Entrepreneurship in Rural India for a Stronger Foundation

India is very commonly referred as a country of villages. With around 72% of the total population of India residing in 638,000 villages this title suits appropriately to India. However, there is a high level of unemployment and underemployment in the rural areas. This has led to a massive migration of the rural population into the well developed cities in their vicinities. With that amount of population, rural India appears to be the biggest untapped market in the country. Also with that amount of population, the human resources in the villages are in abundance. It can be seen as the biggest investment opportunity. All things said, the lack of awareness and low disposable incomes it has never been seen as a prospective market for investments.

The migration of rural population in the cities has put a lot of burden on the cities and often ends up becoming an obstruction for the development of the cities. Metropolitan cities like Mumbai, Delhi and Bangalore are prime examples of this. To help this situation it is important that opportunities are created in the villages so that this migration is controlled and the disposable income of the rural population also increases hence improving the standard of living of the people. The increase in entrepreneurship in rural areas will not only tap an untapped market but will also prove to be a motivation for people living in the villages to come up with their own ventures.

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There are a lot of obstacles that prevent young and inspired minds in the rural areas to come up with their own ventures. One of the biggest problems is convincing one’s own family to start a business rather than going for a job. With low disposable incomes and more number of people in the family it becomes difficult for people to take the risky decision of starting a business. This becomes even more difficult if there is only one money earner in the family. Also due to social stigmas women are not always allowed to work, which is ironical seeing that most of the well known rural entrepreneurial ventures have been started by women or groups of women. SEWA and Shri Mahila Griha Udyog Lijjat Papad are prime examples that support this point. Also, financially, the entrepreneurs in villages have it much more difficult to get funding from investors and also from banks. This forces them to go for loans at high rates of interests that make it difficult for them to build on to their businesses. Low purchasing power of the consumers also makes it difficult for these ventures to break even as they require more volume of sales due to lower price of the items produced. Although stated earlier that the large population in the villages provides ample amount of human resource but due to lack of training most of these people are unskilled and can only be of specific work. Poor technological knowhow of the people in rural areas not only creates a gap for the entrepreneurs to the outer world to make connections but it also leads to longer production time and sometimes even to poor quality products. Also lack of education makes it difficult to find the right candidates for managerial positions.

Although there have been many difficulties but rural India still boasts of a number of successful ventures that have not only generated good revenues but cooperative ventures like Amul are now seen as successful models not just in India but globally. Amul, founded in 1946 as a cooperative venture for fighting against the exploitation of milk producers of Gujarat by the Polson dairy, has today transformed into the biggest rural venture in India with annual revenue of $3.1 billion.

Another example of a successful rural entrepreneurial venture is the Shri Mahila Griha Udyog Lijjat Papad. Not exactly a rural venture but such a model with self-help women groups can be adapted in the rural areas of the country. Started in 1959 by seven Gujarati women living in Mumbai, the group today employs over 42000 employees with an annual turnover of around Rs. 6.50 billion (over 100 million USD).

Also a lot of well educated, young entrepreneurs are exploring the potential that rural India has and are working towards setting up their businesses there. One such example is Kaushlendra from Bihar. Kaushlendra is an alumnus of the prestigious IIM, Ahmedabad and also the topper of his batch of 2007. After graduating, he refused an offer to join an MNC to start his own venture of selling vegetables. His idea of selling vegetables on ice cooled push carts have worked very well in Bihar and has also empowered the farmers with reducing middlemen. He further plans of selling vegetables through prepaid cards.

Over the years the rural sector in India has also seen a rise in the number of micro financing institutes. Also with Jana Dhan Yojana and Make in India initiative the government is making the adequate help required by people in the rural areas to start their ventures. Other micro finance institutes are also taking it as their social responsibilities to help these entrepreneurs receive the funding required for making their ventures a success. For developing the rural sector there is a need of more entrepreneurial ventures to come up and hence more investment is required. There is a lot of scope in the agricultural sector and other small and medium scale industries to expand in the villages. The required support needs to be provided to generate better returns from these ventures.


This article has been authored by Vishesh Saran from SIMSR

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