Report of Rural Entrepreneurship

Development in INDIA

Abstract
Entrepreneurs are driven to achieve success in their
business along with the qualities of a Leader, Manager,
Dreamer, Innovator, risk taker, continues learner,
decision maker & most important is to implement all
these qualities into the work. There are a lot of
examples of the entrepreneurs in North East India who
are now called synonymous of ‘Success’. They saw the
bigger picture but wisely started their business as a
very small unit. Entrepreneurs set the example of
turning their dream into reality. And the story behind to
achieve the dreams into reality is to set massive goals
for themselves and stay committed to achieving them
regardless of the obstacles they get in the way, with the
ambition and the unmatched passion towards achieving
the goal. It looks fascinating, attractive and motivating
after listening stories of the entrepreneurs, but success
is not as easy as it looks always. There are some
obstacles which we call the challenges to overcome by
looking forward the prospects to be a successful
entrepreneur.This research paper focuses on the
challenges available in the Indian market by en-cashing
the possibilities and prospects of the same to be a
successful entrepreneur.
I ntroduction: Rural entrepreneurship has emerged as a dynamic concept. It
is generally defined as
„entrepreneurship emerging at village level which can take place in a variety of
fields of Endeavour such as business, industry, agriculture and acts as a potent
factor for economic development.‟ Development of rural areas, have been
linked to entrepreneurship more than ever before. Entrepreneurship is now
regarded as a strategic development intervention that could accelerate the rural
development process by institutions and individuals promoting rural
development. Entrepreneurship stands as a vehicle to improve the quality of life
for individuals, families and communities and to sustain a healthy economy and
environment. The majority of the rural population depends, directly and
indirectly, on agriculture, fishery, animal husbandry or rural wage labour
associated with plantations and ranches, along with ancillary activities linked to
rural townships. Rural entrepreneurship development strategies aim at
diversifying rural economic activities, which include the development of non-
farm economic activities and facilitating the transition of informal activities into
the formal growth sector.
Objective of Study:
 To study the problems faced in growth of rural entrepreneurs in NER.
 To find out the remedies to solve the problems of rural entrepreneurs.
 To provide suggestions for development of rural entrepreneurship in NER.
Methodology: The data required for the present study are collected both from
primary and secondary sources. Primary data have been collected through
personal interview method. The Secondary data are collected from various
published sources such i.e. magazines, newspapers, journals, books, and various
other publications. Moreover, some important information is also collect from
relevant websites. The present study is descriptive in nature.
Importance of the study: Rural entrepreneurship implies entrepreneurship
emerging in rural areas. In other words establishing industries in rural areas
refers to rural entrepreneurship. This means rural entrepreneurship is
synonymous with rural industrialization. Many examples of successful rural
entrepreneurship can already be found in literature. 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. A turnaround is possible in
the above trend if employment opportunities are made available in rural areas
along with basis amenities of life. The real solution to India‟s economic
problem is not mass production but production by masses as was suggested by
Mahatma Gandhi.
Roles of Rural Entrepreneurs in Economic Development: The entrepreneurs
with their ability to scan, analyze and identify opportunities in the environment
transform them into business proposition through creation of economic entities.
They by channelizing the resources from less productive to move productive use
crate wealth. Through efficient and effective utilization of national resources,
they act as catalysts for economic development and agents of social
transformation and change. According to Joseph Schumpeter, the rate of
economic progress of a nation depends upon its rate of innovation which is turn
depends on rate of increase in the entrepreneurial talent in the population.
According to Meir and Baldwin, development does not occur spontaneously as a
natural consequence when economic conditions in some sense are right. A
catalyst is needed which results in entrepreneurial activity to a considerable
extent. The diversity of activities that characterizes rich countries can be
attributed to the supply of entrepreneurs. They play a vital role for the economic
development of a country in the following ways.
 Formation of Capital: Entrepreneurs by placing profitable business
proposition attract investment to ensure private participation in the
industrialization process. The otherwise idle savings are channelized for
investment in business ventures which in turn provides return. Again the
savings are invested giving a multiplier effect to the process of capital
formation.
 Balanced Regional Development: The entrepreneurs always look for
opportunities in the environment. They capitalize on the opportunities of
governmental concessions, subsidies and facilities to set up their
enterprises in undeveloped areas. The setting up of still plant at Tata nagar,
Reliance Petrochemicals at Jamnagar (Gujarat) have resulted in the
development of Good Township and peripheral regional development. Thus
entrepreneurs reduce the imbalances and disparities in development among
regions.
 General Employment: This is the real charm of being an entrepreneur.
They are not the job seekers but job creators and job providers. With the
globalization process the government jobs are shrinking leaving many
unemployed. In the circumstances, the entrepreneurs and their enterprises
 are the only hope and source of direct and indirect employment generation.
Employment is generated directly by the requirement of the large
enterprises and indirectly by ancilliariation and consequential development
activities.
 Improvement in Standard of Living: Entrepreneurial initiative through
employment generation leads to increase in income and purchasing power
which is spent on consumption expenditure. Increased demand for goods
and services boost up industrial activity. Large scale production will result
in economies of scale and low cost of production. Modern concept of
marketing involves creating a demand and then filling it. New innovative
and varying quality products at most competitive prices making common
man‟s life smoother, easier and comfortable are the contribution of
entrepreneurial initiative.
 Increase in per Capita Income: Entrepreneurs convert the latent and idle
resources like land, labour and capital into goods and services resulting in
increase in the national income and wealth of a nation. The increase in
national income is the indication of increase in net national product and per
capita income of the country.
 National Self-reliance: Entrepreneurs are the corner stores of national
self-reliance. They help to manufacture indigenous substitutes to imported
products which reduce the dependence on foreign countries. There is also a
possibility of exporting goods and services to earn foreign exchange for the
country. Hence, the import substitution and export promotion ensure
economic independence and the country becomes self-reliance.
 Planned Production: Entrepreneurs are considered as economic agents
since they unite all means of production. All the factors of production i.e.,
land, labour, Capital and enterprise are
 brought together to get the desired production. This will help to make use
all the factors of production with proper judgment, perseverance and
knowledge of the world of business. The least combination of factors is
possible avoiding unnecessary wastages of resources.
 Equitable Distribution Economic Power: The modern world is
dominated by economic power. Economic power is the natural outcome of
industrial and business activity. Industrial development may lead to
concentration of economic power in few hands which results in the growth
of monopolies. The increasing number of entrepreneurs helps in dispersal
of economic power into the hands of many efficient managers of new
enterprises. Hence setting up of a large number of enterprises helps in
weakening the evil effects of monopolies. Thus, the entrepreneurs are key
to the creation of new enterprises that energies the economy and rejuvenate
the established enterprises that make up the economic structure.
Benefits from Rural Entrepreneurship:
 Provide employment opportunities: Rural entrepreneurship is labor
intensive and provides a clear solution to the growing problem of
unemployment. Development of industrial units in rural areas through
rural entrepreneurship has high potential for employment generation and
income creation.
 Check on migration of rural population: Rural entrepreneurship can fill
the big gap and disparities in income rural and urban people. Rural
entrepreneurship will bring in or develop infrastructural facilities like
power, roads, bridges etc. It can help to check the migration of people from
rural to urban areas in search of jobs.
 Balanced regional growth: Rural entrepreneurship can dispel the
concentration of industrial units in urban areas and promote regional
development in a balanced way.

 Promotion of artistic activities: The age-old rich heritage of rural India is

preserved by protecting and promoting art and handicrafts through rural
entrepreneurship.
 Check on social evils: The growth of rural entrepreneurship can reduce the
social evils like poverty, growth of slums, pollution in cities etc.
 Awaken the rural youth: Rural entrepreneurship can awaken the rural
youth and expose them to various avenues to adopt entrepreneurship and
promote it as a career.
 Improved standard of living: Rural entrepreneurship will also increase
the literacy rate of rural population. Their education and self-employment
will prosper the community, thus increasing their standard of living.
Challenges of Rural Entrepreneurship: Entrepreneurs are playing very
important role in the development of economy. They face various problems
in day to day work. As the thorns are part of roses, similarly every
 flourishing business has its own kind of problems. Some of the major
problems faced by rural entrepreneurs are as under.
Financial Problems:
 Paucity of funds: Most of the rural entrepreneurs fail to get external funds
due to absence of tangible security and credit in the market. The procedure
to avail the loan facility is too time- consuming that its delay often
disappoints the rural entrepreneurs. Lack of finance available to rural
entrepreneurs is one of the biggest problems which rural entrepreneur is
bearing now days especially due to global recession.
 Lack of infrastructural facilities: The growth of rural entrepreneurs is
not very healthy in spite of efforts made by government due to lack of
proper and adequate infrastructural facilities.
 Risk element: Rural entrepreneurs have less risk bearing capacity due
to lack of financial resources and external support.
Marketing Problems:
 Competition: Rural entrepreneurs face severe competition from large sized
organizations and urban entrepreneurs. They incur high cost of production
due to high input cost. Major problems faced by marketers are the problem
of standardization and competition from large scale units. Competition
from large scale units also creates difficulty for the survival of new
ventures. New ventures have limited financial resources and hence
cannot afford to spend more on sales
 promotion. These units are not having any standard brand name under
which they can sell their products. The literacy rate among the rural
consumer is very low.
 Middlemen: Middlemen exploit rural entrepreneurs. The rural
entrepreneurs are heavily dependent on middlemen for marketing of their
products who pocket large amount of profit. Storage facilities and poor
means of transport are other marketing problems in rural areas. In most of
the villages, farmers store the produce in open space, in bags or earthier
vessels etc. So these indigenous methods of storage are not capable of
protecting the produce from dampness, weevils etc. The agricultural goods
are not standardized and graded.
Management Problems:
 Lake of Knowledge of information technology: Information technology
is not very common in rural areas. Entrepreneurs rely on internal linkages
that encourage the flow of goods, services, information and ideas. The
intensity of family and personal relationships in rural communities can
sometime be helpful but they may also present obstacles to effective
business relationships.
 Legal formalities: Rural entrepreneurs find it extremely difficult in
complying with various legal formalities in obtaining licenses due to
illiteracy and ignorance.
 Procurement of raw materials: Procurement of raw materials is really a
tough task for rural entrepreneur. They may end up with poor quality raw
materials, may also face the problem of storage and warehousing.
 Lack of technical knowledge: Rural entrepreneurs suffer a severe problem
of lack of technical knowledge. Lack of training facilities and extension
services crate a hurdle for the development of rural entrepreneurship.
 Poor quality of products: Another important problem is growth of rural
entrepreneurship is the inferior quality of products produced due to lack of
availability of standard tools and equipment and poor quality of raw
materials.
Human Resources Problems:
 Low skill level of workers: Most of the entrepreneurs of rural areas are
unable to find workers with high skills. Turnover rates are also high in this
case. They have to be provided with on the job training and their training is
generally a serious problem for entrepreneur as they are mostly uneducated
and they have to be taught in local language which they understand easily.
The industries in rural areas are not only established just to take advantage
of cheap labour but also to bring about an integrated rural development. So
rural entrepreneurs should not look at rural area as their market, they
should also see the challenges existing in urban areas and be prepared for
them. Rural entrepreneurs are generally less innovative in their thinking.
Youths in rural areas have little options “this is what they are given to
 believe”. This is the reason that many of them either work at farm or
migrate to urban land.
 Negative attitude: The environment in the family, society and support
system is not conducive to encourage rural people to take up
entrepreneurship as a career. It may be due to lack of awareness and
knowledge of entrepreneurial opportunities. The young and well educated
mostly tend to leave. As per circumstances, rural people by force may be
more self sufficient than their urban counterparts, but the culture of
entrepreneurship tends to be weak. Continuous motivation is needed in
case of rural employee which is sometime difficult for an entrepreneur to
impart with.
Remedial measures to solve the problems faced by the Rural
Entrepreneurs: Different organization like IFCI, ICICI, SIDBI,
NABARD etc. are trying to sort these problems. Marketing problems are
related with distribution channels, pricing, product promotion etc. In order
to make the rural entrepreneurs to stat the business venture, the following
measures may be adopted:
 Creation of finance cells: The financial institutions and banks which
provide finances to entrepreneurs must create special cells for providing
easy finance to rural entrepreneurs.
 Concessional rates if interest: The rural entrepreneurs should be provided
finance at concessional rates of interest and on easy repayment basils. The
cumbersome formalities should be avoided in sanctioning the loans to rural
entrepreneurs.
  Proper supply of raw materials: Rural entrepreneurs should be ensured
of proper supply of scarce raw materials on priority basis. A subsidy may
also be offered to make the products manufactured by rural entrepreneurs
cost competitive and reasonable.
 Offering training facilities: Training is essential for the development of
entrepreneurships. It enables the rural entrepreneurs to undertake the
venture successfully as it imparts required skills to run the enterprise.
Presently the economically weaker entrepreneurs of the society are offered
such training facility by Government of India regarding skill development
of the existing entrepreneurs so that rural entrepreneurs can generate
income and employment opportunities in rural area specially area like NE
region.
 Setting up marketing co-operatives: Proper encouragement and
assistance should be provided to rural entrepreneurs for setting up
marketing co-operatives. These co-operatives shall help in getting the
inputs at reasonable rate and they are helpful in selling their products at
remuneration prices. Thus, proper education, comprehensive training,
setting up of separate financial institutions, development of marketing co-
operatives to a large extent help to flourish the rural entrepreneurs in India.
Suggestions:
 Govt. should provide separate financial fund of rural entrepreneur.
 The concern department should provide special infrastructure
facilities whatever they need.
 Govt. should arrange special training programmes for rural entrepreneurship.
 Govt. should felicitate top ranker rural‟s entrepreneur.
 Rural entrepreneur should more competitive and efficient in the local &
international market.
 We should invite successful rural entrepreneurs from other states of country.
Conclusions: Rural entrepreneur is a key figure in economic progress of India.
Rural entrepreneurship is the way of converting developing country into
developed nation. Rural entrepreneurship is the answer to removal of
rural poverty in India. Therefore, there should be more stress on
integrated rural development programs. The problem is that most of the
rural youth do not think of entrepreneurship as the career option.
Therefore, the rural youth need to be motivated to take up
entrepreneurship as a career, with training and sustaining support systems
providing all necessary assistance. There should be efficient regulated
market and government should also lend its helping hand in this context.
Grading and standardization should be promoted and promotional
activities should be enhanced. NGO‟s should be provided full support by
government.