Rural Entrepreneurship: Strengths & Problems A study with reference to Nanded District.

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1 Rural Entrepreneurship: Strengths & Problems A study with reference to Nanded District. Dr. J. V. Joshi Professor and Dean Faculty of Management studies of School of Comm. & Mgt., Sciences, Swami Ramanand Teerth Marathwada University, Nanded Abstract: There has to be some committed enterprising individual or a group of people who should be capable of making use of the government policies and schemes for the betterment of rural people. Some individuals who happen to be local leaders and NGOs and who are committed to the cause of the rural people have been catalytic agents for development. Though their efforts need to be recognized yet much more needs to be done to reverse the direction of movement of people, i.e. to attract people to the rural areas. In this paper an attempt is made to know the role of Rural Entrepreneurs. This paper covers today s rural entrepreneurship. A survey of 120 entrepreneurs is conducted in Nanded District to know the strengths, of rural entrepreneurs and their problems. Keywords: catalytic agents, rural entrepreneurship, Tolerance,mobilty,humanity,self confidance. I. INTRODUCTION The concept of the entrepreneurship has a wide range of meanings. On the one extreme an Entrepreneur is a person of very high aptitude who pioneers change, possessing Characteristics found in only a very small fraction of the population. On the other extreme of definitions, anyone who wants to work for him or herself is considered to be an entrepreneur. The word entrepreneur originates from the French word, entreprendre, which means "to undertake." In a business context, it means to start a business. The Merriam-Webster Dictionary presents the definition of an entrepreneur as one who organizes, manages, and assumes the risks of a business or enterprise In this paper an attempt is made to know the role of Rural Entrepreneurs. This paper covers today s rural entrepreneurship. A survey of 120 entrepreneurs is conducted in Nanded District to know the strengths, of rural entrepreneurs and their problems. II. RURAL ENTREPRENEURSHIP The problem is essentially lop-sided development which is development of one area at the cost of development of some other place, with concomitant associated problems of under development. For instance, we have seen unemployment or underemployment in the villages that has led to influx of rural population to the cities. What is needed is to create a situation so that the migration from rural areas to urban areas comes down. Migration per se is not always undesirable but it should be the minimum as far as employment is concerned. Rather the situation should be such that people should find it worthwhile to 135

2 Feb., 2012 shift themselves from towns and cities to rural areas because of realization of better opportunities there. In other words, migration from rural areas should not only get checked but overpopulated towns and cities should also get decongested. The question is, is it really possible? If it is so, ways can always be found out. One is by forcibly stopping villagers from settling in the slums of towns and cities, making use of all powers to clear the slums so the villagers are forced to go back. But such practices have not achieved the desired results in the past. Apart from causing suffering to the poor people and adding to the expenditure for the Government, social tensions and economic hardships created by the government officials and their staff in every demolition of slums is not desirable from a sane government. Moreover, when a slum is demolished people do not move out of urban locality. They only relocate to a nearby place because they are entrenched in the economy of the town or city. Though governments have tried out various schemes for generating incomes in the rural areas such government initiatives have not stopped people from moving out of villages to cities. This is because such government initiatives are not on their own capable of enabling people to earn adequately and ameliorate their conditions. There has to be some committed enterprising individual or a group of people who should be capable of making use of the government policies and schemes for the betterment of rural people. Some individuals who happen to be local leaders and NGOs and who are committed to the cause of the rural people have been catalytic agents for development. Though their efforts need to be recognized yet much more needs to be done to reverse the direction of movement of people, i.e. to attract people to the rural areas. It means not only stopping the outflow of rural people but also attracting them back from the towns and cities where they had migrated. This is possible when young people consider rural areas as places of opportunities. Despite all the inadequacies in rural areas one should assess their strengths and build on them to make rural areas places of opportunities. This is much to do with the way one sees the reality of the rural areas. The way a survivor or a job seeker would see things would be certainly different from those who would like to do something worthwhile and are ready to go through a difficult path to achieve their goals. It isn't that there is a dearth of people with such mindset. But with time they change their minds and join the bandwagon of job seekers due to various compulsions. Enabling them to think positively, creatively and Entrepreneurship purposefully is utmost for the development of rural areas. Young people with such perspective and with the help of rightly channel zed efforts would usher in an era of rural entrepreneurship. In this country successful rural entrepreneurs would solve many of the chronic problems within a short time. III. PROBLEMS OF POTENTIAL RURAL ENTREPRENEURS AND DEVELOPMENT IN- PUTS Sr. Problems Inputs No. 01 Low self-image and confidence. Motivational inputs, unfreezing and experience sharing by successful local entrepreneurs. 02 No faith on others includes friends. Group building experiences. 03 No exposure to industry/business. Field visit to factories and big markets. 04 Formalities and procedures Information inputs on procedures and Formalities. 05 Knowledge of viable and sound Proposition of business? Opportunity identification and guidance. Market survey, project report preparation 06 No knowledge of bank operation Training in simple banking procedures like filing up deposit and withdrawal slip etc. 136

3 07 No managerial skills Basic management orientation through simulation exercises. 08 No Accounting skills Functional and numerical literacy. Simple accounting in terms of writing income and expenditure. 09 No Technical skills Technical training (on-the-job training). IV TYPES OF RURAL ENTREPRENEURSHIP Rural entrepreneurial activity can be broadly classified in four types such as: i) Individual Entrepreneurship - It is basically called proprietary i.e. single ownership of the enterprise. ii) Group Entrepreneurship - It mainly covers partnership, private limited company and public limited company. iii) Cluster Formation - It covers NGOs*, VOs*, CBOs*, SHGs* and even networking of these groups. These also cover formal and non-formal association of a group of individuals on the basis of caste, occupation, income, etc. iv) Cooperatives - It is an autonomous association of persons united voluntarily for a common objective. An entrepreneur has to decide on a particular type of entrepreneurship based on the various options available. V BASIC INFRASTRUCTURE FOR RURAL ENTREPRENEURSHIP Infrastructure plays a significant role in providing and enabling encouraging atmosphere for the growth and spread of rural enterprises and small industries. The achievement of an 8 percent growth rate envisaged in the Five Year Plans will require industry sector growth of over 10 percent, with at least a corresponding growth in demand for infrastructure. In India, serious problems have been building up in the infrastructure sector for many years: in transport rail efficiency is low, there has been under-investment and freight rates are high in order to subsidize passengers. The basic infrastructure includes transport, utilities and communication including railways, roads, ports, power, and telecommunication services. Additional infrastructure facilities that are also required are drinking water, housing, healthcare, among others. VI SOURCES OF FUNDS Normally an entrepreneur tries to meet at least part of the funds requirement from one s own sources, which we call as capital of the promoter. He/she arrange this fund either from friends, family members or from own saving. In most cases it is founds that this funds is quit insufficient to run the business. Therefore he approaches various agencies for meeting the requirement The credit and landing agencies operating rural areas can be divided into two types:- 1) Institutional 2) Non- Institutional The former comprise commercial banks, co-operative societies, development banks, regional rural banks and non banking financial companies. These institution operate in regulated environment and observe fixed norms & guidelines enumerated by the government. Since they are more amenable to policy prescriptions of government authorities they have fixed criteria on rate of interest, primary & collateral 137

4 Feb., 2012 securities & selection procedures. The non institutional agencies are lending agencies operating in non formal manner. They are mostly money lenders operating in rural areas. They are only lending agencies before the entry of institutional agencies. Rural people have easy access to these sources of finance, as there are no Rules & regulations guiding their activities. They charge very high rate of interest and many of them take away the entire property of the poor people which is pledge by them for granting loans of even very small amount. Institutional financial is of three types:- 1) Banking Institutional: - Commercial banks, co-operative societies, Regional Rural Bank. 2) Development banks:- Small industries development bank of India(SIDBI), National Bank of Agricultural and Rural Development Bank (NABARD), National Housing Bank (NHB) 3) Non banking financial companies VII. A survey of Rural Entrepreneurs in Nanded District Every human being has certain strength, certain weakness, and when he is working in the socio-economic environment he gets some Opportunities as well as he has to face some threats. Excellence in business can be achieved only when the entrepreneur are ready to turn inwards and have an analysis of their own strengths and weaknesses. As far as Rural areas of India are concerned the field of commerce, trade, etc were closed for a long time due to peculiar social system generated by the shahtras according to which the profession was decided not by technical skills and education but by birth. After independence particularly after adoption of constitution every individual got the fundamental right to choose their profession for his livelihood according to his or her own aptitude and potentialities. Therefore it can be said that the day of enactment of the consultation is the day of revolution for rural classes through which they got the opportunity to select any profession and to prove their potentialities in any sector. In this paper an attempt is made to conduct survey of 120 rural entrepreneurs working in Nanded District. Nanded is industrially a backward District in Marathwada region of Maharashtra state. Now government is providing all assistance to develop entrepreneurs in this district. Strength of the rural entrepreneurs: In the first instance the researcher has examined the strengths of the rural class as the famous economist Edwin has rightly said that every human being born has not only a mouth and stomach but hands and legs to work and brain for thinking. If these natural gifts of strong body, healthy mind and scientific thinking are fully used a man can achieve any damn thing on the earth. The rural class in India in addition to these has added to the strength of the class. The various points of the rural class are tabulated in the Table1. Table 1 Strength of the Rural Class entrepreneurs: Sr. No Strength Rank Weighted Score Rating % 1 Earnest desire to raise social status Mobility Tolerance Rank 138

5 4 Humanity Sell confidante Respecting to others No response Total (From field survey) The rural entrepreneurs enjoy a number of positive point s strength, which they can advantageously use while managing their entrepreneurial activities. In order to know their strengths, the rural class entrepreneurs were asked to indicate the ranking of different strengths based upon the extent of applicability. The weights have been given to each strength as 1, 2 3, and hereby weighted score was calculated for each point of strength. In this way rating percentages have been calculated and ranks have been given to each point of strength. The rating percentages indicate the extent of acceptability of the point of strength towards successful running of the business units by rural class entrepreneurs. 1. Earnest desire to raise the social status has been the first rank point of strength that the rural class entrepreneur s possess. As it has been rightly said where there is will there is way the rural class entrepreneurs are having this part of desire in the heart of their hearths, which motivates them to succeed in entrepreneur activity. This point of strength has received the highest score of weighting i.e. 77 and its rating percentage is Mobility is yet another factor that can be said to be a point of strength. Mobility means the readiness of the entrepreneur to move away from one place to another. The mobility of rural class entrepreneur is their strength. It can be seen from the table that the point of mobility has been received the second rank in the weighting score 36 and the rating percentage is Tolerance is yet another point of strength that the rural class entrepreneur s possess. As a matter of fact the Indian heritage and society have taught these classes tolerance, since the last millenniums and habit of tolerance has become the virtue of rural entrepreneurs. The point of tolerance has received a weighted score of 22 and his rating percentage is Humanity i.e. submissiveness is yet another point of strength that the rural class entrepreneur s having. A successful entrepreneur must be humble, sweet in his tongues and submissive to all around him. This point has received a weighted score of 28 and percentage rating Self-confidence is still important point of strength that the rural class entrepreneur s possess. However it is revealed that though the rural class is having the earnest desire of development yet, their self confidence is comparatively less. This can be indicated by lower weighted score of 29 and rating percentage of and it has received a third rank 6. Respect of others is one more point of strength of the rural class entrepreneurs. A successful entrepreneur must respect other. The point has received the last weighted score of 19 and the rating percentage is as low as 7.91 with the 6 th rank. Therefore it can be said that it is necessary for the rural class entrepreneurs to develop among them a sense of respect for others Weakness of rural entrepreneurs: The rural class of India is not without its weaknesses rather it is only because of its weaknesses that it has remained RURAL. Weaknesses also should also be examined as a part of SWOT analysis. Location of the points of weaknesses and their control with a view to realize predetermine goals is called manage- 139

6 Feb., 2012 ment by exceptions. Only when weaknesses are observed they can be eradicated. This paragraph aims at pointing out the weaknesses only with a view that to eradicated the same. Opportunities of rural entrepreneurs: The opportunities that are open for the rural class entrepreneur are outlined here: 1. Government support 2. Constitutional Responsibility of the government 3. Changing socio-environment 4. Revolutionary attitude 5. Education 6. Dilution of social strata 7. Equal opportunities Threats i.e. Problems in front of rural entrepreneurs: The various opportunities are not without threats. The threats are the problems that are faced by the rural class entrepreneur. The researcher has made a survey of the opinions of the rural class entrepreneurs and the responses are tabulated in Table 2 Table 2 Problems of Rural Entrepreneurs Sr. No Problems Rating of problems Weighted score Rating percentages Rank Cut throat competition Lack of access to credit from market Lack of easily assess the place for unit or activity Heavy burden of family responsibility Lack of finance Lack of courage and fear of failure No responses Total (From field survey) It can be observes from the above table that 1. Cut throat competition is one of the great that the era of globalization, liberalization and privatization has brought. India has adopted a new economic policy after 1991, which has proved to be a great deviation from the socialist pattern of the society adopted in the directive principles of the state policy in constitution of India. Free trade is the principal of modern economy. Free trade means cutthroat competition. In cutthroat competition the rule of survival of the fittest applies. This is a great threat in front of the rural entrepreneurs. 2. Lack of access to credit from market is yet another problem that works as a threat for the rural entrepreneurs. These rural entrepreneurs are not getting credit from the local market. Because they are not found established business community. Efforts will have to be made by the rural 140

7 entrepreneurs to create a track record of credit in the market. This point has received a weighted score of 37 with rating percentage of representing 3 rd rank. 3. Lack of easily assess the place for unit or activity is yet another threat to the rural entrepreneur as a result of the established unwritten norms of the Indian society which create a number of hindrances in the way of getting a proper land for the rural entrepreneur. It is a necessary to create an atmosphere for solving this issue. This point has received a weighted score of 24 and rating percentage of 10 with 5 th rank. 4. Heavy burden of family responsibility is another problem that comes in the way of rural entrepreneurs. Normally the size of the family is big. All are not earning hands. All are not educated. This leads to heavy responsibility on the shoulders of one single persons and this person is generally the one who is the entrepreneur. Active support by way of work on the part of family members will solve the problems. This problem has received a weighted score of 50 and rating percentages of with second rank. 5. Lack of finance is another problem that comes in the way of rural entrepreneurs. The special institutions provide whatever finance and bank sis not sufficient, private money lenders lend money only at very high rates of interests which the rural entrepreneurs can not afford and finance is not available from friends and relatives. This problem has received a weighted score of 72 and rating percentages of 30 with 1 st rank 6. Lack of courage and fear of failure is yet another threat which has received a weighted score of 19 and rating percentages of 7.91 with 6 th rank. Normally rural entrepreneurs is having negative attitude towards entrepreneurial activity. He fears that if the business has to be closed everything will be lost. His family will suffer and therefore he is reluctant to start any business activity. VIII CONCLUSION Rural entrepreneurs are still lagging far behind in the entrepreneurial activity as compared to the youth of established community. The SWOT analysis technique is adopted for assessing the strengths, weaknesses, opportunities and threats that are in front of rural entrepreneurs in the changing business scenario. The reasons have been analyzed, if the socio economic background that is responsible for the situation. The Indian society at present on the threshold of the change, the economic environment is changing fast; the socialist ideals have already disappeared far away in the deep mist. attempts shall be made at both levels that is of the entrepreneurs and government to make the rural entrepreneurs to strong enough cope up with the challenges of the new age REFERENCES: 1. R. B. Agadi, P. Paramashivaiah, Rural entrepreneurship in India, entrepreneurship Thrust and Challenges, National Publishing House, Jaipur, p Rajgoapl, Rural entrepreneurship, Development, Policy, Planning and Practice, Rawat Publications, Jaipur, 1998, p. vii. 3. Rural entrepreneurship: growth and potentials- Mookkiah Soundarapandian, Rural entrepreneurship: motivations and constraints : Tushar Kanti Moulik, S.K. Basu, M.S. Patel

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