Micro enterprise devt ppt

2. Presented by
N.R.PRASAD REDDY
Faculty Member
Centre for Industrial Planning and Development
National Institute for Micro, Small and Medium Enterprises
Hyderabad

3. MICRO ENTERPRISE DEVELOPMENT
NEED
The Need for creating sustainable
Employment opportunities in rural
and Semi-urban areas of over
populated Developing economies,
requiring Off-farm employment
opportunities, The more important
ones are:

4.  To transfer employment pressures
away from agriculture avoid un-economic
fragmentation of land
 To improve agricultural productivity and
convert some of the inevitable agro-surpluses
into productive assets.
 To protect environment
 To generate resources for village/small
towns authorities for better social
infrastructure
 To change factor mix from capital and
power to agro-surplus and labour.

5. MICRO ENTERPRISE DEVELOPMENT
Enterprise is defined in terms of
workers employed or investment in
plant & equipment, turn over of out
put or sales etc.
Micro enterprise can be, for a matter
of convenience, defined in terms of
workers employed. An enterprise
having employment of up to five
workers can be regarded as micro
enterprise.

6. In Indian context
 Small and marginal farmers engaged in
various economic activities under both
farm and non-farm sector
 Rural artisans and crafts man and those
engaged in cottage industries
 Those covered under khadi and village
industries sector
 Micro enterprises: Investment in plant
and machinery is less than Rs. 2.5 million
in manufacturing
 investment in plant and machinery is
less than Rs. 1.0 million in service activity

7. Characteristics of rural micro enterprises
 Year-round seasonal enterprises tuned to
the agricultural cycle
 full or part-time enterprises (tradesmen or
shopkeepers who are not also farmers)
 individual or family enterprises or
enterprises employing full-time or casual
outside labour
 fixed or itinerant enterprise, particularly
petty trading
 enterprises with a sole line of business or
with multiple lines substituting for one
another, according to market needs, or
clustered in order to share risks

8. The micro enterprises mostly rely
on native skills, manual operations
and conventional tools, catering to
local requirements and needs.
This sector play a vital role in the
economy of any country by
providing employment and income
generating opportunities on a
sustainable basis and contributing
significantly to the national income.

9.  Non-governmental organisations
have actively promoted informal
groups of rural poor to encourage
thrift with a view to help in
financing their emergent needs.
National bank for agriculture and
rural development (NABARD)
launched a self-help groups.

10. a) SHGs
 SHG in active existence for at least six
months.
 Group has successfully under taken
thrift or credit activities
 SHG maintains proper accounts
 assistance from NGO/Self-help
promoting institutions (SHPI)
 Group consisting of members as
informal or formal association.

11. b) Credit Guidelines
1) Quantum of Credit : Proportion of savings
to loan could vary from 1:1 to 1:4 based
on the assessment of SHG by bank
2) Disbursement : (i) Directly to SHG in bulk
individual members of SHG on
recommendations of SHG with an
undertaking for monitoring and recovery
of loan (ii) Direct financing to NGO/SHPI
as an intermediary based on the track
record of NGO.

12. c) Repayment: SHG would be free to fix-up
repayment spend for its members
based on income generation
d) Rate of interest :
NABARD to bank : 7%
Bank to SHG : As per prime lending
rate subject to change
Bank to NGO : - do –
NGO to SHG : NGO free to decide

13. Problems faced in financing SHGs
 Some groups formed for abstention of loan
 irregular group meeting
 absence of gradual accumulations of savings
 Larger loans to few members
 Lack of emphasis on income generating credit
activities
 Higher quantum of loan spent for consumption
 Absence of proper records of accounting
 Frequent change of members
 No rotation of group leaders
 No proper follow up of units
 No proper documentation from members
Most of the problems listed above only reinforce the need for
attitudinal change and functional orientation of field level
functionaries of all agencies involved in promotion and
development of self-help groups.

14. Role of NGO :
 Organising the poor to take up
individual and group activities
 Assume the role of the facilitator and
identifier of SHGs
 Promote to Regular thrift
 Help promote confidence building and
group dynamism
 Undertake training programmes
 Identification of markets
 Creation of awareness and can be
involved in a wide variety of activities

15. It is envisaged that NGO should handle the following
functions :
 Collection of information on micro enterprise trades in
the block and identifying their problems
 Preparation of a programme of action with reference to
developmental and other assistance needed by micro
enterprises
 Arranging credit facilities for the identified needy micro-enterprises
 Ensuring supply of raw materials as fair prices and on a
continuing basis
 Building up a strong domestic market especially with in
the block
 Acting as a procurement centre for marketing
organization at district / state / national levels
 Providing technical services through training, product
and design development, modernization of tools and
equipment and improved quality standards.

16. Who is a self-help group member
She/He is :
 An agriculture labourer in the field
 a fruit, vegetable, fish vendor in the street
 A stone crusher in the quarry
 A basket maker working under a tree
 A petty shop keeper in a bunk
 A brick maker
 A construction worker
 A former working in the fields
 A manager of mulch cattle at home
 A weaver
 A potter, and
 A provider of her family
she/he is a woman/men like you
she/he is a worker

17. The women members of 10-15 form a
group taking up economic activity
suited their skills, aptitude and locally
available resources.
 Women are encouraged to save
their own money (Rs. 10, Rs. 20, Rs.
30 per month) as a common fund.
 Revolving fund Rs. 25,000 is
provided to groups as lump sum
grant.

18. When you find a SHG……
 See whether proper books are maintained
 Link them with bank credit
 The Ratio of thrift to loan can be 1:2 in the
first instance
 Lend first cycle without grace period
 Do not insist on activity. Leave it to the
group
 Fix a repayment schedule-left it be short
 Insist on timely repayment
 Deliver credit publicly
 Attend one or two group meetings
 Don’t impose your views.

19. SUCCESS OF A SHG DEPENDS ON
 Group of women in poverty with a
purpose
 Savings, as an, entry point of the
members to get together
 Democratically managed and collective
decision making groups
 sustainable income generating activities
 Least dependence on external marketing
support

20. SHG NABARD’s PERSPECTIVE
What to see in a self-help group (SHG)
 Homogeneity in nature
 Regularity in savings
 Regularity in meeting
 Democratic functioning
 Savings to precede lending
 Prioritization of needs
 Repayment
 Penalty for indiscipline
 Transparency in operation in these aspects are
noticed you have encountered a SHG

21. STRATEGIES FOR MICRO ENTERPRISE
DEVELOPMENT
 MED through micro credit
 MED through escort services
 MED through information dissemination
 MED through entrepreneurship development
programmes
 MED through vocational training
 MED through setting up of production cum
training centres
 MED through product specific regional
projects
 MED through cooperative involvement
 MED using the panchayat route