Recent Trends in Entrepreneurship
Rural Entrepreneurship
Introduction:
An entrepreneur is someone who initiates a new line of business, assuming the risks but also reaping the major portion of the returns. They usually draft a corporate strategy, employ staff, arrange funds and resources, and oversee the company's operations. Entrepreneurship applies to this practice of attempting to set up a company. The entrepreneur is widely regarded as a visionary and a generator of fresh concepts. An entrepreneur is one of the four factors of production who unites land, labour, and capital to create merchandise or deliver services.
The epithet entrepreneur originated from "entreprendre", a 13th-century French term that means "to do something" or "to undertake". In 1730, Richard Cantillon characterized the readiness to shoulder the financial risk of a commercial enterprise as the distinguishing feature of an entrepreneur. Jean-Baptiste Say, as well as John Stuart Mill, two during the 18th century, helped popularize the term "entrepreneur" in academia. Say emphasized the value of coalescence by switching resources from less productive to highly productive alternatives. In ‘Principles of Political Economy’, Mill discusses an "entrepreneur "as a person that upholds both risks as well as the administration of a firm. While Joseph Schumpeter often claimed that the tempo of economic progress of a country rests upon the speed of innovations, it is based on entrepreneurial potential. Before actually delving into rural entrepreneurship in India, one must be cognizant that entrepreneurs venturing into rural entrepreneurship must not only operate firms in rural parts of the country but leverage rural supply as raw material and hire rural residents in manufacturing techniques. In short, it's entrepreneurship that brings worth to rural assets.
"Rural entrepreneurship is, in essence, that entrepreneurship which ensures value addition to rural resources in rural areas engaging largely rural human resources. In other words, this means that finished products are produced in rural areas out of resources obtained in rural areas by largely rural people" ((Khanka, 2006; p. 68).
The concept of rural entrepreneurship is grounded in rural industrialization. Traditionally, rural entrepreneurs preferred hamlet industries (khadi, handloom, sericulture, handicrafts, and coir). But since the Indian market has emerged globally, competitive rivalry is surging at an astounding level. As a catalyst for macroeconomic growth, rural entrepreneurship beguiles attention in the modernized sphere (power looms and small-scale enterprises). Yet, to prosper, rural entrepreneurs need a benevolent culture.
Rural territories are home to over 70% of Indians. It pretty much signifies that potential for entrepreneurs might seep through the villagers. Paradoxically, rural India has yet to transliterate into better output or inclusivity; primarily due to the society's perplexing rural-urban divide. Despite developments, the rural economy seems profoundly enmeshed. They are enslaved by both budgetary and behavioural constraints.
Well, entrepreneurialism in rural India seems trickier. Yet it might brazen out a wide variety of socioeconomic issues by putting the focus on capital formation, employment, increased per capita income, fair and equal distribution of wealth, and sustained growth. Such major developments emanating from bottom-up rural business intentions may neutralize the poor effects of top-down filtration as envisioned by the government. Equitable growth is the demand of the era. Accordingly, instead of "mass production,” the sensible approach to India’s woes would be "production by the masses.”
Need for Rural Entrepreneurship
As a tool in poverty alleviation in rural areas, the Rural Entrepreneurship Revolution has become an increasingly significant part of the sustainable economic development process. Through promotion of local businesses, entrepreneurship in rural areas can offer employment opportunities, lift livings, and help revitalize communities in the direction of an approximation of regional economic balance.
1. Economic Development
Through rural entrepreneurship, economic development in non-urban areas will be stimulated. It generates income and provides job opportunities while stimulating the consumption and production of goods and services within the community. The economic activities keep wealth within rural areas and reduce dependency on external incomes.
2. Job Creation
More job opportunities in high unemployment areas are definitely one of the best contributions that rural entrepreneurship can give. Setting up businesses will establish employment for the people who live there, thereby alleviating poverty and improving living conditions as a whole. Job creation develops and boosts the local economy.
3. Utilization of Local Resources
The other and more crucial method of using local resources is through supplying local demand. People who live in the countryside will always need goods and services to better their present situation, which translates to your business generating an opportunity. Rural entrepreneurship stimulates the exploitation of local assets both on raw materials and human skills. By focusing on the exploitation of local assets, entrepreneurs can create sustainable models that benefit the community and reduce the carbon footprint associated with the transportation of goods. This is a localized approach that speaks to self-sufficiency and resilience in the rural economy.
4. Enable Local Communities
Promoting rural entrepreneurship empowers the local community for self-reliance and independence. As the establishment of their own enterprises gives a person confidence, skills, and possession over his or her economic future, that empowerment could spur on more civic engagement and enhanced social coherence and generally enhance the quality of life in the countryside.
5. Diversification of Sources of Income
Rural entrepreneurship diversifies the sources of income both to the family and to the community so that no dependence is developed on the traditional agricultural activities. During the process of seeking new business opportunities, it can alleviate risks linked to unstable agricultural markets and environmental conditions. This leads to higher economic stability and functionality in rural areas.
Scope of Rural Entrepreneurship:
Rural entrepreneurship is active and is opening new scopes for the entrepreneurs and are discussed as follows:
- Rural area has the capacity of small and medium enterprises and these sectors acts as the economy builders by generating Employment and income for poor and unemployed people and is contributing more than 52% of the GDP.
- Moreover, there is a rapid expansion in the small and medium industry arena. Therefore, Repair shops, service centers, PCO, internet café, hiring of agriculture implements & tractor, computer and other skill training centers have good scope in cluster of villages.
- Entertainment, cable TV ,rural tourism and amusement parks (near urban areas) are also some of the potential areas for rural entrepreneurs in service sector
- Various development programs are being executed through Panchayti Raj Institutions, who are engaging contractors for civil /mechanical works. Rural youth can start this business.
- Changed consumption pattern has opened up new avenues for trading activities in rural areas.
- Rural areas are also using large amount of agriculture products like fertilizers, seeds, pesticides and insecticides etc.
Types of Rural Entrepreneurship
There are four basic forms of rural entrepreneurship:
- Individual Entrepreneurship - It is single ownership of the enterprise.
- Group Entrepreneurship - It mainly covers partnerships, private limited companies, and public limited companies.
- Cluster Formation Entrepreneurship - It covers NGOs, VOs, CBOs, SHGs, and even networking of these groups. These also cover formal and non-formal associations of a group of individuals based on caste, occupation, income, etc.
- Cooperative Entrepreneurship - It is an autonomous association of persons united voluntarily for a common objective.
Individual Entrepreneurship:
One individual owns this company. When an individual tends to set up a business taking into account various benefits and threats; with his/her resources, in a special case, capital may be gathered from capitalists or financial companies, providing the needed strong business acumen.
Group Entrepreneurship:
When a small group of individuals works together to create a business, they rely on their abilities or qualities to build it. Though, administration of such groups is significantly more difficult than solo ones due to shared accountability or unsettled judgment.
Cluster Formation:
Clustering has been regarded as a setting with exposure to all interconnected and contending institutions. Clusters usually form when commercial activities inside a particular supply chain are consolidated. If a substantial number of individuals or activist groups, including NonGovernmental Organisations (NGOs), Voluntary Organisation (VOs), SelfHelp Groups (SHGs), Community Based Organisations (CBOs), participate, the business will form. The benefits of such a group include economies of scale, a strong supply chain, and, most importantly, a promising basis for sharing revenue growth with significant societal impact. The sustainability of such ventures is usually driven not just by resources but by the affirmative engagement of entrepreneurs.
Co-operatives:
An independent group of citizens uniting deliberately to satisfy common interests and requirements within a jointly-owned venture. It consists of both formal and informal activities working towards a shared agenda, For instance, artefact makers, livestock, and fishing businesses. The establishments mentioned above are fantastic examples of combining ingenuity and innovation at the grassroots level to overcome rural challenges in a commercially viable manner.
Rural Industries comprise six different sectors:
Rural industries can be witnessed mostly in the fields of farm value addition, forest-based, mineral-based, textile, and various engineering products. The quality and affordability of raw materials, and also the markets for final output, are the most fundamental criteria in choosing a start-up.
1. Agro-Based and Food Processing Industry :
Village Oil Industry; Aromatic Oil; Honey & Beekeeping; Palm Gur and other Palm Products; Fruit & Vegetable Processing Industry; Pulses & Cereals Processing Industry; Spices & Condiments Processing Industry; Gur & Khandsari Industry; Collection of Minor Forest Produce; Bamboo, Cane & Reed Industry; Organic Dyeing Industry; Medicinal Plant Collection & Processing Industry.
2. Mineral Based Industry :
Hand Made Pottery, Glazed & Ceramic Pottery, and Pottery as Home Décor, Pottery for Food Industry; Stone Cutting & Polishing Industry; Ceramic Tiles Industry; Granite Cutting, Polishing, Stone Carvings, Sculptures, etc.; Brass Metal and other Metal Crafts Industry.
3. Wellness & Cosmetics Industry:
Wellness & Cosmetics including Soap & Oil Industry; Aromatic Oils & Fragrances Industry; Cosmetic and Beauty Products Industry; Hair Oil and Shampoos, Toiletries Industry; Bathing Soap Industry; Incense Stick Industry.
4. Hand Made Paper, Leather and Plastic Industry:
Hand Made Paper, and Paper Products Industry; Paper Conversion Industry; Leather Industry; Plastic Industry; Natural Fibre other than Coir Industry.
5. Rural Engineering and New Technology Industry:
Bio-Gas, NonConventional Energy, Bio-Manure, Vermi-Compost Industry; Carpentry & Blacksmithy Industry; Agricultural Implements & Tools Industry; Electric & Electronic Products Industry; Dry Dairy; Household Metal Utensils & Articles Manufacturing Industry.
6. Service Industry: Small Business; Maintenance and Servicing of Electrical & Electronic Goods; Farm Aggregators (Pre & Post Farming).
Advantages of Rural Entrepreneurship
In regional regeneration, entrepreneurship may be incredibly valuable to the country's overall economic success. Encouragement of business in rural parts of the country might aid in transforming the landscape of agricultural communities. Here are the key benefits of rural entrepreneurship:
1. Capitalization of local assets:
Rural businesses facilitate the efficient application of indigenous resources, raw materials, and labor for commercial ends, thereby multiplying development. It can indeed mobilize rural investments and contribute to the expansion of rural financial affairs.
2. Exalt employment avenues:
Rural industries provide a significant number of job opportunities to rural dwellers. Village industrialisation might successfully address the fundamental dilemma of sizable unemployment and underemployment, especially in rural parts.
3. Circumventing the rural flow of migrants:
Paucity of development prospects and economic hardship rural people often make a move to urban provinces in search of a brighter tomorrow. All of this fosters a rural-urban divide. Rural entrepreneurship will support livelihoods and it will dissuade them from migrating.
4. Encouragement of artistic processes:
The rich culture of India could be perpetuated with rural entrepreneurship support by nurturing traditional art and crafts.
5. Balance the society's wickedness:
The existence of rural entrepreneurship might help alleviate social injustices like destitution, the proliferation of slum dwellers, urban pollution, and so on.
6. Motivate rural population:
Thriving rural entrepreneurs assist the rural masses with various ways to engage in business as a career and offer additional non-farm occupations.
7. Promote local economy:
Rural industrialisation can boost the countryside's industrial prosperity. They are focused on local preferences, improving the gap between demand and supply, or augmenting income levels.
8. Foreign currency revenues:
Sparsely populated firms play a big role in strengthening the nation's foreign exchange reserves with the export of various niche products.
9. Leading professional development standard:
Rural entrepreneurship can increase the general level of information among rural populations. These abilities and awareness will increase the quality of life.
Disadvantages of Rural Entrepreneurship
Rural entrepreneurs encounter a variety of limitations due to poor physical connectivity, digital connectivity, and financial inclusion. Such as a resilient and productive existence; skill enhancement, or rather, vocation fit; rural socio-economic participation. Some of the concerns associated with rural start-ups are as follows:
1.Lacking experience and understanding:
There seems to be an insufficiency of proper skills and abilities for the business potential within the village community. Besides, several learned and competent individuals leave the town and move to urban areas in pursuit of opportunities, widening the gap.
2. Lack of funding:
Capital is unquestionably an integral aspect of any business. Rural businesses have always been concerned with generating funds for their endeavours. Due to lack of financial choices, businesses are obliged to take loans from unregulated lenders, who impose exorbitant interest rates.
3. Inadequate entrepreneurial willingness:
The vast majority of rural residents are unsure of the best way to approach the corporate world. Preferences for being employed as labor or a sheer lack of a unique and innovative vision are the factors limiting the spread of enterprising in rural areas.
4. Need for professional knowledge:
Sparsely populated areas lack administrative, scientific, and commercial expertise, which leads to the annihilation of the entrepreneurial spirit, and as a result, few individuals move distant to build units.
5. Limited infrastructural amenities:
Rural regions are affected by the lack of infrastructural options such as expressways, supermarkets, power, information exchange, processing, storage, etc., which impede seamless industrial undertakings.
6. Unfavourable socioeconomic environment:
Social stratification, cultural ills, religious myths, and other factors stifle the development of the inquisitive nature. Furthermore, the preference for items manufactured by multinationals, large corporations, and so on complicates matters significantly for aspiring entrepreneurs.
7. Absence of marketing knowledge:
The need for effective interaction and access to appropriate but also reliable data renders it tricky for rural businesses to comprehend market dynamics.
8. Lack of qualified personnel:
Highly trained professionals concentrate on capital. Since the pay is lower in rural settings, entrepreneurs in remote places have a hard time attracting people with the right skills.
9. Subpar quality merchandise:
Buyers are now particularly vigilant about quality of products. Rural businesses still end up making average-quality commodities due to poor raw material grades as well as a lack of standardization techniques or machinery.
10. Competition: Rural businessmen face a fierce competitive edge from MNCs, large corporations, and even urban small business owners. Such firms must emerge, featuring innovative marketing tactics that the community may readily embrace.
11. Distribution barriers:
Branding is primarily concerned with transmission networks and supply chains. The majority of the times, rural entrepreneurs rely on intermediaries. Unfortunately, the mediator swindles them for services.
Importance of Rural Entrepreneurship
Following are the importance of rural entrepreneurship:
1. Creating employment opportunities
Rural entrepreneurship is manpowerintensive and offers a clear solution to the rising problem of unemployment. Development of industrial units in rural areas through rural entrepreneurship has high potential for employment generation and income creation.
2. Check on migration
Rural entrepreneurship can fill the big hole and changes in income of rural and urban people. Rural entrepreneurship will bring in or raise infrastructural facilities like power, roads, bridges etc. It can help to contain the relocation of people from rural to urban areas in search of jobs.
3. Regional Growth
Rural entrepreneurship can dismiss the attention of industrial units in urban areas and endorseequitable regional development in a steady way.
4. Promotion of art and handicrafts
Through rural entrepreneurship the age-old rich inheritance of rural India is preserved by protecting and endorsing art and handicrafts.
5. Check on social evils
The development of rural entrepreneurship can decrease the social evils like poverty, growing of slums, contamination in cities etc.
6. Awaken the rural youth
To accept entrepreneurship and endorse it as an occupation rural entrepreneurship can awaken the rural youth and expose them to various avenues and prospects.
7. Improved standards of living
Rural entrepreneurship will also increase the literacy rate of rural population. Their education and self-employment will flourish the community, hence increasing their standard of living.
8. Utilisation of local resources
Rural industries help in the intenseuse of local resources like labour and raw materials for productive purpose and which raises the overall productivity and value addition of agricultural and allied products. An efficient, effective and optimum use of limited resources by therural entrepreneursleads towards overall economic development of that region.
9. Foreign exchange
Through export of their produce rural entrepreneurship plays significant role in growing the foreign exchange earnings of the country.
Problems faced in the growth of rural entrepreneurs:
Rural entrepreneurs face large number of problems like illiteracy, risk factor, improper training and experience, limited purchasing power and tough competition from urban entrepreneurs. Various problems faced by rural entrepreneurs are following.
1. Scarcity of funds: Rural entrepreneurs find it difficult to get external funds due to the risk involved in the rural industries. Moreover, the procedure to avail loan facility is too long and cumbersome that its postponement often disappoints the rural entrepreneurs.
2. Competition: Rural entrepreneurs face tough competition from large scale industries and the urban entrepreneurs as their cost of production is high due to high input cost.
3.Middlemen: As there is small market available for the rural entrepreneurs so they are heavily dependent on the middlemen for marketing of their products and thus Middlemen exploit rural entrepreneurs.
4. Legal formalities: As Rural entrepreneurs are illiterate and ignorant so they find it extremely difficult to comply with various legal formalities in obtaining licenses. Moreover, the legal formalities are so complex and time consuming that it become tough for the entrepreneurs.
5. Procurement of raw materials: Arranging raw material is really a tough task for rural entrepreneur. They may finish with poor quality raw materials and can also face the problem of storage and warehousing.
6. Risk element: Rural entrepreneurs face tough competition from large scale industries and do not have large market available for them. Therefore, have much less risk taking capacity due to shortage of financial resources and external support.
7. Lack of technical knowledge: Rural entrepreneurs suffer a problem of lack of technical knowledge because rural people are illiterate and lack of training facilities which acts as hurdle for the rural development.
8. Lack of infrastructural facilities: Though government is putting its best efforts but the growth of the rural entrepreneurs is not very healthy due to lack of proper and adequate infrastructural facilities.
9. Poor quality of products: Rural entrepreneurs produce inferior quality of products due to lack of availability of standard tools and equipment and the availability of poor quality raw materials.
10. Negative attitude: The environment in the family and society is not favorable to support rural people to take up entrepreneurship as a career. It may be due to lack of awareness and knowledge of entrepreneurial opportunities.
Developmental strategies for rural entrepreneurship:
While developing strategy for industrial enterprise in rural areas, it is necessary to take into consideration the totality of rural reality in terms of resources physical and human as also environmental. It is believed that following approaches can be used for formulating strategy for rural industrial enterprise:
- Harmonize Govt. efforts: Government should synchronize its initiatives with some NGO's or the agencies working for the rural development so that policies can be implemented in a perfect order for the rural growth.
- Technology development: Provisions should be made to provide the rural population with the latest technologies so that rapid development can takes place.
- Basic training for prospective rural entrepreneurs: Prospective entrepreneurs must be identified and basic training should be provided. They should be motivated by telling the success stories of the different entrepreneurs.
- Skill enhancement training programs: Such training programs should be provided to the rural population so that skilled workers can be available for the rural industries.
- Modern infrastructure facilities: It is necessary to create modern infrastructural facilities in the rural areas so that entrepreneurs can be attracted.
- Credit supply: banking and non banking agencies should provide the funds at cheaper credit and at short terms and conditions.
- Co-ordination between small and large industries: collaborations should be encouraged between small and large scale industries so that cheaper products made by small industries can be marketed at large scale.
Role of NGO in Development of Rural Entrepreneurship
Rural entrepreneurship is one of the most important factors for the rural development to remove the problem of unemployment and poverty. Therefore, it is the need of the hour. Government has taken many initiatives for the rural development and started various self employment and poverty alleviation programmes like Pradhana Mantri Rozgar Yojna, IRDP, TRYSEM etc. but proved ineffective due to the improper execution of the programmes. For the rural development, one has to be at the grassroots to identify the problems and then find the solutions and this can be done only when one is in the contact of the rural population. Such a situation necessitated the need of the NGO’s to join hands with the Government and find the problems and thus helps in the execution of the programmes implemented by the government. Government therefore collaborated with the NGO’s to reach the actual problems of the rural population.
Today we have large number of the NGO’s working for the rural entrepreneurship. The main NGO’s are: National Alliance of Young Entrepreneurs (NAYE), World Assembly of Small and Medium Entrepreneurs (WASME), Xavier institute for Social Studies (XISS), SEWA of Ahmedabad, Self-Employment of Calcutta, AWAKE (Association of Women Entrepreneurs of Karnataka), and Rural Development and Self-Employment Training Institute (RUDSETIs) based in Karnataka:
NGO’s functioning for the rural entrepreneurship can be classified into three types:
1. Primary level NGO’s
2. Secondary Level NGO’s
3. Grass root level NGO’s.
1. Primary Level NGO’s: These are the NGO’s who assemble their own resources and implement developmental activities on their own and works at international level. Example: ACTIONAID, OXFAM, Christian Children Fund, etc. are some of the best examples of primary level NGOs in India.
2. Intermediate NGO’s: These are the NGO’s who arrange funds from the external agencies and impart training and conduct workshops for the target group. Example: SEWA and AWAKE are examples of intermediate NGOs
3. Grass Root Level NGO’s: These are the NGO’s who make direct contact with the target group and work at the grass root level. Example: Such NGO’s are RUDSETIs, ANARDE Foundation (Gujarat), Indian Institute of Youth Welfare (IIYW) of Maharashtra etc.
The training imparted to the rural population can be divided into three types:
1. Stimulation: Conducting workshops and trainings for the rural population to stimulate the entrepreneurial attitude amongst them.
2. Counselling: Providing counseling and consultancy services to the rural entrepreneurs regarding Project analysis, selection of an idea, preparation of business plan etc.
3. Assistance: Providing help to the target group in financial support and providing market for their products.
The NGOs can prove to be a boon for rural entrepreneurship due to following reasons:
a. NGO’s works at the grassroot level so they are near to the rural population which helps in understanding them well.
b. their experiments with the community can helps in developing policies.
c. working of the NGO’s is flexible so they help in formulate appropriate solutions and can tailor to meet the individual needs.
d. NGO’s concerns with the rural poor, so can reach at the remote locations, where it is not possible for the government to reach.
e. Due to their flexibility, they have the capability to innovate and adapt using technology transfer and settle them according to the local conditions.
NGOs also suffer from certain weaknesses as following:
a. NGO’s prime job is to work for the social development of the community. So, there can be role conflict.
b. NGO’s have limited capacities, therefore there projects are limited in area.
c. They are dependent on other agencies for funds. Therefore, donor pressure may create problems.
d. The NGO’s structures are becoming bureaucratic in nature leading to the reduced efficiency in the overall development.
In spite of the weaknesses, the role of NGOs in entrepreneurship development cannot be undermined. There is large number of Evidences which shows that NGOs in India have succeeded largely in imparting entrepreneurial skills among the weaker sections of the society.
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