Download this Document for Free RURAL ENTREPRENEURSHIP IN INDIA1 1.

INTRODUCTION TO RURAL ENTREPRENEURSHIP ENTREPRENEUR “Entrepreneurs” are people who create and grow enterprises.“Entrepreneurship” is the process through which entrepreneurs create and grow enterprises.“Entrepreneurship development” refers to the infrastructure of public and private policies andpractices that foster and support entrepreneurship. ENTREPRENEURSHIP The concept of entrepreneurship has a wide range of meanings. On the one extreme an entrepreneur is a person of very high aptitude who pioneers change, possessingcharacteristics found in only a very small fraction of the population. On the other extreme of definitions, anyone who wants to work for himself or herself is considered to be anentrepreneur.The word entrepreneur originates from the French word, entreprendre , which means "toundertake." In a business context, it means to start a business. The MerriamWebsterDictionary presents the definition of an entrepreneur as one who organizes, manages, andassumes the risks of a business or enterprise. WHAT IS RURAL ENTREPRENEURSHIP? The problem is essentially lop-sided development which is development of one area at thecost of development of some other place, with concomitant associated problems of underdevelopment. For instance, we have seen unemployment or underemployment in the villagesthat has led to influx of rural population to the cities. What is needed is to create a situation sothat the migration from rural areas to urban areas comes down. Migration per se is not alwaysundesirable but it should be the minimum as far as employment is concerned. Rather thesituation should be such that people should find it worthwhile to shift themselves from townsand cities to rural areas because of realization of better opportunities there. In other words,migration from rural areas should not only get checked but overpopulated towns and citiesshould also get decongested. The question is, is it really possible? If it is so, ways can alwaysbe found out. One is by forcibly stopping villagers from settling in the slums of towns andcities, making use of all powers to clear the slums so the villagers are forced to go back. Butsuch practices have not achieved the desired results in the past. Apart from causing sufferingto the poor people and adding to the expenditure for the Government, social tensions andeconomic hardships created by the government officials and their staff in every demolition of slums is not desirable from a sane government. Moreover, when a slum is demolished peopledo not move out of urban locality. They only relocate to a nearby place because they areentrenched in the economy of the town or city. Though governments have tried out variousschemes for generating incomes in the rural areas such government initiatives have notstopped people from moving out of villages to cities. This is because such

using mainly local resourcesboth material . But with time they change their minds and jointhe bandwagon of job seekers due to various compulsions.e. The entrepreneurs may be fromanywhere.Young people with such perspective and with the help of rightly channelized efforts wouldusher in an era of rural entrepreneurship. Though their efforts need to be recognized yet much more needs to be done toreverse the direction of movement of people. that entrepreneurship which ensures value addition to rural resources in rural areas engaging largely rural human resources.governmentinitiatives are not on their own capable of enabling people to earn adequately and amelioratetheir conditions. It meansnot only stopping the outflow of rural people but also attracting them back from the townsand cities where they had migrated. Entrepreneurs taking torural entrepreneurship should not only set up enterprises in rural areas but should be alsousing rural produce as raw material and employing rural people in their production processes. Such enterprising people who prefer ruralentrepreneurship may or may not themselves belong to rural areas. to attract people to the rural areas. in essence. It isn't thatthere is a dearth of people with such mindset. There has to be some committed enterprising individual or a group of people. Despite all the inadequacies in rural areas one should assess theirstrengths and build on them to make rural areas places of opportunities. this means that finished products are produced in rural areas out of resourcesobtained in rural areas by largely rural people. This is much to dowith the way one sees the reality of the rural areas. To promote entrepreneurs who would take to rural entrepreneurship in utmost earnestnessand sincerity is to ensure rural development. In other words. The way a survivor or a job seeker wouldsee things would be certainly different from those who would like to do somethingworthwhile and are ready to go through a difficult path to achieve their goals. This is possible when young people consider rural areasas places of opportunities. Rural entrepreneurship is. Some individuals who happen to be local leaders and NGOs andwho are committed to the cause of the rural people have been catalytic agents fordevelopment. Enabling them to think positively. but their enterprises have to be located in a rural area. The entrepreneur may or may not be of rural origin. RURAL ENTREPRENEURSHIP IN INDIA2 who should be capable of making use of the government policies and schemes for thebetterment of rural people. In this country successful rural entrepreneurs wouldsolve many of the chronic problems within a short time.creatively and Entrepreneurship purposefully is utmost for the development of rural areas. i.

VOs*. There is hardly any difference betweenpersonal assets and business assets. single ownership of the enterprise. TYPES OF RURAL ENTREPRENEURSHIP Rural entrepreneurial activity can be broadly classified in four types such as:i) Individual Entrepreneurship .iv) Cooperatives . occupation. it would throw up lots of opportunities in the rural areas and result indecongestion of the urban centers.It is an autonomous association of persons united voluntarily for acommon objective.This type of entrepreneurship is quite prevalent in rural areas where an entrepreneur haslimited resources . both the rural as well as urban areas get benefited by setting up more industrialunits in the rural areas.e. These also cover formal and non-formal association of a group of individualson the basis of caste. Urban slums would start disappearing with large numberof industries getting shifted to rural areas resulting in increasing opportunities in the ruralareas. 1] INDIVIDUAL ENTREPRENEURSHIP/PROPRIETORSHIP In this. to fulfill the demands of such large units and the multiplier effect such largeunits create. making rural areas attractive locations for investments. But certainly large portion of materialused has to be locally produced and an appreciable number of people engaged in theproduction of finished goods should be people based or living in rural areas. Any large unit coming up in rural areas more or less does have an impact inactivating the surrounding economy for entrepreneurs to take advantage of.Even a unit set up by the government or a large company in a rural area could promote ruralentrepreneurship depending on how much opportunities it throws up for entrepreneurs to uselocal resources. Such shifting initially may be a difficult proposition but in the long run beneficial inmany ways. the enterprises have to be located in a rural area thoughit need not be actually using 100% local material and human resources. Moreover.It is basically called proprietary i.It mainly covers partnership. 2. it is the entrepreneur who is the only (100%) owner. . etc. SHGs* and even networking of these groups. income. CBOs*. Some amount of material and some people may be from urban cities. The entrepreneur has "unlimited liability under the law". This is preciselythe reason why it is recommended to shift industries from urban centers to neighboring ruralareas.It covers NGOs*.ii) Group Entrepreneurship .An entrepreneur has to decide on a particular type of entrepreneurship based on thevarious options available. Also. The entrepreneur bearsfull responsibility for each and every activity and is alone the strategic thinker and decisionmaker to make the unit viable as well as profitable. Thus.iii) Cluster Formation .as well as human. private limited company andpublic limited company.

The importance of human resources cannot be over emphasized. For partnership type of entrepreneurship.Achievement motivation is a key to entrepreneurship development. upbringing. a. Partnership is governedby Indian Partnership Act. Likeproprietorship. common approach. e)agency relationship.2] GROUP ENTREPRENEURSHIP It is classified into mainly three types such as i) Partnership. b) contractual relation: c) lawful business.The focal point of all entrepreneurship development programmes is the entrepreneur. mutual trust is a must. RURAL ENTREPRENEURSHIP IN INDIA19 5. for it is thisresource alone that makes the greatest impact on socioeconomic development of rural areas. registration. writtenagreement. skills and stability. all contribute to achievement motivation. The conceptual framework of the development of ruralentrepreneurship should be made the starting point so that the various strategies used in developingentrepreneurs can be properly understood and . Besides both the partners in partnership mustunderstand their respective responsibilities and complement each other for commonobjectives and goal. HUMAN RESOURCES FOR DEVELOPING RURALENTREPRENEURS Human Resources are amongst the most essential resources that are required for fostering ruralentrepreneurship. Partnership In this case there is no individual ownership of the unit. self study.coaching and training.The characteristics of partnership are a) association of two or more persons(maximum twenty). Training for Entrepreneurship Development Development of entrepreneurs through systematic training namely Entrepreneurship DevelopmentProgrammes (EDPs) has emerged as an important strategy for development of human resources forpromoting small business enterprises in rural areas. the person whomatters in the process of development. f) unlimited liability. exposure to challenging situations. d) sharing of profit. India has come a long way since the idea of creating an entrepreneur through training was first mooted over 40 years ago. the liability is "Joint and Several". ii) Private LimitedCompany and iii) Public Limited Company. There is another partner with you who works with you and also bears the responsibility and shares profit.The requirements of ideal partnership are good faith. 1932. and g) non-transferability of interest. The entrepreneur should be seen in the social context and alsoin the context of the needs of rural societies. This is achieved in many ways:childhood reading. apprenticeship. adequate capital.

hardworking.planned. RUDSET institutes also provide training for potential entrepreneurs underPMRY scheme. in which they live. NIESBUD. The latter may include elements of bookkeeping. It relates to the setting up of the self employment venturesin all economically viable projects (except direct agricultural operations). These skills have to be properly emphasized. quality consciousness. they need to bethoroughly prepared.In order that the potential entrepreneurs succeed in their entrepreneurial ventures. the network of SISIs located all over the country provides technical guidance and supportfor small enterprise development.Normally the above traits or qualities are not found in the majority of rural people since they are notoriented to an entrepreneurial culture. competition and collaboration. It is.planning. On completion of training. In this programme. dignity of labour. The . openness to feedback. restrict them. RURAL ENTREPRENEURSHIP IN INDIA20 Training and Development of Rural Entrepreneurs A brief sketch of the training and support programmes launched by the government is given to enablethe reader get a comprehensive view of the efforts of human resources development for ruralentrepreneurship. sense of efficacy. learning from experience. information seeking ability. either with a training institution or a mastercraftsman to provide necessary technical and entrepreneurial skills. IIED. risk taking willingness. NISIET. simpleknowledge of marketing. to imbibe and nurture the key traits like taking initiative. ICECD. Entrepreneurship Development Centres being runin each State. have designedseveral training courses for training potential entrepreneurs on various aspects of enterprisedevelopment.In addition.perseverance. Krishi VigyanKendras have provided adequate training opportunities on the subject matter and technologies forenterprise development. ability to identify and grab opportunities. and the lack of opportunities for entrepreneurial encounters. The syllabus for each trade under TRYSEM should include training in job skills. etc. KVIC. problem solving. selfconfidence. as well as management skills. In addition. and national level institute like EDII. research institutes. theselected rural youth are put through a period of training. rather pained. persuasive and influencing competencies. therefore. product costing. theidentified youth receive a combination of subsidy and institutional credit under IRDP for acquisitionof an income generating asset. concern for society. necessary to create anatmosphere for promoting potential entrepreneurs.Prime Minister's Rozgar Yojana (PMRY):Prime Minister's Rozgar Yojana was launched on 2nd October 1993 to assist educated unemployedyouth to set up self-employment ventures. several agricultural universities. etc.Entrepreneurial motivation is the most important factor in contributing to the development of entrepreneurship in a society.Training of rural Youth for Self Employment (TRYSEM):Training of Rural Youth for Self Employment was launched by the Government of India in 1979 as afacilitating component of Integrated Rural Development Programme (IPDP). The environment. need for independence and need for outstanding performance. So. respect forwork.time orientation. various aspects that help in developing achievement motivationneed to be included in the EDP training courses. familiarization with entrepreneurial assistance agencies andwith project financing by banks.

which will be credited to the borrower's loan account after aperiod of two years from the date of first disbursement of loan. c) to achieve the goal of ruralSwaranjayanti Gram Swarozgar Yojana (SGSY):Swaranjayanti Gram Swarozgar Yojana (SGSY) was launched by Government of India in 1999 with afocus on providing effective self employment through self help group approach and activity clusterapproach for rural poor families below poverty line.The scheme targeted for setting up of nearly 7 lakh enterprises and consequent employmentgeneration to more than one million educated unemployed youth in the last four years of the EighthFive Year Plan.00 lakhs. training of entrepreneurs and preparation of project profiles. 25. the borrower is required to invest her/his own contribution of 10 percent of theproject cost. b) to developentrepreneurial skill and attitude among rural unemployed youth. In case of SC/ST and other weaker section borrowers. the rural entrepreneurs need to concentrate their energy and effortson sustaining the activities of the enterprise. The REGP scheme is applicable to all village industries project set up in rural areas.The main objectives of REGP are a) to generate employment in rural areas. Trusts & SHGs for projects up to Rs. And d) to facilitate participation of financial institutions for higher credit flow torural industries. Banks will sanction 90 percent of the project cost in case of generalcategory borrowers and 95 percent of the project cost to the weaker section beneficiaries/institutionsand disburse full amount of the loan. The target for the year 2004-05 & 2005-06 under the Yojana has been enhanced from2. The major . the beneficiary's contribution willbe 5% of the project cost. theKVIC launched Rural Employment Generation Programme (REGP) with effect from 1st Nov 1995. RURAL ENTREPRENEURSHIP IN INDIA21 industrialization.Under the scheme.The Scheme also seeks to associate reputed non-governmental organisations in implementation of SGSY Scheme Rural Employment Generation Programme (REGP): On the basis of recommendationof the High Power Committee submitted in May 1994. After the sanction of the credit facility by the Bank branch. SUSTENANCE MANAGEMENT FUNCTIONS Once the production process is on.for generation of two million jobs under the KVI sector in the rural areas of the country.50 lakh beneficiaries per annum for creation of additional employmentopportunities in the rural non-farm sector. RURAL ENTREPRENEURSHIP IN INDIA33. headed by the then Prime Minster of India. The self help groups are motivated throughtraining and capacity building for taking up thrift and credit activity and start their own small ruralenterprises through the financial assistance of Revolving Fund Assistance.The eligible agencies under the scheme are (i) individuals (rural artisans/entrepreneurs) ii) institutionscooperative societies.20 lakh beneficiaries to 2.eligible amount of Margin Money will be kept in Term Deposit of two years in the account of theborrower at the leading bank branch.Scheme also seeks toassociate reputed non-governmental organisations in implementation of PMRY Scheme especially inthe selection.

the enterprise follows the simple practices of monitoringthe cash flows to and from the enterprise. If a production target is set. In such cases. changes thedirection towards the set goals. Moreover. packaging. In case. An essential part of controlling process is taking corrective actions. recycling funds and managing the enterprise. theentrepreneur controls it. she sees if the enterprise goals are in sight and if not. delays may prove very costly. Time management also assumes significance as proper distribution of timeproportionately among all aspects of enterprise ensures . Otherwise. organizing. This act of assigning work related to management coupled with formalauthority and responsibility is called delegation. the enterprise is not being run in desired direction. controlling. budgeting.Usually many entrepreneurs learn something about all the tasks of their enterprise. which helps managers to monitor theeffectiveness of their planning. and actions. Or she may have one of her/his familymembers or relative to help as an assistant. on the way he or she coordinates all the activities of theenterprise. the owner has to manage almost everything. In this process. An entrepreneurwho can handle all operations of one's unit is more likely to succeed only because she pays equal RURAL ENTREPRENEURSHIP IN INDIA34 attention to all aspects of managing the enterprise. coordination is the process of integrating enterprise works in order to pursueentrepreneurial goals effectively. Controlling An entrepreneur takes steps to ensure that the actual activities of running enterprise conform to theplans and goals already set for the enterprise. Delegation In the tiny units. among others. she can easily diagnose what wentwrong and where. When the scale of operation of an enterprise gets enlarged. it has to be met within thespecified time frame. manager. Entrepreneurs delegate work to others in order tomanage the enterprise efficiently and successfully. Even close supervision and monitoring of production process helps in qualitycontrol.To enable better controlling of the enterprise. Thus the production process ismonitored. i. to achieve the entrepreneurialgoals. the entrepreneurusually has to attend to various activities of the enterprise and is hard pressed for time. delegating and supervising. worker.she usually hands over some specific work to one of her/his employees or family members formonitoring and completion. This management practice is called 'controlling'. Strict financial management practices help attain bettercontrol of the enterprise. functions that would help sustainthe enterprise are coordination. S/he has to takecare of all the activities involved in the raw material supply. Thus. it is the constant close supervision of the enterprise owner that helps in steering theenterprise in the right direction.all in one. As the size of the unit grows the need for delegation of responsibility increases. as and when needed. the entrepreneur personally handlessome of the most essential jobs and gets other less critical jobs done under her/his instruction andsupervision. So the likelihoodof an entrepreneur being successful depends. Coordination An entrepreneur is the technician. quality control. In production.e. financer and the boss .

the poultry farmers rarely delegated the technical tasks likevaccination of birds at regular intervals as it involves high level of skill and its poor performance mayresult in high losses. and by getting directly involved in the manufacturing process. even though they delegate some specific works to supervisorsin their enterprises. arranging working capital becomes the major task as she runsout of money to buy raw materials though she may not yet have earned any reputation in the market toget raw materials on credit.delegating and controlling functions of a manager.To ensure quality. but prepare for the worst". They were also found to be confusing the term strategic planning with daydreaming. she learnsfrom the customers and distributors about the preferences and prices. improves quality. To give an example. are not entirely happy with the process of delegation. diagnosing problemsand immediately correcting them. the entrepreneurconducts various tests. usually called 'teething troubles' whenhe/he sets up her/his enterprise. Supervising Supervision may be defined as the art of directing the effort or harnessing the energy of humanresources of the enterprise for the attainment of enterprise goals.Many of the successful entrepreneurs. They . They would insist that theresponsibility still rests with them in ensuring the completion of some works and quality of products/services.Quality Control: Quality conscientiousness is another aspect that fetches more monetary returns. and hence success. etc.The usual dictum is "Do not count your chickens before they are hatched!" But successfulentrepreneurs believe in "Hope for the best. Supervision involves directing. she makes several production trials. attempts to set a price for her/his products. have often fallen victims to vagaries of monsoons.success. Common Pitfalls A person who does not believe in long-term strategic plans but gets entangled in daily chores of running the enterprise usually meets with failure for lack of preparedness for future eventualities. because improper components may not be useful to assemble better finalproducts. RURAL ENTREPRENEURSHIP IN INDIA35 8. in general. they seldom venture to think of future plans and are usually ill-prepared for anycontingencies. PITFALLS IN MANAGING A RURAL ENTERPRISE A promoter of a rural enterprise faces a plethora of problems. a low skill task with low risks like 'daily feeding of birds' wasoften delegated to the workers.Improving quality of products by redesigning and using better components is possible only when theentrepreneur herself/himself spends adequate time with workers on shop floor. First. the practice of strategic planning is found to be quite inadequate. mid-way in the process of manufacturing various components. In the process. Sincethe rural people.Among rural entrepreneurs. Similarly. prices and otheruncertainties. Close and direct supervision is essential formaintaining quality control. Most of themanagerial staffs recruited have very little experience. refines the finishedproducts. On the other hand.

they tend to get bogged down in one aspect of production at the cost of ignoring some other crucialaspect of managing the enterprise and so productivity may decline.Even if they know their job and business skills. Usually they learn the RURAL ENTREPRENEURSHIP IN INDIA36 basic principles of financial management from their own mistakes. But partnerships may yield mixed results. An entrepreneur needs to look beyond into future with long-termgoals in mind. others have failed due to lack of understandingbetween partners. inferiority complex and lack of patience and lack of exposure willbe great impediments for enterprise development. Delayed cash flow is a big pitfallwhich may not be avoided by even the best of entrepreneurs. A narrow outlook. money and other key resources because they take up only familiar entrepreneurialactivities on which they have adequate command and knowledge. However. Suspicion and jealousy may not find place in a partnership venture. they are not able to reflect upon the mistakes of thepast. However. Usually. it is the inadequate understanding of theintricacies of business and lack of proper planning which hampers their dreams. the access to formal credit facilities is also denied.In cases where the scale of operation of an enterprise has increased.often learn their job according to theexigencies without much prior practical training. Whilesome units survive because of committed partnerships. Dueto shortage of managerial staff.Managing cash flows poses a great challenge for the entrepreneurs. Most of the entrepreneurs supervise their production work by themselves.The small entrepreneurs usually do not prepare long-term plans. the scope for specialization is limited. So it isimportant for them to learn and adopt the principles of financial management as well as maintain thenecessary records.They find organizing of resources as an easy and routine affair and conduct themselves in a 'businessas usual' manner. Merely thinking of limited gains will not make asuccessful entrepreneur. many of them bumtheir fingers and get disheartened in the beginning. Similarly large gaps are seen in theunderstanding the operating cycle and working capital requirements by the new entrepreneurs. it is imperative for one to handle other's jobs to ensure that work doesnot get held up in case someone is absent.Most of the rural entrepreneurs are not serious with the practice of organizing resources forproduction/services for their enterprises. . maturity and complementary support are essential forsuccessful partnership in enterprises. In the process.they have to learn to delegate various responsibilities to their partners and subordinates. The managerial jobs are plural in nature to a greater degreein the small-scale sector than in the medium and large-scale industries. Quite often in the absence of records. Otherwise. they take it for granted this crucial issue of organizing inputs. They often believe that their ideascannot be implemented for want of resources. However. Aneffective manager-entrepreneur will take special care of cash flows in running one's enterprise. small-scale industries are alsostarted as joint ventures with two-or more partners. A good deal of mutual faith.

9.RURAL ENTREPRENEURSHIP IN INDIA3 Constraints of Potential Rural Entrepreneurs and Development InputsSr. Who to contact for st arting a venture.7. How to know whether the identifiedbusiness is a viable and soundproposition? Opportunity identification andguidance. Constraints Inputs 1. 3.what formalities and procedures are tobe followed?Information inputs on procedures andformalities. 5. No. How does one carry out bank operations?Training in simple banking procedureslike filing up deposit and withdrawalslip etc. Rural Entrepreneurship in India Download this Document for FreePrintMobileCollectionsReport Document Info and Rating . Motivational inputs. project reportpreparation. How to know whether the identifiedbusiness is a viable and soundproposition? Market survey. How to manage the business? Basic management orientation throughsimulation exercises. No exposure to industry/business.4. How to read and write accounts? Functional and numerical literacy. Field visit to factories and big markets.2.Simple accounting in terms of writingincome and expenditure.10. Group building experiences. No faith on others includes friends. unfreezing andexperience sharing by successful localentrepreneurs. 8. Low self-image and confidence. Almost no technical skills Technical training (on-the-job training).6.

Sign up to vote on this title
UsefulNot useful