Rural Entrepreneur, Its Types and their Problems
Rural entrepreneurs are those who carry out entrepreneurial activities by establishing industrial and business units in the rural sector of the economy. In other words, establishing industrial and business units in the rural areas refers to rural entrepreneurship. In simple words, rural entrepreneurship implies entrepreneurship emerging in rural areas. Or, say, rural entrepreneurship implies rural industrialisation. Thus, we can say, entrepreneurship precedes industrialization.
According to KVIC (Khadi and Village Industry Commission), "village industries or Rural industry means any industry located in rural areas, population of which does not exceed 10,000 or such other figure which produces any goods or renders any services with or without use of power and in which the fixed capital investment per head of an artisan or a worker does not exceed a thousand rupees".
The modified definition of rural industries has been given by Government of India in order to enlarge its scope. According to Government of India, "Any industry located in rural area, village or town with a population of 20,000 and below and an investment of Rs. 3 crores in plant and machinery is classified as a village industry."
Types of Rural Industries:
All the village industries come under the following broad categories:
Ø Agro Based Industries: like sugar industries, jaggery, oil processing from oil seeds, pickles, fruit juice, spices, diary products etc.
Ø Forest Based Industries: like wood products, bamboo products, honey, coir industry, making eating plates from leaves.
Ø Mineral based industry: like stone crushing, cement industries, red oxide making, wall coating powders etc.
Ø Textile Industry: like spinning, weaving, colouring, bleaching.
Ø Engineering and Services: like agriculture equipments, tractors and pump sets repairs etc.
Problems Faced By Rural Entrepreneurs
Most of the rural entrepreneurs face peculiar problems like illiteracy, fear of risk, lack of training and experience, limited purchasing power and competition from urban entrepreneurs. Some of the major problems faced by rural entrepreneurs are as under.
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.
Rural entrepreneurs face severe completion from large sized organizations and urban entrepreneurs. They incur high cost of production due to high input cost.
Middlemen exploit rural entrepreneurs. The rural entrepreneurs are heavily dependent on middlemen for marketing of their products who pocket large amount of profit.
Rural entrepreneurs find it extremely difficult in complying with various legal formalities in obtaining licenses due to illiteracy and ignorance.
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.
Rural entrepreneurs have less risk bearing capacity due to lack of financial resources and external support.
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.
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.
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.
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.
Role and importance of rural entrepreneurs in India
The development of rural entrepreneurs is a complex problem which can be tackled by the social, political and economic institutions. The sooner they are established the better it would be for the entrepreneurial development in the rural sector and the economic growth of the country.
: Rural entrepreneurship is labor intensive and provide 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.
: 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..
: Rural entrepreneurship can dispel the concentration of industrial units in urban areas and promote regional development in a balanced way..
: The age-old rich heritage of rural India is preserved by protecting and promoting art and handicrafts through rural entrepreneurship.
: The growth of rural entrepreneurship can reduce the social evils like poverty, growth of slums, pollution in cities etc..
: Rural entrepreneurship can awaken the rural youth and expose them to various avenues to adopt entrepreneurship and promote it as a career.
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.
Opportunities and Prospects for Rural entrepreneurs
a) Support & Motivation from local people: Rural entrepreneurs have a lot of support from the Rural people. Rural village people always encourage and give the motivation to the entrepreneurs.
b) Low establishment cost: When compared to the urban areas, rural entrepreneurs' business establishment cost is very low. There is no need to construct or facilities huge infrastructure and buildings.
c) Competitive advantages / Availability of labour: In India seventy percent of the people are living in the village. Majority of the rural people are depending on the agriculture. The agriculture work is not available throughout the year. That is the reason why rural entrepreneurs have the competitive advantage in easily acquiring unskilled and semiskilled labor.
d) Government policies and subsidies: The government of India is continuously monitoring and introducing the new policies for encouraging the rural entrepreneurship. These policies are very flexible, innovative, liberalized and giving continues support to rural entrepreneurs. At the same time government has also announced huge subsidies for promoting the rural entrepreneurship.
e) Availability of raw materials. Most of the times the rural entrepreneurs are depending upon the farm based products as raw materials, which are available through-out the year. These raw materials are available in the rural area that is the reason there is no transportation cost and flotation cost.
f) Cost of production: Rural entrepreneurs cost of production is very low when compared to the urban industries. The factors of production are available with low cost; automatically the cost of production is also low. Because of this rural entrepreneurs can sell their goods and services with cheaper cost.
g) Optimum utilisation of produces: Optimum utilisation of farm produces is only possible through the rural entrepreneurship only. Most of the rural entrepreneurs depend upon the farm produces as raw materials.
h) Employment generation for rural youth: Rural entrepreneurs are providing hundred percent jobs for rural youth. If the rural entrepreneurs are succeeding in this activity the migration of the people to urban from rural will be immediately stopped to a maximum extent.
i) Promotion cost: There is no promotion cost for rural entrepreneurs. In fact the competition is very less. Particularly there is no need for advertising and other promotional activities for their products.
j) Potential customer: In this twenty-first century rural villagers are economically strong and also heavily populated. This heavy population can be converted as potential customers. That is the reason all the MNC's are concentrated in rural villages for their potentiality.
k) Building the goodwill: Rural entrepreneurs have a lot of scope building the goodwill. Most of the rural entrepreneurs have ethical values and also these people do not work for pure profits.