Rural Entrepreneurship

Article shared by:

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.

Rural Entrepreneurship

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:
 1. Mineral-based industries
2. Forest-based industries
3. Agro-based industries
4. Engineering and non-conventional industries
5. Textile industry (including Khadi), and
6. 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:

1. Provision for incentives and support to small-scale industries.

2. Providing factoring services and facility of discounting bills to
solve financial problems of small industries.
3. Raising investment limit to Rs. 3 crore to broad-based small-
sector. The present investment limit is Rs. 1 crore.
4. Promotion and up gradation of technology in the small sector.
5. 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:

1. Agricultural Entrepreneurs
2. Micro Entrepreneurs
3. Small Business Entrepreneurs
4. 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:

1. Agriculture:

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:

1. Lack of Finance
2. Shortage of raw materials
3. Lack of market coverage
4. Lack of technical/managerial skills
5. Improper project planning
6. Shortage of power
7. Lack of transport/communication facilities, and
8. Lack of testing facilities etc.

Entrepreneurship among rural people is lacking mainly due to:

 1. Risk taking abilities
2. Lack of business experience
3. Lack of aptitude and necessary motivation
4. Bureaucratic procedures involved in setting up of the units
5. Initial harassment and hardships
6. 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:

1. Proper coordination between concerned authorities

2. Deploying a special cell and with adequate staff for selecting and
guiding genuine investors. This staff must be honest, sincere and
with motivating qualities
3. Proper guidance in preparing techno-economic viability report
4. Proper infrastructural facilities development
5. Planners and policy makers should make themselves familiar
with the problems and priorities of the area
6. Snags in the institutional framework and various schemes of
assistance should be removed
7. Emphasis on industries based on local resources
8. 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:

1. Promoting rural industries in a big way.

2. Give a fillip to rural artisans.
3. Widening rural business and trade.
4. Modernising the rural industrial sector.
5. Upgrading rural skills.
6. Continuous supply of raw materials.
7. Training rural entrepreneurs.
8. Instilling self-confidence.
9. Providing adequate and timely finance.
10. Exploring new domestic and international markets for their
products.
11. Imbibing professional management skills.
12. Simplifying licensing provisions.
13. Feeding them with new ideas/products collected through
market research/surveys.
14. Popularising their products through fairs and exhibitions.
15. Establishing common marketing complexes in every block.
16. Give stress on vocational awareness.
17. Popularise various self-employment.
18. 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:

1. Per capita income

2. Per capita income from industry
3. Number of works in registered factories
4. Per capita annual consumption of electricity
5. Length of surface roads in relation to population
6. 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:

1. Grant of higher development rebate

2. Exemption from income tax for five years after providing
development rebate
3. Exemption from import duties on plant and machinery
4. Exemption from excise duties for five years
 5. Exemption from sales tax both on raw materials and finished
products for a period of five years
6. 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:

1. Agro-based industries
2. Mineral-based industries
3. Forest-based industries
4. Hand-made paper and fibre
5. Rural engineering and bio-technology
6. Polymer and chemical based industries
7. 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.

https://www.economicsdiscussion.net/entrepreneurship/rural-
entrepreneurship/33667#:~:text=Rural%20entrepreneurship
%20refers%20to%20initiatives,units%20in%20the%20rural%20areas .