Rural Entreprneurship -One Key to Rural Revitalisation

Entrepreneurship can play an important role in rural development. â€Å"Entrepreneur means one who creates a product on his own account, who ever undertakes on his own an industrial/trading enterprise in which work men are employed†. If entrepreneurships really encouraged in rural area it would, of course, be instrumental in changing the face of rural areas by solving the problems of unemployment, poverty, economic disparity, poor utilization of rural capacity, low level of standard of living. Authors: 1. Dr.Ratan Barman, Reader, Department of Commerce, Assam University (Diphu Campus) 2. Dipanjan Chakraborty, Senior Lecturer, Department Of commerce,Darrang College,tezpur Introduction ‘India lives in her villages’—- this axiom is still true today despite the service sector budding in the urban and semi urban areas. Majority of the population still lives in rural India and the large chunk of population in urban areas still live through the learning of a villa ge life. For the strength of the country there is a necessity to develop the villages. Development of a country is a choice loaded on its people, whether urban or rural.It is individuals who shape up a society and decide its progress and performance. Urban and rural are two sides of the same coin of economic development. While the urban sector has witnessed phenomenal growth and development, fuelled by the post independence era of industrialization, the rural sector saw little corporate growth. Rural development is more than ever before linked to entrepreneurship. Institutions and individuals promoting rural development now see entrepreneurship as a strategic development intervention that could accelerate the rural development process.Furthermore, institutions and individuals seem to agree on the urgent need to promote rural enterprises: development agencies see rural entrepreneurship as an enormous employment potential; politicians see it as the key strategy to prevent rural unrest ; farmers see it as an instrument for improving farm earnings; and women see it as an employment possibility near their homes which provides autonomy, independence and a reduced need for social support. To all these groups, however, entrepreneurship stands as a vehicle to improve the quality of life for individuals, families and communities and to sustain a healthy economy and environment.Rural industrialization is important not only as a means of generating employment opportunities in the rural areas with low capital cost and raising the real income of the people, but also because it contributes to the development of agriculture and urban industries. In the absence of rural industrialization, it would not be easy to solve the problem of unemployment in rural areas. The entrepreneurial orientation to rural development accepts entrepreneurship as the central force of economic growth and development, without it other factors of development will be wasted or frittered away.However, the acceptance of entrepreneurship as a central development force by itself will not lead to rural development and the advancement of rural enterprises. What is needed in addition is an environment enabling entrepreneurship in rural areas. The existence of such an environment largely depends on policies promoting rural entrepreneurship. The effectiveness of such policies in turn depends on a conceptual framework about entrepreneurship, i. e. , what it is and where it comes from. Concept of Entrepreneurship and Entrepreneur The terms ‘entrepreneurship’ and ‘entrepreneur’ are not new to the Indian economy.Often these two terms are considered synonymous and used interchangeably. But conceptually both the terms are different. The relationship between the two is just like the two sides of the same coin. The understanding of the concept of entrepreneurship owes a lot to the work of economist Joseph Schumpeter and the Austrian School of economics. According to Schump eter (1950),’ and entrepreneur is a person who is willing and able to convert a new idea or invention in to a successful innovation. † Entrepreneurship forces â€Å"creative destruction† across markets and industries, simultaneously creating new products and business models and liminating others. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. The entrepreneur is the kind of persons that is willing to put his career and financial security on the line for an idea, spending his time and capital in an uncertain venture. Entrepreneurship as a stabilizing force limits entrepreneurship to reading markets disequilibria, while entrepreneurship defined as owning and operating a business, denies the possibility of entrepreneurial behaviour by non-owners, employees and managers who have no equity stake in the business.Therefore, the most appropriate definition of entrepreneurship that would fit into the r ural development context, argued here, is the broader one, the one which defines entrepreneurship as: â€Å"a force that mobilizes other resources to meet unmet market demand†, â€Å"the ability to create and build something from practically nothing†, â€Å"the process of creating value by pulling together a unique package of resources to exploit an opportunity†2. Concept of Rural entrepreneurship Many examples of successful rural entrepreneurship can already be found in literature.Rural entrepreneurship can be 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, In short, rural entrepreneurship implies rural industrialization consisting mainly of agro-based industries, Khadi and village industries and cottage industries. The promotion of rural entrepreneurship is vital in the context of generating gainful employ ment and minimizing the widening of disparities between rural and urban population.About 75% of the population who lives in villages has to utilize the village resources and they are plentifully available and people are not utilizing it effectively due to mass illiteracy. The risk aversion people can be transformed in to risk taking innovative entrepreneurs by proper training. Rural entrepreneurship not only concentrates on enhancement of products by use of local force or by artisans but also has significant environmental and social impact by developing eco friendly and appropriate olution to local problems China represents a unique example of rural entrepreneurial development with prima facie importance to the use of local resources, such as natural resources, human resources and material resources for local economic, social and cultural development and for running within the local area the surpluses so generated and at the same time effectively integrating rural development with m odernization the urban sector. China’s successful rural development through less dogmatic and down-to-earth approach to rural industrialization is really worth emulating for our country.Dynamic rural entrepreneurs can also be found. They are expanding their activities and markets and they find new markets for their products and services beyond the local boundaries. Role of Entrepreneurship in Rural development For rapid development, rural industrialization is must. But rural industrialization requires development of rural areas.. According to the Government of India, any industry located in rural area, village or town with population of 20,000 or less and an investment of Rs. crore in Plant and machinery is treated is rural industry. Rural or village industry is classified in to the following categories: †¢ Mineral based industry †¢ Forest based industry †¢ Agro based and food industry †¢ Polymer and chemical industry †¢ Engineering and non-convention al energy †¢ Textile industry †¢ Service industry Objectives of entrepreneurship in Rural Development †¢ To reduce disparities in income between rural and urban areas †¢ To promote balanced regional development To pressure the age-old rich heritage of the country †¢ To control migration of population from rural to urban area and thus helps in checking haphazard growth of cities and slums †¢ To help in reducing social tension and pollution Rural Entrepreneurship as a policy Tool to Achieve Rural Development Before independence, rural industrialization and hence rural entrepreneurship did not get any emphasis. The British Government gave importance to imports and neglected the development of Indian industries.In order to achieve rural development, after independence, the government of India used rural entrepreneurship as a policy tool. It has been clearly reflected in various five year plans and industrial policies. 1) Production in Khadi & Village indust ries sector was Rs 4,519 croes in the year 1997-98 and by the end of the year 2006-07, it is expected to increase up to Rs. 13,250croes i. e. in the span of 9 years it is expected to rise by almost 3 times. 2) Employment in KVI sector was 6. 65 million in the year 1997-98 and it is expected to increase up to 9. 5million by the end of year. Problems faced by entrepreneurs of rural areas †¢ Lack of finance-Modern entrepreneurship is a costly affair which needs abundant credit facilities. But in undeveloped countries, there is always scarcity of such credit facilities †¢ Lack of technical know-how-On account of faulty education system youth lack professional, managerial and technical knowledge which is an impediment in developing the spirit of enterprise, consequently not many people come forward to establish self-employment units. Absence of Enterprising skill- Most of the rural people in India lack risk bearing ability. Reluctance to involve oneself in business, inclination towards wage employment, lack of creative thinking are few reasons which have restricted the growth of self-employment in rural area. †¢ Lack of Infrastructure-On account of lack of infrastructural facilities viz, transport, water, electricity, market, storage and communication etc, entrepreneurs are shying away from establishing industries in villages. Industries which are already established are also facing similar problems. Adverse, social, cultural and Industrial environment-Caste systems, social evils, fatalism, religious superstitions, particularly in the countryside, do not allow development of adventurous spirit. Lack of skill and expertise in labourers, their tendency to migrate to big cities and consumer’s habit to buy goods produced by big companies create many problems for new entrepreneurs. †¢ Lack of awareness about quality control-It is true that of awareness hinders rural entrepreneurship. There are number of factors responsible for the lack of awar eness among rural folk.Illiteracy, ignorance, lack of proper propaganda by agencies, corruption among government functionaries etc are some of the factors responsible for this problem. †¢ Lack of market information due to poor communication facility- The absence of effective communication and access to right information makes it difficult for rural entrepreneurs to understand market trends and policies followed by the government on industrialization. Rural Development through Rural Entrepreneurship To achieve rural development through rural entrepreneurship,† The support infrastructure† given by Bill Bolton & John Thompson should be implemented given below.The support infrastructure | | People | Ideas | The Enterprise | |Sector |Education and |Research and |Property |Finance |Supply |Business support |Community | | |Training |Development | | | | |development | |Facility |School, |Industry, |Business |Seed and |Sub |Government |Housing, | | |College |University |Incu bator; |venture |contractors; |Agencies; |Schools, | | |University; |Garage |Innovation |capital |Labour |Clubs and |Hospitals, | | |Training | |centre | |pool |Associations, |Recreation, | | |Facility; | |Science | | |Consultants |Transport | | |Entrepreneur | |Technology | | |And business |Tele commu | | | | |Business | | |advices |nications | | |school | |parks | | | | | | | | | | | | | |Activity |Courses of |Technology |Premises |Equity& | Staff |Training advice |Amenity | | |programmes |transfer |and support |Loans |& Suppliers |and networking |provision | Source: Entrepreneurs by Bill Bolton & John Thompson Conclusion On the basis of analysis and role of rural entrepreneurship for rural development, we can conclude that rural entrepreneurship and rural development are two sides of the same coin. A part from Government policy, there is an urgent need to create conducive environment in rural areas so that rural entrepreneurship should flourish. Suggestions The following suggesti ons can be put forwarded for the protection and enhancement of demand potentiality leading to fertile ground for entrepreneurship.Entrepreneurship would be conducive for rural capacity utilization and development and solving rural problems like, unemployment, poverty, low level standard of living etc. ? Formulation of a registered trade union, under the guidance of appropriate Government, at village level-The role of such a trade union should be to protect and promote the interest of labours in the village. It will lead to enhance their bargaining power, thereby more earnings. Labour concessions will be instrumental in changing the face of rural areas. ? Formation of village development council, under the guidance of appropriate Government, at the village level . This council should lead in forming and propagating about negative impacts of drain of rural demand, rural resources to urban area.Consciousness should be created about the fulfillment of rural demand by rural supplier livi ng in the same village. It means trading should be promoted in the villages. Positive impact of divion of work. Divion of work will lead specialization, better capacity utilization, assurance of definite market and enough earning to meet family needs. The positive and negative impacts of migration of people from rural area to urban area. It is good in the sense that it is going to provide employment to rural people in urban area. But the negative part of the process is that commit their funds in urban area. These migrated people should be encouraged and motivated to finally stay in village.They should spend their money in rural areas. It would lead to enhancement in rural demand and rural development. Such a village development council will be forum where issues relating development will be discussed and opinions will be floated among the people for course of action. ? Formation of Rural entrepreneurship Development Bank of India, on the line of Industrial Development bank of India, is essential to promote entrepreneurship in the rural areas. It role would be to make available finance, knlwledge, technical expertise, managerial advice, help in marketing, string etc. it has to take case from beginning to end. Even its role would be to come up with plans.The is need to promote urban culture in rural area in respect of consumption, entertainment, education, spending, standard of livingrationality,etc. to promote economic activities. Rural-Urban interaction, T. V, Radio, Mobile, Road etc, are promoting urban culture in rural areas. ? State Government must invest in more for development of rural entrepreneurship ? All latest technology of the globe is to be disseminated to all rural areas by Government through Toll free number ? Appointment of SSI ombudsman and having one stop centre for needs of rural entrepreneurs to be established. ? There is necessary to promote education and skill necessary for entrepreneurship ?