. A Mass Movement:
The programme for rapid growth of rural industries should be launched like a mass movement, with the emphasis on rural brands. Efforts should be made to carry the message of rural development to the rural people. This apart, a sure market is created for the rural consumer goods. And, the urban and international markets are developed for artist’s works. The rural industrialisation is an integral part of the overall rural economy and it will hasten the integrated rural development.
The traditional village industries and crafts continue to play a pivotal role in providing new markets, particularly in case of handicrafts, handlooms and other varied crafts. However, till today, the rural potential has not been effectively utilised. Besides, a number of industrial activities have begun to play a significant role in the generation of employment and income in rural areas.
Most of these activities have been economically more rewarding than the traditional ones, and have been providing remunerative employment and shown a relatively better growth potential. The emerging pattern of rural industries and their relative performance, therefore, indicate that rural industrialisation is an effective means for the generation of growth and employment in rural areas by utilising the potential new industries and of the traditional ones.
Types of Rural Entrepreneurs
Rural entrepreneurs represent a complex heterogeneous social structure with a wide variability.
Broadly rural entrepreneurs fall into the following types:
1. Farm Entrepreneurs:
These are people whose primary occupation and main source of livelihood is farming. Persons not having land or other farming resources but are willing to take up an enterprise in the village that will aid agriculture, can be regarded as farm entrepreneurs.
2. Artisan Entrepreneurs:
These entrepreneurs represent the skilled persons in rural society. Such skills are either acquired through professional training in association with their kinship group, or through inheritance as for example, blacksmithing, carpentry, etc.
3. Merchant and Trading Group:
This includes primarily the business community of rural areas who form a small segment of rural population. It shares the larger trades in the community. These people are perceived as a traditionally exploitative class and play the role of middleman in business to the pursuit of any vocation in the rural areas.
4. Tribal Entrepreneurs:
Tribal entrepreneurs are predominantly in tribal villages and could be regarded as an entrepreneurial class by itself. Their source of origin is the tribal community. Their entrepreneurship may however lead to the pursuit of any vocation in the rural areas.
5. General Entrepreneurs:
Some examples of this class are high school drop-outs, educated-unemployed, landless labourers, wage earners, and persons belonging to the scheduled castes, etc.
The rural entrepreneurs can initiate their enterprise in any of the categories classified as rural industry.
i. Forest based industries that include honey making, beedi making, bamboo products, cane products, wood products, coir industry, etc.
ii. Agro based industries include processing and sale of agricultural products such as pickles, jaggery, juice , fruit jam, dairy products, products made out of rice, oil processing from oil seeds.
iii. Mineral based industries include stone crushing, cement industries, making of idols, decorative items made from marble and granite.
iv. Textile industry includes weaving, spinning and dyeing of clothes. This industry incorporates within its ambit khaadi, tussar silk, muga silk.
v. Enterprises based on handicrafts include decorative and household products like made out of cane, bamboo and wood available in the area.
vi. Engineering industries include making and repairing parts of agricultural equipment, tools and implements, parts of machinery etc.
Benefits of Rural Entrepreneurship
Some of the benefits that can be seen on promotion of rural entrepreneurship are listed below:
1. Reduction in Exodus to Cities:
There is always a lot of debate around the growing infiltration of people into cities, searching for livelihood, thereby creating an unhealthy competition for both resources and opportunities. Sometimes, because of this infiltration, basic amenities are also breaking down leading to health and maintenance issues.
At times, even the quality of life gets degraded. This has also led to huge slum dwellings and over-populated areas, where people live in sheds and tents even in developed cities in the country. If rural entrepreneurship can create wealth and provide enough opportunity in local markets, then it can reduce the pressure on people moving to cities.
2. Improving Chances for Success in Rural Development Initiatives:
Rural entrepreneurship can be used as a tool to improve life and infrastructure. There is a lot of pressure on the Government to implement new schemes and initiatives. But it is very difficult for the schemes to be implemented successfully due to lack of opportunities in the current situation in rural India. By creating rural entrepreneurship opportunities, it is possible that many of the social schemes and development schemes thought of by the government can be taken to fruition.
For example, education can be thought of as an opportunity. Government funds which have been allocated can be used as public-private partnership to ensure that social schemes are also addressed, while creating entrepreneurial opportunities.
Entrepreneurship can also be used as a tool for enabling growth in the agri and non-agri sector. There is a tremendous pressure today on supply of food and food grain development.
So, entrepreneurship can be thought of as a tool that can be used by agri and non-agri industries for developmental reasons. Aspects like improved infrastructure, technology deployment, education, health, hygiene, etc., when infiltrated into the rural sector—improve the quality of life in the rural environment. This in turn can induce people to also start looking at an educated way of life, i.e. we can have farmers who are now educated, rather than thinking about farming once educated.
3. Enhances Economic Conditions:
When local produce is consumed, there is spending and there is more returns on produce. With greater surplus income on their hands, poverty levels can be reduced in the country. Unemployment rates can also be reduced. Both these can happen when local markets are tapped and local industries are developed. Entrepreneurship in a rural setting can actually solve a lot of social problems by improving economic conditions.
4. Rural Entrepreneurship can become Positive Contributor to Nation’s Growth:
The rates at which rural markets are contributing to the nation’s GDP is not on par with the industry in urban areas or service industries or exports. In fact, a lot of rural industries are de-growing because of lack of adequate support and opportunities. If rural entrepreneurship can be promoted, it can also add to the economy of the country. It can become the second engine for the nation’s development.
5. It can Break Down Social Stigma:
If rural entrepreneurship is promoted, basic stigmas and dogmas can be removed. This is because with increasing wealth and access to education and awareness, people tend to get over basic stigmas and dogmas that have been practised in villages and rural areas, since time immemorial. One of the things that have proven to work as a tool for social reform is increase in access to education.
With the surplus money on hand, it is a tendency for people to look forward to educating their progeny. It is highly possible that once rural entrepreneurship is promoted and rural industries are allowed to thrive, there is a high chance that people will start enrolling their wards in schools and education will improve. Once education improves, much of the social stigmas that are breaking down the society will automatically stop.
6. Enhancing Domestic Consumption:
While there is a lot of pressure on countries to ensure that the exports meet the payouts at the country level, it is also important that if domestic consumption can be improved and people are made capable of buying and consuming enough, then the economy can thrive on domestic consumption itself. So the dependency for foreign exchange to drive our economy is reduced.
This does not mean that foreign trade is not needed for a country, but domestic consumption can reduce the pressure on the Government and industry to depend on exports alone. It can also reduce the cost of importing goods from far off countries. Since domestic consumption can happen based on domestic produce, the overall sustainability of the environment can also be handled and in consequence rural entrepreneurship can be promoted.
With the growing interest in the rural sector, the opportunities are only going to increase. If people look at schemes devised by the Government, then the amount of opportunities in agri-based rural markets like India or any of the Asian countries can be found in plenty.
Steps Taken by Government to Promote Entrepreneurship in Rural Sector
Promoting entrepreneurship in the rural sector can be spearheaded by the government, since they are the ones with greater responsibility and reach.
Few steps that the government has taken in promoting entrepreneurship in rural sector are as detailed below:
Step 1: Promotion of Rural Industry:
Government can promote entrepreneurship in sustainable businesses by providing significant tax benefits. Exports are being given a huge thrust and the IT sector is being promoted in a lot of ways. Similar promotions can be repeated for domestic industries. For example, a significant amount of promotions can be done for agro-based and non-agro based industries in the rural sectors.
Step 2: Increasing Access to Capital:
Though subsidies and allocation of capital for farmers have been increasing constantly, the effectiveness of their relief leaves much room for improvement. Suicide rates amongst farmers, loss of crops because of seasonal changes, problems of pests, weeds, plant and animal disease, etc., are still very high. Farmers are still relying on local middlemen and financers for access to capital, which does not make it very viable for them to continue in the long run. This is an area where implementation needs to be relooked at on a war footing.
Step 3: Creation of Policies for Rural Markets & Rural Industry:
A fresh look at the policy formulation and implementation for rural markets and industries need to be done. People who are handling the formulation and implementation need to be brought in from a variety of areas. They also need to spend time in the rural sector to understand the possible problems. While technology can only enable some of the solutions, it cannot be the solution to all the problems. Solutions beyond technology and those that are sustainable by the rural community are ones that are going to provide the needed relief.
Step 4: Access to Professional Help:
Technology transfer and best practices can be enabled by the Government in terms of creating a pool of experts. They can be made available to rural entrepreneurs. Professional help can be extended in the form of technology, business related issues, marketing related issues, promotions, exhibitions and other forms, which can be accessed by the stakeholders with relative ease and at a low cost.
Step 5: Infrastructural Connectivity:
One of the key aspects that has been realised is the need for connectivity of villages to cities and towns, for ensuring that produce and other aspects can be transported in a quick and timely manner. This is also to ensure that perishable goods are not lost, since considerable effort would have been spent in growing them.
Entrepreneurs need to look at this as a viable business proposition and come up with innovative solutions. However, very often the lack of infrastructure has been stated as a reason for not pursuing opportunities in rural sectors. It is the Government’s singular responsibility to ensure connectivity is provided from the rural area to other places.
Step 6: Enhance Rural Consumption:
Government can also enhance rural consumption by allowing companies to procure in a fair manner. By ensuring fair procurement for rural based produce (agri and non-agri), the government can enhance the income of families in rural sectors, thereby increasing their power of consumption. This can lead to a huge market that can be serviced by other companies as well. This will also reduce the pressure on financing.
For example, the e-choupal scheme by ITC enables a certain amount of good rates to be provided to farmers. Their produce is then bought out by ITC. Because of this, farmers have received better returns and the money has been spent by them on a lot of products. ITC has also set-up stalls in rural areas, which has increased rural consumption.
Step 7: Improving Education and Skill Development Infrastructure:
Government should also take a serious look at the speed and effectiveness of schemes in education, which will enhance schools and skill development programmes. Employment generation can also happen in the domestic market at local places.
Some of the interesting schemes like the Mahatma Gandhi Rural Employment Guarantee Act have also had surprising impact. However, there are a lot of issues with respect to implementation that have raised questions on whether the scheme has actually benefitted or created more cost for the economy in general.
Strategies for Rural Entrepreneurship Development
Strategies initiated by the government for the development of rural entrepreneurship are as follows:
1. Government Efforts:
The Rural Employment Generation Programme (REGP) implemented by Khadi and Village Industries Commission (KVIC) covers all viable village industries projects except those specified in the negative list of KVIC. 119 rural industries are specified under seven heads for financing by banks, with KVIC support for margin money.
These heads are mineral-based industries, forest-based industries, agro-based and food industries, polymer and chemical-based industries, engineering and non-conventional energy, textile industry (excluding khadi), and service industries. Further, rural development programmes like IRDP, TRYSEM, SWVRJA, and Jawahar Rozgar Yojana have been concentrating on target groups and rural infrastructural facilities.
There are signs of inter-sectoral coordination and schematic linkages getting strengthened at the grass root level. Voluntary efforts too are getting due recognition and being provided an impetus through policy support. The action plan of the government desires to spend half of national resources on rural development.
2. Rural Industrialization Programme:
Non-farm sector (NFS) activities located in rural areas and urban areas up to one lakh population are covered under the rural industrialization programme. Under the programme, financial support and incentives are given to entrepreneurs for setting up manufacturing and service enterprises in the mini, micro, small, and medium.
The National Bank for Agriculture and Rural Development (NABARD) provides refinance for investment made in agro- industries, sericulture, and marketing of rural non-farm sector products, irrespective of the location. For other industries in locations up to 50,000 populations, refinance is sanctioned by NABARD.
Decentralised industrial development through traditional industries covered by a few All India Boards (like Central Silk Board Coir board, Central Wool board) and bodies such as – KVIC, All India Handloom Board, and All India Handicrafts Board are also part of the rural industrialization programme.
Several other agro, food processing, and mineral-based industries including power looms located in rural and semi-urban areas up to one lakh population are also included in this programme.
In the rural industrialization programme, an integrated approach is being pursued by identifying clusters of industries. The package of measures can include the following – credit, technology upgradation modernization, technology transfer, marketing including exports wherever practicable, infrastructure development, common services, supply of raw materials, etc.
The National Programme for Rural Industrialization (NPRI) was implemented for five years from 1999-2000 to 2004-2005, using the cluster approach. The institutions involved in implementing this programme are KVIC, and other decentralised organisations, like Small Industries Service Institutes (SIVI), NABARD, and SIDBI.
The NPRI scheme has a provision for extending financial assistance up to Rs. 5 lakh per cluster for various interventions. The programme has been subsumed under the Scheme of Fund for Regeneration of Traditional Industries (SFURTI) from 2005-06, as the latter provides a much more comprehensive approach to cluster development.
In each cluster, through a study of individual enterprises, requirements of the group are finalised taking into account the long-term perspective of the growth of the industry in the context of liberalisation. The programme of work includes conducting motivational campaigns, entrepreneurial training, and skill up gradation of artisans and prospective entrepreneurs in rural and urban areas.
3. Policies and Schemes:
The government of India has been undertaking a number of schemes to directly or indirectly enhance rural entrepreneurship. These schemes directly or indirectly help in promoting rural entrepreneurship.
1. Training of Rural Youth for Self-Employment (TRYSEM):
Training of Rural Youth for Self-Employment (TRYSEM) was a scheme that was aimed at providing basic technical and entrepreneurial skills to the rural poor in the age group of 18-35 years in order to enable them to take up income generating activities. The scheme was merged into Swarnajayanti Gram Swarojgar Yojana (SGSY) with IRDP, DWCRA etc. from April, 1999.
2. Swarnjayanti Gram Swarozgar Yojana (SGSY):
Swarnjayanti Gram Swarozgar Yojana (SGSY) aims at bringing the assisted poor families (Swarozgaries) above the Poverty Line by ensuring an appreciable sustained level of income over a period of time. SGSY aims at organising the rural poor into Self Help Groups (SHGs) through the process of social mobilisation, their training and capacity building and provision of income generating assets. SGSY stresses that instead of funding diverse activities; each block should concentrate on a few select activities (key activities) and attend to all aspects of these activities, so that the Swarozgar can draw sustainable incomes from their investments.
3. Council for Advancement of People’s Action and Rural Technology (CAPART):
Council for Advancement of People’s Action and Rural Technology (CAPART) was formed in 1986 as a nodal agency for catalysing and coordinating the emerging partnership between voluntary organisations and the Government for sustainable development of rural areas.
4. Prospects of Rural Entrepreneurship in India:
1. Low Cost of Establishment:
Rural entrepreneurship has an advantage over the urban counterparts. The establishment of a rural enterprise involves lesser cost. The promising entrepreneurs can avail this advantage and choose to initiate his/her enterprise.
2. Better Availability of Labour:
Majority of the rural population are engaged directly or indirectly with agriculture. The labour force includes both semi-skilled and unskilled labourers in abundance. The problem of disguised employment can be resolved. The excess labourers can shift and join the enterprises developed by rural entrepreneurship. The labour force is available in abundance for rural entrepreneurship at cheaper rates. Even the labourers of the rural areas working in urban areas can rethink joining rural entrepreneurship.
3. Local Resources are Easily Available:
The rural entrepreneurship based on available local raw materials is placed in a comfortable position. The local agro based or mineral based raw materials are easily available and do not involve huge transportation and storage costs.
4. Cost of Production:
As the factors of production are available at cheaper rates, the cost of production involved in rural enterprise will be comparatively low. Rural entrepreneurship if provided with required capital and expertise can do wonders.
5. Best Utilisation of Available Resources:
Rural entrepreneurship can bear the responsibility of optimal utilisation of the available resources in the rural areas.
6. Government Support and Policies:
The Central government and the state governments have always supported and promoted the growth of rural entrepreneurship in India. The governments have formulated policies and have provided subsidies for promotion of rural entrepreneurship. The state is aware of the significance and potential of rural entrepreneurship. The state will definitely promote rural entrepreneurship. This is a very positive prospect for the aspirants of rural entrepreneurship.
Opportunities for Rural Entrepreneurship
There are many opportunities available for entrepreneurs in the rural area.
Some of the opportunities that are definitely picking up or becoming available for entrepreneurs include:
Agriculture as a sector needs to be looked at from an opportunity perspective, because a large part of the agriculture industry in India is still very conventional in farming practices. This by itself is a huge opportunity for entrepreneurs to start their ventures. Bringing in new technology can be thought of as an opportunity that can be capitalised by creating right models. Some of the agricultural produce can also be domestically consumed.
2. Non-Agri Traditional Specialities:
Non-agri traditional specialities or indigenous products like food, hand-made goods, etc., have a huge international market today. With the travel and tourism industry picking up, it can also add as a supplementary market to tourism, where these kinds of arts and crafts can be revived and allowed to grow.
3. Rural Tourism:
There is a growing interest today in people to tour the rural sector, experience agriculture & farming, living in different settings, because of the stress that they go through in their routine lives. Rural tourism is becoming an interesting area in today’s scenario.
4. Technology-Enabled Education:
Technology can be used to provide services. There is a lot of opportunity in ensuring that education can be provided over technology medium. Today, there is an increase in pressure to set-up schools, to ensure that a lot of faculty is available, to ensure classes take place, etc. Because of shortage in availability of people for teaching, lack of funds available to set-up schools in remote places, technology can be thought of as a solution, which enables us to handle some of the problems. So technology based education and skill development can be looked at as a huge opportunity.
5. Renewable Energy:
There is also scope for a lot of activities in the area of renewable energy due to the availability of large amounts of land and open areas. Renewable energy can also be thought of as an area of opportunity. Government is also making available schemes and grants for such initiatives.
6. Mobile Alerts:
An interesting idea that has seen good reception in the agriculture and technology cusp is the aspect of sending out weather alerts or climate alerts on mobile phones of farmers. Since mobile penetration has happened at an unprecedented and unexpected rate, people are now looking at utilising the mobile medium creating business opportunities.
There are start-ups that have started providing climate and weather alerts to farmers through messages on mobile phones for a nominal fee. This enables farmers to derive value by being prepared for various activities dependent on the weather like cutting crops, identifying the right time for ploughing, sowing, etc.
Problems of Rural Entrepreneurship
A rural entrepreneur is an entrepreneur who works in an industry in the rural area. They are mostly the first generation entrepreneurs.
Problems of Rural Entrepreneurs:
Industrial development activities in India have been concentrated around a few metropolitan cities and big towns. As a result of this, the development of entrepreneurship in backward regions has been adopted as a basic strategy of economic planning.
In these areas, the entrepreneurs who are mostly first generation entrepreneurs faces several problems such as:
- Lack of Finance
- Shortage of raw materials
- Lack of market coverage
- Lack of technical/managerial skills
- Improper project planning
- Shortage of power
- Lack of transport/communication facilities, and
- Lack of testing facilities etc.
Entrepreneurship among rural people is lacking mainly due to:
- Risk taking abilities
- Lack of business experience
- Lack of aptitude and necessary motivation
- Bureaucratic procedures involved in setting up of the units
- Initial harassment and hardships
- Ignorance of various facilities and incentives available.
These make them not to venture with any attempt to set up industries. Further, lack of infrastructural facilities is a big hurdle in the growth of industries in backward regions, which is a basic prerequisite and has been neglected. A dynamic organisational infrastructure to coordinate and activise entrepreneurial development is essential. Such an organisation can effectively handle the lacunae in the above mentioned areas.
Several steps that can be taken to promote entrepreneurship in backward areas:
- Proper coordination between concerned authorities
- Deploying a special cell and with adequate staff for selecting and guiding genuine investors. This staff must be honest, sincere and with motivating qualities
- Proper guidance in preparing techno-economic viability report
- Proper infrastructural facilities development
- Planners and policy makers should make themselves familiar with the problems and priorities of the area
- Snags in the institutional framework and various schemes of assistance should be removed
- Emphasis on industries based on local resources
- Monitoring the progress of assisted units till it stabilises.
An integrated and multidimensional approach is required for the growth of entrepreneurship in backward areas and for identifying opportunities. The necessary technology, finance and other assistance are to be provided.
Government agencies and financial institutions often provide essential infrastructural facilities like land, power, raw materials and finance at concessional rates. Technical guidance, training, marketing assistance, subsidies, and tax exemptions available are made known to them.
A lack of coordination among the different agencies like banks, state financial corporations and the government should be eliminated or reduced and the officers of various agencies who are not knowledgeable and also the officers who harass in this area are to be replaced.
Measures to Encourage Rural Entrepreneurship
The following measures have to be taken to give a fillip to rural entrepreneurship:
- Promoting rural industries in a big way.
- Give a fillip to rural artisans.
- Widening rural business and trade.
- Modernising the rural industrial sector.
- Upgrading rural skills.
- Continuous supply of raw materials.
- Training rural entrepreneurs.
- Instilling self-confidence.
- Providing adequate and timely finance.
- Exploring new domestic and international markets for their products.
- Imbibing professional management skills.
- Simplifying licensing provisions.
- Feeding them with new ideas/products collected through market research/surveys.
- Popularising their products through fairs and exhibitions.
- Establishing common marketing complexes in every block.
- Give stress on vocational awareness.
- Popularise various self-employment.
- Initiate creative interaction.
Challenges of Rural Entrepreneurship
There is great interest and talk in terms of rural entrepreneurship. At the same time, there are a lot of challenges for an entrepreneur to ride on this need.
Some of the challenges of rural entrepreneurship are listed below:
1. Government Policy:
The Government and the policy-makers should spend time in understanding the social and cultural aspects that need to be taken care of in making a plan. In many cases, the rural markets do not seem to have been impacted by the schemes that have been allocated for them.
In fact, on an annual basis, the budget allocation for rural sectors is increasing. But the rate at which it is being deployed and used effectively does not seem to reflect in the statistics. Policy-makers need to relook at how the policy gets framed and also at the challenges in execution.
2. Lack of Infrastructure and Basic Amenities:
While Government can make it favourable for entrepreneurs to set-up a rural industry by giving them tax holidays, it should also be considered that after living in a modern setting, it is very difficult for entrepreneurs to move their families to rural settings, where there is lack of infrastructure and basic amenities like electricity, schools, hospitals, etc.
So, infrastructure and basic amenities need to be made available at a fast rate, so that it becomes easy for people to travel to rural areas and also have access to what they would have, in case they continue to be in an urban setting, albeit in a limited capacity.
3. Lack of Ability to Scale Fundamental Industries:
Since many of the rural industries are very person dependent and have been primarily created for the local market, many of the businesses and opportunities that are available may not be scalable beyond a certain level. This may not entice the people to start industries or businesses in the rural setting. Hence, scalability needs to be redefined, re-thought, opportunities need to be reassessed and entrepreneurial minds should be given an exposure to the possibilities in the rural schemes. A lot of research is required in this area that could throw open new possibilities.
4. Lack of Availability of Skilled Labour:
This is a big challenge that a lot of industries face today. India today needs a lot more ITIs, skill development centres and vocational centres just as we require centres for higher learning like IIT or IIM. Many of the industries today require a lot of skilled labour. Most of the people in rural areas do not have access to higher education and often drop out of school/ colleges. Many of them are not in shape to join an industry. If a person is willing to set-up a company in a rural area, utilising local strengths the available skills needs to be assessed, gaps identified and then filled.
The latest initiative from Government of India is the creation of National Council of Skill Development with an allocation of about INR 1,000 crores as a first step to set-up skill development centres. The challenge is going to be in terms of implementation of the same. Identifying the right parties and right skill development programmes is a large challenge.
5. Difficulties in Mindset, Belief and Stigma:
Factors like lack of education penetration in rural areas, higher rates of school dropouts, increase in the shortage of teachers in rural schools and colleges – are becoming very difficult for the country as a whole to combat. It is very hard to make the rural population drop the wrong mindsets, beliefs, superstitions, stigmas and myths that have prevailed in the past. Education is the only tool against these.
In certain cases, a lot of old experiences and dogmas cloud the people in doing something positive. Certain past experiences which may not have been very positive would have left a sour memory in people’s mind. When a development initiative is being planned or an entrepreneur plans to set-up an industry, people may not actually participate, since it may be seen with a very different point of view.
By increasing awareness and literacy, a lot of these challenges can be effectively addressed. This will also enable people to look at overall development in a positive and balanced manner.
Entrepreneurial Development in Backward Areas
Most of the industrial development in India has been concentrated around a few metropolitan cities and big towns. Therefore, development of entrepreneurship in backward regions has been adopted as a basic strategy of economic planning in India. In backward regions, the entrepreneurs, most of whom are first generation entrepreneurs, face several problems such as lack of finance, shortage of raw materials, lack of market coverage, lack of technical and managerial skills, improper project planning, shortage of power, lack of testing facilities, etc.
Entrepreneurship among local people is lacking mainly due to lack of risk-taking ability, lack of business experience, ignorance of various facilities and incentives available for setting up industries, lack of aptitude and necessary motivations. Bureaucratic procedures involved in setting up new units and the initial harassment and hardships discourage many prospective entrepreneurs.
Lack of infrastructural facilities is the main hurdle in the growth of entrepreneurship in backward regions. A dynamic organisational infrastructure to coordinate and activate entrepreneurial development is a basic prerequisite in a backward area. Such an organisation can bridge the knowledge gap, lack of expertise, training and aptitude. It can face problems of finance, raw materials, marketing and transportation, etc.
Several steps can be taken to promote entrepreneurship in backward areas. Proper coordination must be ensured between the concerned authorities. They should have adequate technical staff for selecting and guiding genuine investors. The staff of these agencies must be motivated, honest and sincere.
An orientation in their outlook and approach is necessary. Before the loan is released proper techno-economic viability tests of the proposal will be carried out. Proper infrastructural facilities should be developed in the backward areas. The planners and policymakers should be fully familiar with the problems and priorities of these areas. Snags in the institutional framework and various schemes of assistance should be removed.
Emphasis should be on industries based on local resources. The agencies should monitor the progress of assisted units. Their officials should frequently visit the entrepreneurs to ensure that the facilities are being availed of properly.
To conclude an integrated and multidimensional approach is required for the growth of entrepreneurship in backward areas and for identifying opportunities that have growth prospects based on local resources. It is necessary to provide the technology, finance and other assistance which small scale entrepreneurs need very acutely.
Government agencies and financial institutions often provide essential infrastructural facilities like land, power, raw materials and finance at concessional rates to entrepreneurs in backward areas. Technical guidance, training, marketing assistance, subsidies and tax exemptions are also available.
But there is often a lack of coordination among the different agencies like banks, State financial corporations and the government. For example, the financing agencies insist on a licence or permit before granting finance. But the licensing authorities grant permits only after the vehicle is acquired. Officers of various agencies lack requisite knowledge to guide the entrepreneurs. In some cases the officers harass the entrepreneurs.
Development of Backward Areas:
The problem of backward or underdeveloped areas has assumed considerable significance since the mid-1960s from the point of view of both economic growth and national integration. As early as in the First Five Year Plan document, it was mentioned that if industrial development in the country was to proceed rapidly, and in a balanced manner, greater attention would have to be paid to the development of states and regions which had remained backward.
The Second Five Year Plan made it clear that in any comprehensive plan of development it is axiomatic that the special needs of less developed areas should receive due attention. The Fourth Plan document admitted that the problems of imbalance between the states were highly complex and an attempt was made to cater to the needs of the backward states. Capital assistance, special fee and programmes for drought prone areas were provided. The Fifth Plan laid special emphasis on the development of backward and hill areas.
However, the identification of backward areas is, however, an uphill task. Over the years various panels and committees set up by the government have suggested different criteria as the basis for deciding the backwardness and extending incentives for development of such areas.
For instance, the Pande Committee adopted the following criteria to decide backwardness:
- Per capita income
- Per capita income from industry
- Number of works in registered factories
- Per capita annual consumption of electricity
- Length of surface roads in relation to population
- Railway mileage in relation to population.
As a result of these yardsticks, Andhra Pradesh, Bihar, Madhya Pradesh, Orissa, Uttar Pradesh, and Rajasthan were considered industrially backward and qualified for incentives for industrial development. Similarly, the save committee recommended two or three districts in each backward state for grant of incentives.
For selecting a beneficiary district in an industrially backward state, the criteria adopted was that it should be 50 miles away from any large industrial project, the per capita income be at least 25 per cent below the state average, a low percentage of population engaged in subsidiary activity, etc. In 1982, the Union government identified and declared 83 districts in the country as – ‘No industry districts’. Special tax concessions and incentives were announced for setting up industry in these areas.
Incentives for Promoting Entrepreneurship in Backward Areas:
Following are the main industrial incentives announced by the Union and various State governments to promote entrepreneurship in backward areas:
- Grant of higher development rebate
- Exemption from income tax for five years after providing development rebate
- Exemption from import duties on plant and machinery
- Exemption from excise duties for five years
- Exemption from sales tax both on raw materials and finished products for a period of five years
- Transport subsidy for a period of five years particularly in north-eastern states.
In spite of this lucrative package of incentives, it is doubtful whether these by themselves would significantly help in stimulating industrial growth in the backward areas. The reasons for backwardness must also be sought in intangible factors and cultural attitudes of the people.
The most important among attitudes, from the point of view of industrial development, is to understand whether the target populace has the ability to innovate, to undertake risks and to plan for the future. This is what an entrepreneur does. He or she is the person who conceives an idea, works it out in detail and sells it to others.
That is a person who has the vision, the drive and above all, the self-confidence to attract investments for the project finally. That is the person who has the tenacity to see the project through and make a new product. In the ultimate analysis, there is no substitute for entrepreneurial ability to conceive projects and to work them out.
Government Schemes for Rural Entrepreneurship in India
The development of village and khadi industries provides opportunities for work, albeit part-time work, in certain cases, and thereby helps to mitigate the severity of rural unemployment and underemployment. With this end in view, the Khadi and Village Industries Commission (KVIC) was established in April 1957, under the Khadi and Village Industries Commission Act, 1956.
Under the guidance of Mahatma Gandhi, provisional activities of Khadi were started in 1922, when they were symbolic of the “Fight for Freedom.” The Khadi Programme was thus closely linked with the struggle for freedom. The All-India Congress Committee, then known as the All-India Spinners’ Association (AISA), was established in 1925 to organise hand-spinning and hand-weaving.
This was followed by the establishment of another organisation in 1935, called the All-India Village Industries Association (AIVA), to look after other village industries such as hand-pounding of paddy, ghana oil, palm gur, bee-keeping, hand-made paper, etc.
The establishment of the Khadi Commission was the culmination of the efforts to organise cottage/village industries during the freedom movement. In 1951, the Saiva Seva Sangh took over the work of AISA and AIVA, as a part of an integrated plan for rural industrialisation.
The Government of India evolved a general policy frame for the development of these industries. In the First Plan, these industries were treated as an integral part of agriculture; and the emphasis was on local consumption. In the Second Plan, on the advice of the Village and Small-Scale Industries Committee (Karve), 1955, and in consonance with the Industrial Policy Resolution of 1956, Khadi and Village Industries programmes were made an integral part of the whole plan for the country’s industrialisation.
The Third Plan retained the emphasis on these programmes while highlighting the need for an integrated approach. In the successive plans, the emphasis unit policy was shifted from one of protection of such industries to positive forms of assistance, such as improving skills, supplying technical guidance, better equipment and adequate credit with a view to increasing productivity and reducing cost.
The Government is committed to the encouragement of the production of textiles and textile products in the khadi sector. Considering its large employment potential, it would be the endeavour of the Government to make the products of this sector more competitive and of better quality.
The infrastructure for the distribution of controlled cloth, particularly in rural areas, will be strengthened and streamlined. State Governments will be encouraged to open more rural outlets and exercise stricter control over distribution.
There is a lot of interest from the government to focus its efforts on improving rural markets and rural industries; and promoting entrepreneurship in the rural sector. According to Khadi and Village Industries Commission (KVIC), a rural industry is any industry located in the rural area, which produces goods or renders services with or without power in which the fixed capital investment per head of a worker does not exceed INR one lakh.
The village industries have been classified by the KVIC under seven categories, namely:
- Agro-based industries
- Mineral-based industries
- Forest-based industries
- Hand-made paper and fibre
- Rural engineering and bio-technology
- Polymer and chemical based industries
- SEP/Service industry
1. Functions of KVIC:
The functions of KVIC also comprise building up a reserve of raw materials and implements for supply to producers, creation of common service of facilities for processing, marketing and training.
1. To promote the sale and marketing of Khadi products of village industries or handicrafts, the KVIC may forge lines with established marketing agencies wherever necessary and- feasible.
2. The KVIC is also charged with the responsibility of encouraging and promoting research in the production techniques employed in the khadi and village industries sector and providing facilities for the study of the problems relating to it including the use of non-conventional energy and electric power with a view to increasing productivity eliminating drudgery and otherwise enhancing their competitive capacity and to arrange for dissemination of salient results obtained from such research.
3. Further, the KVIC is entrusted with the task of providing financial assistance to institutions or persons engaged in the development and operation of Khadi and Village industries and guiding them through supply of design, prototypes and other technical information.
4. In implementing KVI activities the KVIC may take such steps as to ensure genuineness of the products and to set up standards of quality and ensure that the products of khadi and village industries do conform to the standards including issue of certificates or letters of recognition to the concerned.
5. The KVIC may also undertake directly or through other agencies studies concerning the problems of khadi or village industries besides experiments or pilot projects for the development of khadi and village industries.
6. The KVIC is authorised to establish and maintain separate organisations for the purpose of carrying out any or all of the above matters besides carrying out any other matters incidental to its activities.
2. New Initiatives:
1. Decentralisation of the implementation of the scheme by making payment of margin money through State Offices and State KVI Boards.
2. Fixation of targets for projects and Margin Money for all field offices based on Rural Population of the State.
3. Financing of units based on coir as raw material was allowed.
4. Financing of auto-rickshaws in Andaman and Nicobar Islands, house boat, shikara and tourist boat in Jammu and Kashmir were also allowed under rural transport, keeping in view the special requirement of these States.
5. For providing information/guidance to the new entrepreneurs, REGP helping counters were opened in all the field offices of the Commission and the State KVI Boards.
6. For payment of margin money besides 33 States KVI Boards, 346 number of model branches of Public Sector Banks were identified. They were provided margin money in advance on a quarterly basis.
7. Training to all KVIC/KVIB’s field offices staff was provided to acquaint them with the implementation of the programme.
8. Extensive publicity programmes were made through workshops, awareness camps, exhibitions etc.
9. A system of awarding best banks, field officers and the staff for their contribution to the programme was introduced. Awards to Punjab National Bank, Central Bank of India and Oriental Bank of Commerce have been given under this scheme. Awards to KVIC Officers and staff were also given in recognition of their active performances in implementation of the REGP scheme.
Few reasons why rural entrepreneurship and industries must be promoted are provided below:
1. With more and more people moving into the urban areas, because of job creation by large enterprises (especially the IT sector, construction industry, etc.), the number of people taking interest in farming is gradually reducing. This is being seen as high risk for the agriculture industry.
2. Various policies are not in favour of protecting the farmer’s interest, though the government has provided a lot of subsidies and credit through various banks. A lot of people in the rural areas do not have access to the regular form of banking and this increases the number of people approaching middlemen for funding the entire farming activity. This raises the risk for the farmer, because the middlemen tend to make more money than the person who actually puts in the effort. Though India is an agrarian economy, farming as a whole has seen tremendous reduction in effort and output.
3. Agriculture as a sector employs a lot of people. But most of these people are not educated. Though there is research and development in terms of improving the agricultural situation or the way agriculture is practised, the risks that the farmer faces because of the uncertain climate, etc. is not being handled effectively. Farmers are neither aware nor have access to this. The lack of education and inadequate access to information puts forth considerable challenges in the dissemination or transfer of technology to rural markets.
4. Promoting rural entrepreneurship is a key method to keep alive indigenous industries. For example, India is famous for its handlooms, silk saris, etc. Failure to encourage livelihood based on these could lead to the art and craft becoming extinct. We are liable in this manner to lose out on our inherent cultural components. Encouraging rural entrepreneurship and enterprises around fundamental industries protects and promotes our unique skills and trade.
5. Rural entrepreneurship is a strong tool for social development. Encouraging the setting up of industries in the rural areas apart from improving economic conditions also brings benefits like better health care, infrastructure, education etc. Hence rural entrepreneurship is a good socio-economic lever.