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Entrepreneurship as an Economic Force in Rural Development

  3. OBJECTIVES 1 • To know the concept of entrepreneurship and problems faced by rural entrepreneurs. 2 • To analyze the promotion of entrepreneurship for rural development. 3 • To visualize a training approach for economic development of rural entrepreneurs. 4 • To review the research studies related to rural entrepreneurship.
  4. Concept of Entrepreneurship • Entrepreneurship is the act of being an entrepreneur, which is a French word “entreprendre” meaning "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". (
  5. TYPES OF RURAL ENTREPRENEURSHIP 1. Individual Entrepreneurship 2. Group Entrepreneurship : (i) Partnership (ii) Private Limited Company (iii) Public Limited Company 3. Cluster Formation: Non-Governmental Organizations (NGOs), Voluntary Organization (VOs), Self- Help Groups (SHGs), Community- Based Organizations (CBOs), 4. Cooperatives.
  6. DOMAINS OF RURAL ENTREPRENEURSHIP • Food processing • Dehydrated Fruits and Vegetables • Fruit Based Beverages • Mushrooms • Poultry Industry • Cottage industries • Oil Industry • Pottery • Repair of Phone/Mobile Phone, Electronic and Electrical goods • Rural Tourism • Entertainment
  7. Problems faced by rural entrepreneurs Technical assistance Entrepreneurial attitude Financing Qualification of human resources Market
  8. Constraints of Potential Rural Entrepreneurs and Development Inputs Sl. No. Constraints Development Inputs 1. Low self-image and confidence Motivational inputs, experience sharing by successful local entrepreneurs 2. No faith on others includes friends Group building experiences 3. No exposure to industry/business Field visit to factories and big markets 4. What formalities and procedures are to be followed? Information inputs on procedures and formalities 5. How to know whether the identified business is a viable and sound proposition? Market survey, project report Preparation, Opportunity identification and guidance 6. How does one carry out bank operations? Training in simple banking procedures 7. How to manage the business? Basic management orientation through simulation exercises 8. Almost no technical skills Technical training
  9. FRAMEWORK FOR ENCOURAGING RURAL ENTREPRENEURSHIP Propensity to become entrepreneurs Knowledge & skills associated with entrepreneurship Succeeding as entrepreneurs Need to address cultural & behavioural issues Preparing to be entrepreneurs through training Supporting through financial assistance An entrepreneurial economy NO NO NO YES YES YES
  10. Promotion of entrepreneurship
  11. Two approaches 1 •Promotional programmes 2 •Institutional approach
  12. Promotional programmes Entrepreneurship Development Programme (EDP) Rural Entrepreneurship Development Programme (REDP) Technology based Entrepreneurship Development Programme (TEDP) Training of rural Youth for Self Employment (TRYSEM) Prime Minister's Rozgar Yojana (PMRY) Swarnajayanti Gram Swarozgar Yojana (SGSY)
  13. Entrepreneurship Development Programme (EDP) • Development of entrepreneurs through systematic training. • Important strategy for development of human resources for promoting small business enterprises in rural areas. • Comprises 3 distinct phases, viz., a. pre-training b. training c. post-training
  14. Rural Entrepreneurship Development Programme (REDP) • Supported by NABARD • Objective: to create sustainable employment and income opportunities in a cost effective manner for the benefit of educated unemployed rural youth. • To set up small/ micro-enterprises.
  15. Technology based Entrepreneurship Development Programme (TEDP) • Focus of training is on specific products/ technologies, having commercial viability. • Motivational & managerial inputs.
  16. Training of rural Youth for Self Employment (TRYSEM) • Facilitating component of IRDP, aims at providing basic technical and entrepreneurial skills to the rural poor in the age group of 18 to 35 years to enable them to take up income generating activities.
  17. Prime Minister's Rozgar Yojana (PMRY) • To assist educated unemployed youth to set up self-employment ventures. • To develop entrepreneurial skill and attitude among rural unemployed youth
  18. Swarnajayanti Gram Swarozgar Yojana (SGSY) • With a focus on providing effective self employment through self help group approach and activity cluster approach for rural poor families below poverty line. • The self help groups are motivated through training and capacity building for taking up thrift and credit activity and start their own small rural enterprises .
  19. Institutional approach Educational institutions Financial institutions Inter-firm institutions
  20. Educational Institutions • RUDSETI • Entrepreneurship Development Institute of India • National Institute for Entrepreneurship and Small Business Development ( NIESBUD) • Indian Institute of Entrepreneurship (IIE) • Association of Women Entrepreneurs of Karnataka (AWAKE)
  21. Objectives • To identify, orient, motivate, train and assist the rural youth to take up self-employment as an alternative career. • To promote rural entrepreneurship. • To train village level workers. • Counselling and project consultancy.  68% of the trained candidates have successfully established self-employment ventures.  RUDSET Institutes have contributed to the national wealth to the tune of Rs. 315 Crores per annum. (At an average earning of Rs. 2500/- per month by a successful trainee).
  22. Entrepreneurship Development Institute of India National Resource Institute Engaged In Entrepreneurship Education, Research & Training,
  23. Contd…
  24. National Institute for Entrepreneurship and Small Business Development ( NIESBUD) OBJECTIVES: • To promote, support and sustain Entrepreneurship and small business through Training, education, research, consultancy • To serve as an apex national level resource institute for accelerating the process of entrepreneurship development ensuring its impact across the country and among all strata of the society. • To share experience and expertise in entrepreneurship development across National frontiers.
  25. Indian Institute of Entrepreneurship (IIE) • Established in the year 1993 in Guwahati. OBJECTIVES: • To organize and conduct training for entrepreneurship development. • To evolve strategies & methodologies for different target groups & locations & conduct field tests. • To identify training needs and offer training programmers to Government and non-Government organizations engaged in promoting and supporting entrepreneurship.
  26. Association of Women Entrepreneurs of Karnataka (AWAKE) • India’s premier institutions for women totally devoted to Entrepreneurship Development. • Established in 1983. MISSION * To promote entrepreneurship among women and thereby empower them to join the economic mainstream. * To enhance the status of women in the society, by creating a culture of entrepreneurship amongst women in both rural and urban areas. * To develop successful models of entrepreneurship for emulation worldwide.
  27. Financial Institutions • Commercial banks, Co-operative societies, Regional Rural Bank. • Development banks:- Small industries development bank of India(SIDBI) , National Bank of Agricultural and Rural Development Bank (NABARD), National Housing Bank (NHB)
  28. Inter-firm institutions Business incubators Industrial parks Business support centres
  30. BASIC INFRASTRUCTURE FOR RURAL ENTREPRENEURSHIP Transport Railways Roads Power Communication & telecommunication services Additional infrastructure facilities that are also required are drinking water, housing, healthcare etc.
  31. Training approach
  32. Entrepreneurial development process 1. Development of entrepreneurial culture 2. Encouraging start-ups 3. Setting up the new venture 4. Development of a new venture and growth 5. Institution building (
  33. 1. Development of entrepreneurial culture Understanding of: What is entrepreneurship? Who are entrepreneurs'? and Mechanisms crucial for the development of positive attitudes towards entrepreneurship
  34. 2. Encouraging start-ups Identification of constraints Design of training inputs Process to develop business ideas Estimating entrepreneurial potential
  35. 3. Setting up the new venture Feasibility study The business plan Guidelines
  36. 4. Development of a new venture and growth • Managerial skills • Business performance • Strategies for future growth
  37. 5. Institution building Promoting institutions Financial institutions Networking
  38. Model for the development of rural areas • The Enterprise (E) is in the centre and includes the sectors Production (P), Marketing (M) and Development (D).
  39. Research studies
  40. Participatory Rural Entrepreneurship Development for Grassroots Transformation: A Factor Analysis O. D. Kolawole and D.O Torimiro
  41. Principal component analysis of independent variables (socio-economic factors, infrastructure and institutional factors) associated with participatory rural entrepreneurship development and employment promotion (PREDEP) Sl. No. Factor Label Names % of variance Cumulative % of variance 1. Social status 22.89 22.89 2. Personal experience 18.20 41.09 3. Infrastructure functionality 10.65 51.74 4. Educational advantage 9.78 61.52 5. Economic prowess 7.01 68.53 6. Institutional influence 5.90 74.43 7. Information and project type 4.93 79.36 8. Other unknown factors 20.64 100.00
  42. Agro Processing Industries- A Challenging Entrepreneurship For Rural Development Pardeep S. Shehrawat
  43. Technological problems encountered by entrepreneurs for establishment of sustainable units Sl. No. Problems Rank order 1. Technological gap between Different institutions and entrepreneurs I 2. Lack of specialized skill to the entrepreneurs II 3. Non availability of improved technology III 4. Outdated technology IV 5. Lack of technical know-how V 6. Non-availability of technologies in time VI 7. Lack of facilities for maintenance And repair of the machinery VII N=120
  44. Institutional problems encountered by entrepreneurs for establishment of sustainable units N=120 Sl. No. Problems Rank order 1. Lack of cooperation and coordination among different developmental agencies I 2. Poor working of various industrial agencies such as directorate of small industries, SISIs, DICs, etc. II 3. Lack of Govt. support and incentives III 4. Long and complicated procedures to avail institutional help IV 5. Lack of training to workers V 6. Insufficient publicity for imparting trainings VI 7. Training institutes give less attention to the objectives, identification and proper selection of entrepreneur VII 8. Trainers do not belong to the relevant field thus lack competence VIII 9. Lack of communication between field functionaries and entrepreneurs IX
  45. Financial problems encountered by entrepreneurs N=120 Sl. No. Problems Rank order 1. Problems in procuring finance loans as well as working capital from different agencies I 2. Lack of sufficient working capital II 3. Inadequate amount advanced through financing agencies III 4. Lack of funds for publicity and advertisement of the product IV 5. High rate of interest V 6. Difficulty in getting money from buyers after sales VI
  46. A Study on Effectiveness of Group Dynamics and Entrepreneurial Behaviour of Women in Self Help Groups PRASANNA KUMAR, R.
  47. Economic performance of enterprises undertaken by women in SHGs Sl. No. Enterprises Economic dimensions Gross income (Rs.) Cost of productio n (Rs.) Net income (Rs.) B:C ratio 1 Dairy 38576 19403 19173 1.99 : 1 2 Sheep 17603 5703 11900 3.09 : 1 3 Fisheries 19833 4100 15733 4.84 : 1 4 Vermiculture 14167 3333 10834 4.25 : 1 5 Manufacturing activities 18704 4097 14607 4.57 : 1 6 Trading activities 24623 7766 16857 3.17 : 1 7 Dairy + others 30326 9725 20601 3.12 : 1 8 Sheep + others 38267 11683 26584 3.28 : 1 n=180