[November 2023 Kurukshetra Summary] Sustainability of Rural Enterprises- Explained Pointwise+ Inforgraphic

Sustainability of rural enterprises is a crucial aspect of India’s economic growth and development. Rural enterprises are business entities that promote revenue generation and act as agents of social change at the grassroots level. According to official data released on April 30, 2022, India has more than 63 million MSMEs, out of which about 94% are micro-enterprises. Most of these micro-enterprises are rural enterprises.

What are the types of Rural Enterprises?

Rural Enterprise means a group of people with common economic interests who have formed a legally recognized organization to carry out business activities. For example- Farmers, Fisherfolk, ago-processors, tour guides, craft makers, etc. Article 43 of the constitution provides that the state must undertake measures to promote rural and cottage based enterprises.

There are two types of Rural enterprises-

1. Proprietial ownership– The enterprises are run by an individual.
2. Group entrepreneurship- The enterprises are run by the Self Help Groups (SHGs), Cooperatives, and Producer companies.

What is the Importance of Rural Enterprises/Entrepreneurship in India?

The Rural enterprises have the following advantages due to which they become extremely important in India:

1. Resource Utilization- Rural enterprises foster the appropriate utilization of local resources like raw materials and labour for productive purposes. For ex- Rural Farmer Producer Companies engaged in production of coconut milk, coconut oil in Southern India.

2. Employment Generation- Rural industries create large-scale employment openings for rural people. Rural industrialisation can solve the dual problem of unemployment and under-employment in the rural areas. For ex- ID Fresh company which produces dosa and Idly batter, employs 1,100 employees and produces 50,000 packets a day.

3. Reduction in the Migration of Rural Population: Rural entrepreneurship provides gainful and productive employment opportunities for the rural people in their own areas. It discourages rural people to migrate from rural areas to urban areas in search of jobs.

4. Promotion of Artistic Activities- The rich heritage of rural India is conserved by protecting and promoting handicrafts and art through entrepreneurship. For ex- Rural enterprises engaged in the making of Madhubani Painting’s for customers.

5. Keeps a check on Social Evils- The growth of rural enterprises abates the unsymmetrical growth of cities, increase of slums, social tensions, social issues, environmental pollutions.

6. Encouragement of the Rural Youth- Rural entrepreneurship can promote the rural youth and expose them to several paths to adopting entrepreneurship and promoting it as a career.

7. Social empowerment of Women and other marginalised sections- The rural industries promote the empowerment of women and other marginalised sections of the society by providing them with gainful employment and securing financial independence. For ex- Lijjat papad enterprise provides employment to over 40,000 women.

What are the challenges faced by Rural Entrepreneurs?

1. Inconsistent market linkages- The rural enterprises lack the infrastructural and logistical facilities to market their products. For ex- Difficulties of FPOs in rural areas in marketing their produce.

2. Lack of skill and understanding of enterprise entrepreneurship- The rural entrepreneurs often lack the necessary enterprising skill to upgrade their businesses.

3. Severe competition from urban markets- The rural businesses face adverse competition from their urban counterparts which have better availability of working capital, access to latest technology and ability to transform their product range. For ex- Local snacks maker’s inability to compete with brands like Haldiram.

4. Prevalent societal and gender-based biases- The rural enterprises run by the marginalised communities and women are subjected to the biases prevelant in the society and are often discriminated. For ex- Social Boycott of shops run by the lower castes in villages.

5. Inadequate understanding of the government support mechanism- Low awareness about the Government of India schemes regarding the promotion of rural enterprises is also a major bottleneck in the growth of the rural enterprises.

What are the Government’s initiatives to promote rural entrepreneurship?

Government has been undertaking several initiatives to promote rural entrepreneurship in the country. Some of these are mentioned below

Conclusion and way forward

Developing rural entrepreneurship is essential for India’s progress, as it augments economic and employment growth. It is fundamental to ensure that manpower, money, material, machinery, and understanding of market are complete for the development of a viable business model to better support aspiring rural entrepreneurs.

1. Better access to capital, infrastructure and marketing- The government must target to provide the rural industries the same facilities of easy access to manpower, material and money as their urban counterparts.

2. Mentoring by Industry experts- The government can work with the industry experts like TATA group’s Ratan Tata to mentor these rural enterprises to scale up their operations.

3. Skilling and Entrepreneurship Development through Project Mode- Entrepreneurs should be selected based on their existing skills, geographic locations, and demographic traits. Post selection, the participants should be provided with skill training and handheld into scaling up of their enterprises.

4. Establishment of incubation centres- Ideation hackathon and establishment of rural incubation centres can promote skill development in the rural areas.

5. Active participation of civil societies- The civil society groups like the NGOs, SHGs, charities, etc can further help in promoting rural entrepreneurship.