TITLE: Rural Entrepreneurship and Growth of Rural India

- Ms S. Sara Usma, Ms A. Kashmithavarsini, I BA Economics,

- Under the Guidance of Dr S.Padma Annakamu
PSGR Krishnammal College for Women, Coimbatore - 641 004, Tamil Nadu

1. Introduction

A staggering percent of 68.8% of Indians reside in rural areas, where agriculture is an integral
component in daily life.The increasing prominence of rural areas is largely responsible for the
growth of the country's economy. One of the most significant variables in the nation's economic
development is rural entrepreneurship. Rural entrepreneurs efficiently take advantage of the
limited resources by strengthening, increasing the revenue and cutting costs.

One of a stellar depiction of entrepreneurship is the farming industry itself, which includes labor,
land, finance, technology, handle, exposure, promotional activities, and supplies, amid other
elements. The absence of funding and raw supplies are the main issues rural entrepreneurs
encounter. And particular challenges that rural business owners face include illiteracy, a lack of
education and experience, a fear of failure, and animosity from urban proprietors of businesses.

Entrepreneurship in the countryside is an evolving concept nowadays.

In general, "Entrepreneurship blossoming at the grassroots scale" is characterized as
"Entrepreneurship taking place throughout a variety of spheres of interest such as commerce,
company operations, and agro and functioning as an important driver for overall prosperity."

Rural business might provide remedies to issues like joblessness and relocation, fiscal inequity,
and decrease of impoverishment.Entrepreneurs not only contribute to organizing and arranging,
but also take bets as part of these endeavors. The approach that entrepreneurs turn their
ambitions into reality is by establishing incredibly lofty objectives for themselves and remaining
steadfast in reaching them irrespective setbacks.

2. Review of Literature

Sherief (2005), made a conscious choice to grasp the factors that influence rural entrepreneurship
and those circumstances which foster it. The study assumed that promoting entrepreneurship is
crucial for quickening economic development in rural neighborhoods.

In the opinion of K.S. Gopal (2009), India has predominantly had a rural economy.The
overwhelming majority of its citizens—about 80%—live in hamlets. At the present time, up to 30%
of rural residents live in poverty. Because it possesses the largest pool of human resources, rural
development remains a topic of global interest.

Sharma, Swati, Vyas, and Divya (2011), made the argument that several social, financial,
political, and environmental problems in rural areas of developing countries like India create
difficulties for livelihood, dwindling rural generation, and growing malnutrition.
This has had a tremendous impact on residential generation, livelihood, and other factors. By
encouraging entrepreneurship in rural India, these concerns can be grasped to a certain extent.

Mehta (2011)'s study demonstrated that several Indian firms, including MNCs, started developing
business systems to access India's untapped rural business sector. The analysis will assist the
various organizations in developing plans and strategies to boost rural entrepreneurship in India.
This might transform the rural business sector in India into an essential driver in the global
economy.

Entrepreneurship in the countryside provides an exciting opportunity for growth, but S. Jayadatta
(2017) emphasizes that it also presents significant hurdles, particularly in developing nations
where there is a shortage of basic utilities.

As stated by Sathya (2019), two of the main advantages of rural entrepreneurship are the
improvement of rural prosperity through a greater availability of farm products, and a decrease in
untapped employment options for rural youth due to entrepreneurial occupation.

3. Objective

1. To explore how rural entrepreneurs contribute to economic growth.

2. To research the issues and difficulties faced by rural businesses in India.
3. To promote female business ownership in rural India.

4. Methodology

The secondary data used in the present study, which is a comprehensive assessment of
numerous reports, research articles, and comparative analyses of statistical data from official
government websites, form the basis of the study.

The majority of the information on connected topics is gathered from written and unwritten
publications on the subject.

5. Results and discussions

5.1 How rural entrepreneurs contribute to economic growth:

Rural entrepreneurial activity is an intricate matter that can affect social, political, and economic
institutions. Rural business owners are crucial to the nation's broader economic growth. The
expansion and development of rural industries fosters self-employment, leads to a broader range
of economic and industrial activity, and aids in the best possible utilization of locally accessible
labor and supplies.

Outlined are a few of the crucial roles that rural economies play in improving the socioeconomic
well-being of rural residents in particular and the nation as a whole:
 1. Rural businesses offer rural residents numerous alternatives for work on a broad scale.
There is a lot of potential for job and income creation when industrial units are developed
in rural areas by rural entrepreneurs.

2. Startups at the countryside ensure healthy growth within a region through establishing
new firms and industrial facilities in both established and underdeveloped areas by which
the entrepreneurs make a check on balancing regional growth.

3. The significant income gaps between rural and urban residents can be closed via rural
entrepreneurs efforts. Infrastructure projects like new road, electricity lines will be
developed or introduced by rural entrepreneurs. It can aid in limiting the movement of
people in pursuit of employment and a higher quality of life from rural to urban regions.

4. The corner stores of a country's independence are entrepreneurs. They aid in the
production of domestic alternatives to imported goods, reducing reliance on other nations.
In order to generate foreign currency for the nation, exporting goods and services is
another option. Because of the import substitution and export promotion, the nation
achieves economic independence and becomes self-sufficient.

5. Rural entrepreneurship helps to maintain the rich cultural heritage of rural India by
preserving and developing arts and crafts. Better employment opportunities provided by
rural entrepreneurship enhance income and purchasing power, which is then used for
consumption and education. Their financial security and education will boost the local
economy and raise everyone's standard of living.

5.2 To research the issues and difficulties faced by rural businesses in India:

Listed are some of the main financial issues that rural business owners deal with:

1. The majority of rural entrepreneurs struggle to obtain outside funding since there is a lack
of real security and credit in the market. Additionally, the application process for bank
loans takes so long that delays frequently dissatisfy rural business owners. The modest
amount of purchasing power of rural consumers, which results in insufficient sales volume,
is one of the main challenges faced by rural businesses.

2. Large corporations and urban business owners, whose goods are also generic and
inexpensive, present a serious threat to rural businesses. Rural business owners are
unable to offer their goods under a recognized brand name. Additionally, it is challenging
to market the same without any branding. The existence of middlemen in marketing is
another difficulty for rural business owners because a significant portion of their profits go
to these individuals.

3. Considering there are so few highly trained individuals available in rural areas at
reasonable prices, the majority of rural businesses are unable to hire workers with high
skill levels.Entrepreneurs in rural areas tend to think less creatively.
The family, social, and support structures in rural areas do not encourage people to
pursue entrepreneurship as a vocation. It can be the result of a lack of understanding and
awareness of business potential. Lack of market information as a result of inadequate
communication facilities, etc.
 4. Rural business owners face additional difficulties with quality control due to subpar raw
materials and inadequate technological implementation. Rural business owners are
unable to acquire in bulk or make large-scale purchases due to a lack of warehouse
space. One of the biggest issues facing rural entrepreneurs is a lack of knowledge of
information technology. Another significant issue with rural entrepreneurship is the poor
quality of the goods produced.

5.3 To promote female business ownership in rural India

There has never been a better time in India to start a business, despite the fact that women still
face obstacles in their homes and in society. The government has started programs to make it
simpler for women to start businesses.
Although women do launch their own enterprises, the Indian government is crucial to the growth
of rural women entrepreneurs, which include the following:

1. For women who have huge dreams despite having few resources, Bharathiya Mahila Bank
was founded. It provides loans of up to 20 crores to female business owners who want to
launch manufacturing ventures. There is no need for collateral if the requested loan
amount is less than Rs. 1 crore. The lending scheme that started in 2017 is still in effect
even though the Bharatiya Mahila Bank and the State Bank of India merged.

2. A program called Mudra Yojana may help women who want to launch or grow their small
businesses. Despite not being a program specifically for women, it is nonetheless quite
advantageous. Women business owners are eligible to apply for loans between $5,000
and $10 lakh. It is perfect for opening up beauty salons, a small business, or a home-
based operation.

3. Dena Shakti Scheme is a program that offers loans to female business owners in the
Firm partnership business, retail outlets, sector of manufacturing, housing, education. One
can employ this strategy if it's necessary to launch a firm in one of the aforementioned
sectors. Depending on the sector which it is, the loan each can apply for has a maximum
ceiling of 20 lakhs.

4. The Women Entrepreneurship Platform is a project launched by the Indian government's

NITI Aayog, which brings together female entrepreneurs and sponsors who are eager to
support them in one location:

Programs for company incubation and acceleration for those in the beginning stages
programs for skill development and mentoring to learn about business and leadership
help with marketing support for guaranteeing adherence to rules and financial support for
a group and network of females with similar interests.

These are only a few of the greatest programs available right now to assist ambitious
female business owners in taking the first step toward financial emancipation.
6. Findings

Considering the aforementioned debate, it is clear that rural industries, particularly those involved
in rural development, contribute significantly to the national economy.

Increased rural entrepreneurship benefits both the development of the agricultural and urban
sectors as well as the creation of jobs in the rural economy.

As a result, NGOs and the government should create training programs and continuous support
networks that provide rural kids with all the assistance they need to pursue entrepreneurship as a
vocation in order to encourage them immensely.

According to a recent survey, rural entrepreneurs hold 51% of Micro, Small, and Medium-Sized
Enterprises, with a concentration at the Micro Level.

Since independence, the government has undertaken a variety of policies and programs to
encourage and foster rural entrepreneurship, but these efforts have not been successful in
producing the expected outcomes.

7. Conclusion

One method for transforming a developing country into a developed country is through rural
entrepreneurship. The answer to ending rural poverty in India is rural entrepreneurship.

The majority of young people in rural areas do not consider entrepreneurship as a career option.
These young people must be inspired to pursue entrepreneurship as a career.

It is impossible to fully address unemployment without rural industrialization. This leads to the
conclusion that rural entrepreneurship is the nation's backbone for resolving issues affecting
young women, small company owners, etc.

With time, rural areas have seen an increase in entrepreneurial activity, although it still pales in
comparison to urban areas. In order to achieve the intended results in rural areas through
entrepreneurship, it is necessary to evaluate the government's rural entrepreneurship
development schemes and programs.

8. References

1. Ministry of Micro, Small and Medium Enterprises, Government of India, Annual Reports
(2014–17).
2. https://timesofindia.indiatimes.com/blogs/voices/developing-rural-entrepreneurship-in-
india/
3. https://www.financialexpress.com/industry/msme-other-rural-entrepreneurship-how-
hinterlands-young-enterprises-could-solveindias-social-challenges/1873844/
4. https://www.mgncre.org/R-entrepreneurship.html
5. P. Madhu Mohan Gandhi and S. Mohan, "Rural Entrepreneurship in India," Tactful
Management Research Journal, 2(6), 1-6 (2014).
6. https://www.ukessays.com/essays/economics/opportunities-and-challenges-for-rural-
entrepreneurship-in-india-economics-essay.php
7. Raj S.J., "Problems Faced by Entrepreneurs: A Special Reference to Micro and Small
Entrepreneurs in Mumbai and Pune," (2016).
8. https://www.google.com/search?
q=rural+entrepreneurship+in+india&rlz=1C1GCEU_enIN1044IN1045&oq=rural+entrepren
eurship+in+&aqs=chrome.0.0i512l2j69i57j0i512l7.12960j0j15&sourceid=chrome&ie=UTF-
8