Definition of Entrepreneurship Development in Rural Areas

Introduction

Industrialisation was one of Nehru’s greatest legacies for independent in absolute terms appears to be very impressive, in the perspective it is rather meagre. The hiatus between rural and urban sectors has been constantly accentuated. But there is a saying that India is living in villages which implies that a very large majority of our population (3/4) is residing in villages. They have to earn, their bred only by utilising the village resources. Though such the resources are abundently available people are not utilising it effectively due to mass illiteracy, low skill, limited productivity, risk aversing nature of people etc. This has create very high degree of economic backwardness.

Rural Entrepreneurship

Rural Entrepreneurship involves the same basic functions as entrepreneurship in business and industrial activities of urban area. But, primary sector activities alone are taking place in rural areas. Rural entrepreneurship by transmitting industrial culture in rural areas bring about modernisation and innovation in agriculture and its allied activities. This will dynamise the rural economy, thereby accentuating earnings of rural people. Hence, promoting the farm entrepreneurship in the form of agro- based industries, tiny, cottage and small scale unit etc. will serve the purpose of promoting rural entrepreneurship. The difference ‘between rural and urban entreprenurs is only a matter of degree, rather than of content. Many of the successful entrepreneurial classes prospering in cities infact have their roots in the rural area.

The closeness to establishment, urban culture of manipulation infra-structural advantages in social costs make the urban entrepreneurship attractive. To build rural entrepreneurship it is needed to sustain and support the enterprising initiative and provide a proper model to the rural entrepreneur so that he can face challenges in a competitive environment.

Why Rural Entrepreneurship?

The need to promote entrepreneurship in rural areas is vital in the context of generating gainful employment and minimising the ever widening disparities between rural and urban areas. To remove mass poverty, widespread unemployment and urban employment and low productivity and to create prevalance of subsistence production both m farm and non-farm sectors require the development of rural entrepreneurship.

Dispersal of industries in rural areas using local resources and manpower the imperative need for combating the twin problems of poverty and unemployment in the rural economy. This could be done by promoting small scale and tiny sector units in rural areas. Resource utilisation at its origin has to be optimsed.

The industries sooner or late; get involved with development of villages, around the industrial area. At times, this happen voluntarily and out of genuine desire for rural upliftment. Besides that, pressures come from various sources; the local politicians, the populace who loose their land to industry, the workman who want to do things for their own village.

Government has also been designing and implementing many rural development programme like IRDP, TRYSEM, DWCRA, Jawahar Rozgan Yojana and PMRY on target groups and rural infra-structural facilities. Voluntary efforts are getting due recognition and new thrusts in policy support. The new action plan of the government desires to spend half of national resources for rural development.

Problems Relating to Rural Entrepreneurship

Rural society lives in paradoxes. They are capable of remarkable patience and express deep feelings on the one hand and on the other hand they exhibit inexplicable celloushness. There are several social and economic constraints on entrepreneurial development in rural areas. Often the living conditions and facilities offered by rural areas fail to attract the professionals. Similarly, the vast difference in the nature of industrial and rural work cultures create problems in production. Many Engineering industries discover this fact when they compare the productivity of self factories in rural areas with an urban one. Industries invariably need to develop ancillaries or atleast resort to sub-contracting part of their work. It is difficult in rural areas to find the right quality of such organisations. Then the testing and inspection facilities in the rural areas are also highly inadequate which tends to ignore and) incur cost of poor quality. Another problem the rural, areas are riddled with is’ the shortage of decision makers. The local government officials in the rural areas are at fairly low levels. Thus, the rural entrepreneurial development is a complex problem which, can tackled by the social, political and economic institutions. Efforts must be taken without any further delay to uplift the entrepreneurial development in rural sector and economic growth of the country.

Entrepreneurial Building

Highly educated and urban based potential entrepreneurs could utilise the services of Technical Consultancy organisations, Entrepreneur-ship Development Institutes, and the support service institutions like the DIC, SFC, SIDO, SISI, SSIDC, IDBI, SIDBI etc. Whereas the rural masses have to depend only on grass root ‘level organisations which are normally not active. So, first of all steps must be taken to strengthen the grass root level organisations, to respond suitably to the

emerging needs of entrepre-neurship building require social. and economic inputs, training and mo-tivation, functional inputs in credit, technology, markets and information and above all, an umbrella organisation to provide security cover.

Generally, entrepreneurial building could be done on two basis, viz.

Individual Approaches;

Group approaches.

Similarly it could be done on the basis of two other criterias to match with specific objectives. They may be

Product approaches and

Project approaches.

Area approaches and

Service area approaches. The first category classification of entrepreneurial building is highlighted below.

Individual Approaches

Under this method the individual who have some basic entrepreneurial qualities and experience in the relevant field were identified awl provided with all support services: These individual entrepreneurs come from relatively better off categories such as business communities, prosperous. Farmers, technocrats, Previous trade practice as Job workers, skilled persons m service sector activities etc.

Group Approaches

There is greater need for induced entrepreneurship and mobilising inputs for mass entrepreneurship where groups and groups of entrepreneurs take to group and groups of activities. Here the main consideration is not high profit orientation and high risk taking. These are really the mass-based activities whose success depends on establishing linkages to resource and market systems’ on the one hand and infrastructural inputs and services on the other. This type of entrepreneurship building exercises are difficult in the initial stages but gain momentum as their profitability becomes known. The target category of people coming under this approaches may be artisan classes small and marginal farmers; Women; people trained in technical schools, self-employment schemes like PMRY, TRYSEM TRIbals and specialised communities.

The other two category of approaches such as product and project approaches; Area and Service area approaches may also be adopted under the first category of classification of entrepreneurial building. Whatever may be the nature of approaches it should be done on group basis for promoting rural entrepreneurship.

While envisaging a methodology for entrepreneurial building 10 rural areas, certain experiences and observations have to be taken as suppositions.

Rural entrepreneurs represent a complex heterogeneous social structure with a wide variability.

The innovation of entrepreneurship has a greater elements of unknown and fever conditions which are reassuring to the villagers.

Different rural target areas require different programming in entrepreneurial identification and selection.

Localised linkage agency provide entrepreneurs and acts as a stroking source in their continuity.

Every potential rural entrepreneur reflects certain behavioural manifestation that needs to be isolated and, screened scientifically for a planned entrepreneurial’ development.

Once the community is exposed to be entrepreneurial ventures and has reached the level of acceptance, the initiation has to reinforce the endeavour.

Steps to Improve Rural Entrepreneurs

While the problems that beset industrialisation are many leading to unbearable cost burden there is a need for some pre industrialisation planning to alleviate the situation in the rural areas. There is no doubt that the process of Rural entrepreneurship can be substantially speeded up. The crucial factor is the creation of the conditions which will attract the entrepreneurs to rural areas:

Identification of potential entrepreneurial opportunities in concrete terms is the foremost step in this process.

Providing entrepreneurial training, motivation at constant interval will attract the people to undertake the entrepreneurial venture with full confidence and interest.

The apprenticeship training centre is to set up in rural areas to build up a bank of rural youth, skilled and turned to industrial culture programmes like EDPS, Workshops, seminars, demonstrations are to be taken to rural areas on a massive scale.

Effective usage of the mass media to educate the rural community would go a long way in fostering values like timeliness, productivity etc. which are essential to the industrial culture.

Perception of risk is a critical factor among rural people at the time of taking any new activity. So, development of the people in the risk assuming process is more important that the development can be used as a frame work to formulate strategies for the development of rural entrepreneurship. Any developmental programme relating to rural entrepreneur should not be on achieving the time bound quantitative targets but on developing the villagers’ risk taking and innovative capabilities.

Provision of essential infra-structural facilities like land, power, raw materials and finance at concessional rates to entrepreneurs by the governmental agencies and financial institutions are immensely essential to promote rural entrepreneurship. ­

Entrepreneurs must recognize that the safeguarding of workers interest is essential for securing optimum productivity and profitability of the enterprises.

Monitoring of rural development programmes will activate the rural entrepreneurship by providing right information at the right time to plan and manage the activities successfully.

The other basic requirement for promoting the rural entrepreneurship is the timely availability of credit. It is not only incentives such as low interest rates, sales tax exemption for two or three years or priority lending that the small rural entrepreneur needs but also making available to him the needed credit and making it available on time is essential.

The important grass root organisations like the Panchayats, Voluntary service organisations, banks have to be pressed into service. Various developmental programmes should converge to yield an entrepreneurial activity.

The national level institutions in technological research, training, promotion etc. are to attach themselves with the grass-root level organisations with a continuous interaction.

Information flows on projects, incentive structures, guidance sources etc. should be regular and continuous. Rural areas needs to be covered by information network.

Rural Entrepreneurial Opportunities

Rural folk would like to see returns in a very short period. Enterprises suggested for them need to produce tangible results. Hence rural entrepreneurship could be promoted mainly on the basis of the resources that are available in rural areas. Agriculture and agricultural based activities are the main’ sources of employment. Some of the entrepreneurial opportunities available to rural people as identified by the VIII plan are given below:

mineral based such as gas-based mini hydrocarbon plants,

marine based such as the growing of aqua culture in the sea coasts,

forest based, such as many units of wood industries

animal based, such as’ the meat, leather and dairy activities,

poultry based such as industries for curing, freezing, grading, and canning of poultry and eggs and manufacture of egg powder, agro-based which the Union Ministry of Agriculture has developed for meeting local village block demand and export purposes grouped into:

seed processing & marketing, food nursery

gardening, mushroom production

integrated pest control, fisheries,

animal husbandry, bamboo working

wheat flour & polished rice,

sugar, gur, khandasari, tobacco, cigarettes, bidis,

shoes, leather for making irrigation leather bags,

paper, cardboard, pencils, pen ink,

buckets, fruit juice, bricks, tiles,

khadi, handloom cloth, bleached,

soaps, utensils, bullock carts,

micro nutrients like sulphates of zinc, copper, borax and others,

cattle feed, poultry feed,

tea, coffee, cashew, cardamom and other processes plantation crops.

To ensure that the above agro-resource-based industries selected by each State/district lead to full employment and enhance incomes. Eight multi skilled trades have been identified. under VIII plan in which training needs to be given -to the rural workers involved:

tractor and farm equipment;

mechanic and auto mechanic;

rural electrician

bakery

tailoring, knitting & embroidery;

leather goods manufacturing;

carpentry & furniture making, and

a blacksmithy, sheet metal & welding.

Both state and central governments are promoting entrepreneurship development by incorporating various special programmes. The details of those schemes are briefly given below.

Special Entrepreneurship Development Programmes

The need to step up rural development efforts, particularly in the context of the structural adjustments in the economy, substantial increases has been made in the rural development outlay for the Eighth Plan. The General Plan outlay has been steeped up to ` 30,000 crores which is exclusive of the likely State-Plan Outlay or about ` 15,000 crores. Few rural Development Schemes for promoting entrepreneurship are given below:

Rural Artisans

A new programme of supply of modem tool kits to rural artisans to enhance the quality of the product, increase the production and income and reduce their migration to urban areas was launched in July 1992 to cover 5,00,000 rural artisans during the Eighth Plan. During 1992-93, 97.585 rural artisans were covered in 61 districts.

So far, 33,666 tool kits have already been distributed. All traditional rural artisans living below the poverty line except weavers, tailors, needle workers and bldi workers are covered under the programme. During 1993-94, it is proposed to supply tool kits to 1,33,000 rural artisans in 100 districts.

IRDP

Under the Integrated Rural Development Programme (IRDP), 42.24 million families have so far been assisted at a total investment of 18,048 crores. Coverage of women under the programme has steadily increased from 9.90 percent during 1992-93. During the last two years, nearly 46,00,000 families were assisted. The existing monetary ceiling for subsidy under the programme was increased by ` 1,000 for all categorizes of beneficiaries from the current year.

DWCRA

There has been a phased expansion every year under the programme of development of women and children’ rural areas (DWCRA) It has now been extended to 291 districts throughout the country. Fifty more districts would be covered during 1993-94. During the last two years, 3,35,882 beneficiaries were assisted and 18,273 groups formed, the review said.

TRYSEM

The scheme of training of rural youth for self-employment (TRYSEM) aims at providing basic technical and managerial skill to rural youth from families below the poverty line to enable them to take up self-employment in the broad and business activities. During the last two years, 612,568 youths have been trained out of which. 3,20,967 have either been employed on wages or self-employed. During 1993-94. 3,50,000 youths are to be trained.

JRY

Under the Jawahar Rozgar Yojna (JRY), which provides wage employment to the rural poor, 1726.87 million mandays employment was during the last two years. A total os 3,80,979 wells were constructed under the million wells, scheme (MWS) during the last two years. Under the Indira Aws Yojna (JAY), about 4,48,283 houses have been constructed for the members of SC/ST and freed bonded labourers below the poverty line free of cost.

To have a correct assessment of the JRY, the Government has undertaken a concurrent evaluation of the programme through reputed research institutions in.all districts of the country. An intensified JRY scheme has been started in 120 districts with additional funds.

PMRY Scheme

Reserve Bank of India has announced a new scheme formulated by Government of India called prime inister’s Razgar Yojana for Educated Unemployed Youth which was launched on 2nd October 1993.

Objective

The objective of the scheme is to provide employment to more than a million persons by setting up 7 lakh micro enterprises by the Educated Unemployed Youth. These micro enterprises will cover manufacturing (Industries), Services and Business ventures. The scheme also seeks to associate with reputed non-governmental organizations especially in the selection and training of the entrepreneurs, besides preparation of project profiles.

Coverage

The scheme will cover only Urban Areas of the Country during 1993-94 and whole of the Country from 1994-95. From 1994-95 onwards, the existing Self Employment Scheme for the Educated Unemployed Youth (Seeuy) will be subsumed in PMRY.

Eligibility

The Scheme covers all Educated Unemployed Youth who are marriculates (passed or failed). Preference will be given to Women, ITI passed and persons who have undergone the Government Sponsored Technical Courses for a minimum of 6 months and fulfilling the following conditions.

Age: Between 18 and 35 years

Residency: Permanent resident of the area for atleast 3 years. Documents like Rarion Card would constitute enouch proof for the purpose. In its absence any other document to the satisfaction of the Task Force need be produced.

Family Income: Upto ` 24,000/- per annum, the word Faily would mean spouse and parents of beneficiary and family income would include income from all sources, whether wages, salary, pension, agriculture, business, rent, etc.,

Should not be a defaulter to any natioinalised bank/financial institution / cooperative bank.

Eligible Activity

The loan can be considered to Educated Unemployed Youth to set up micro enterprises relating to manufacturing (industries), Service and Business. Existign activities being financed under SEEUY will also qualify.

How to Apply

Eligible Educated Unemployed Youth may apply in the prescribed form to the District Industries Centres (DIC) / Small Industries Service Institutes and all promotional, financial and developmental agencies of the State Government as also NGO’s (Non Governmental Organisations), Industries Associations and Other Agencies.

The above mentioned agencies in turn will forward the viable loan proposals to the District PMRY Committee / Merropolitan PMRY Committee.

These Committees will screen loan applications and forward them to the nearby bank branches for their consideration.

Role of Bank

If the applications received from the District PMRY Committee/ Metropolitan PMRY Committee are found viable, the financing branches will sanction a composite loan (working capital and term loan) not exceeding ` 95,000/- (` 1,00,000/- minus margin money ` 5,000- to each applicant with the following terms and conditions.

Rate of Interest

The loan will carry interest as per directives of the Reserve Bank of India issued from time to time. The present system of charging system of charging interest based on the quantum of loan is applicable for this loan also.

Margin Money

The beneficiary would be required to bring in 5% of the project cost as margin money.

Unit Cost

The unit cost for different activities to be undertaken under the scheme will be fixed locally by the District PMRY Committee / Metropolitan PMRY Committee

Security

Neither collateral security not third party guarantee need be insisted upon except the assets created out of the loan proceeds.

Repayment

The repayment of term loans would be in instalments after the initial moratorium of 6-18 months ranging from 3 to 7 years based on the economics of the venture.

Training

Scheme envisages compulsory training for entrepreneurs for a period of four weeks after the loan is sanctioned. Trainees will get a stipend of ` 500/- during training period from the government.

Subsidy

Government of India would provide subsidy at the rate of 15% of the loan disbursed subject to a ceiling of ` 7,500/- per entrepreneur. In case more than one entrepreneur join together and set up a project under partnership, subsidy would be calculated for each partner separately at the rate of 15 percent of his share in the project cost, limited to ` 7,500/- (per partner).

Implementation

The District PMRY Committee will function as a nodal agency for implementation and monitoring of this scheme. The Committee could set up a sub-committee for the purpose.

In four metropolitan cities, metropolitan PMRY Committee will be similarly constituted. The PMRY Committee will be responsible for

Motivating and selecting the entrepreneurs.

Identifying and preparing scheme in Trade, Service establishments and arrage Industries.

Determining the avocation / activities for each entrepreneur.

Recommending loan for the entrepreneur.

Getting speedy clearance from the authorities concerned.

Summary

In these days, much is talked about relating education to social needs. Entrepreneurship is the best course to be offered to men and women. Women entrepreneurs are a vital group for the country’s economic development. Women entrepreneurship movement in India is already off in but it has to be spread out geometrically among the masses with the co-ordination of all governmental agencies.

Thus an integrated and multi-dimensional approach is required for the development of entrepreneurship in rural areas. Identifying the opportunities that have growth potentials based on the locally available resources in the rural areas and give it in the in the form of capsule is very essential aspect of rural entrepreneurship. Besides the provision of package of assistances relating to technology, finance and other assistances to the entrepreneurs, assisting agencies must have close watch and guide the entrepreneurs properly. Certainly it will be getting good take-off to rural entrepreneurship.

In a nutshell, this lesson has created understanding about the various special programmes adopted by the government for promoting entrepreneurship. A detailed description about the different schemes especially PMRY Scheme is given.