Rural Industrialization and Women Entreprenuership

Unit-5: Rural Industrialization and
Entrepreneurship
Prepared by:
Ankur Sachdeva
Assistant Professor, ME
Ankur Sachdeva, Assistant Professor, ME

Introduction
• One of the central problems impinging significantly on rural development is the shrinking
employment opportunities in rural areas.
• Seasonal unemployment, partial unemployment, and artisans who are at the margins
because the technology they use has become obsolete are common in Indian villages.
• Finding jobs to match the skills of the people is one enormous task for any government.
• Agriculture is widely found to be non-remunerative. This has accelerated migration to
urban areas in a big way, worsening the situation of urban poverty.
• The dearth of access to information, knowledge and technology makes rural people stand
away and watch their resources such as land, sand, soil, water, vegetation, herbs, trees etc.
being exploited by profiteering interests.
• The unlettered or semi-literate rural people wind up their business in villages and get set
to depart to urban centres in search of employment in the cities.

Meaning of Rural Industrialization
• Rural Industrialization means encouraging the location of large and small scale
units away from urban areas or planned shifting of units from urban areas to
rural areas.
• Rural industrialization aims at the all-around development of an area as well as
people living in such areas.
• Rural industrialization includes economic activities outside agriculture, carried out
in villages and varying in size from households to small factories.
• Some examples of these activities are cottage, tiny, village and small-scale
manufacturing and processing industries; and services of various kinds.

Significance of Rural Industrialization
• They can slow down urban migration and thereby ease the problems of
urbanization.
• They lead to improvement in the environment by reducing the concentration of
industrial units in big cities.
• They can increase rural income and generate nonfarm employment for the
farmers.
• They can reduce both skilled and unskilled unemployment.
• They can promote balanced industrialization by avoiding excessive industrial
concentration.
• They are based on the local needs and can better meet the local consumption
needs.

Objectives of Rural Industries
• To assist in the growth and widespread dispersal of industries
• To increase the levels of earnings of artisans;
• To sustain and create avenues of self-employment;
• To ensure regular supply of goods and services through the use of
local skills and resources;
• To develop entrepreneurship in combination with improved methods
of production through appropriate training and a package of
incentives;
• To preserve the craftsmanship and art heritage of the country

Gandhian Approach to Rural Industrialization
• Gandhian approach has always said about the voluntary wants, the need for self-
sufficient village communities and the issues relating to a better balance between
man and nature.
• Gandhi wanted to have an ideal society of his own imagination and his economic
ideas are a part and parcel of his philosophical and sociological ideas.
• Gandhi was interested in the growth of human beings and more significantly the
growth of the deprived and underprivileged group of people.
• 'Rural Industrialization' was never the term used by Gandhi.
• However, two basic components of Gandhian development, self-sufficient villages
and decentralization of economic and political powers, gave a very important
place to the development of Khadi and Village Industries.

Gandhian Approach to Rural Industrialization
• According to a recent study the Khadi movement was not only a mass
mobilization movement against the anti-imperialist struggle, but it was also a
social movement of recognizing women’s capacity as economically and politically
active beings without whose support the goal of freedom or Swaraj would be
unattainable and meaningless.
• In fact, Gandhi’s well-known concept of 'Living Wage for Spinners' originated in
his realizing the danger of women being paid low wages even by constructive
workers.
• The World of Appropriate Technology, in which it defined appropriate technology
as characterized by "low investment cost per workplace, low capital investment
per unit of output, Organizational simplicity, high adaptability to a particular
social or cultural environment, sparing use of natural resources, low cost of the
final product or high potential for employment.

Gandhian View of Self–Sufficient Village Economy
• Gandhi holds the view of the maximization of social welfare and for this, he gives prime importance to the welfare
of the individuals by reducing inequalities in income and wealth.
• Gandhi is in favour of the self-sufficient village economy where the villages will be the independent economic units.
• India lives in villages. Naturally, the development of the country depends on the development of villages.
• All the goods and services necessary for the village members should be grown within the village.
• Agricultural sector alone cannot solve the problem of rural poverty and unemployment. That's why Gandhi gives
stress on the growth of the rural industries like khadi, handlooms, sericulture and handicrafts.
• He opines that large-scale industries make people lazy and help concentrate wealth in the hands of a few. Therefore
there is no problem with production and market.
• Large scale production creates conflicts between labour and capital. On the contrary, rural industries are based on
family labour and required less amount of capital.
• The raw materials are also collected from local markets and the goods thus produced are sold in the local markets.
• Gandhi is not in favour of large-scale industries in the sense that these industries are not related to a vast population
living in rural areas.
• Thus industrialization, according to Gandhi, does not help the growth of the personality; contrarily it helps only the
material progress of a few

Meaning of Rural Entrepreneurship
• In simple terms “entrepreneurship” is the act of being an entrepreneur, which can
be defined as “one who undertakes innovations, finance and business acumen in
an effort to transform innovations into economic goods”.
• Rural entrepreneurship certainly implies entrepreneurship emerging in rural areas.
• In other words, establishing the industry in rural areas is referred to as rural
entrepreneurship.
• This means that rural entrepreneurship is synonymous with rural industrialization.
• Diversification into non-agricultural uses of available resources such as
blacksmithing, catering for tourists, carpentry, spinning etc. as well as
diversification into activities other than those solely related to agricultural usage
like the use of resources other than land such as water, woodlands, buildings, local
features and available skills all fit into rural entrepreneurship.

More Areas of Rural Entrepreneurship
• The entrepreneurial combinations of these resources are
• tourism,
• sport and recreation facilities,
• professional and technical training,
• retailing and wholesaling,
• industrial applications (engineering, crafts),
• servicing (consultancy),
• value added (products from meat, milk, wood, etc.) and the
possibility of off-farm work.

Role of Rural Entrepreneurship in Economic Development
• Formation of capital:
• Entrepreneurs as such by placing profitable business propositions do attract investment to
ensure private participation in the industrialization process.
• General Job creators and job providers and not the job seekers:
• Employment is generated directly by the requirement of the large enterprises and also
indirectly by ancilliariation and consequential developmental activities
• Balanced regional development:
• Entrepreneurs always look for opportunities in the working environment.
• They capitalize on the opportunities of governmental concessions, facilities and subsidies
to set up their enterprises in undeveloped areas.
• Classic example is setting up of steel plant at Tata Nagar, Reliance Petrochemicals at
Jamnagar (Gujarat) which have resulted in the development of Good Township and
peripheral regional development.

• Improvement in the standard of living
• Entrepreneurial initiatives taken by entrepreneurs through employment generation
lead to an increase in income and also purchasing power which is spent on
consumption expenditure.
• Certainly increased demand for goods and services boosts up industrial activity.
• Large scale production with technological advancements will result in economies of
scale and low cost of production
• National Self-Reliance
• Entrepreneurs are certainly the corner stores of national self-reliance.
• They help to manufacture indigenous substitutes for imported products which reduces
the dependence on foreign countries.
• There is also a wide possibility of exporting the goods and services to earn foreign
exchange for the country.
• Hence, the export promotion and import substitution ensure economic independence
and the country becomes self-reliant.

• Increase in per capita income:
• Entrepreneurs convert the latent and idle resources like labour, land and capital into goods and
services resulting in an increase in the national income and in turn wealth of a nation.
• The increase in national income is thus an indication of an increase in the net national product
and per capita income of the country.
• Planned Production:
• Entrepreneurs are considered and best judged as economic agents since they unite all means of
production.
• All the major factors of production i.e., land, labour, capital and enterprise are all brought
together to get the desired product.
• This will help to make use of all the factors of production with perseverance, proper
judgement and knowledge of the world of business
• Equitable distribution of economic power:
• The increasing number of entrepreneurs helps in the dispersal of economic power into the
hands of many effective and efficient managers of new enterprises.
• Hence setting up of a large number of enterprises certainly helps in awakening the evil effects
of monopolies

Major benefits from Rural Entrepreneurship
• Provide employment opportunities:
• Rural entrepreneurship as such is mainly labour-intensive and certainly provides a
clear solution to the growing problem of unemployment.
• Mainly the development of industrial units in rural areas through rural
entrepreneurship has a high potential for income creation and employment generation
• Balanced regional growth:
• Rural entrepreneurship can dispel the concentration of major industrial units in urban
areas and also promote regional development in a balanced way
• Check on the migration of rural population:
• Rural entrepreneurship can fill the lacunae and big gap and also disparities in income
for rural and urban people.
• Rural entrepreneurship will bring in or develop infrastructural facilities like roads,
power, bridges etc.
• It can help to check the migration of people from rural to semi-urban and urban
areas in search of jobs

Major benefits from Rural Entrepreneurship
• Promotion of artistic activities in rural areas:
• The age-old rich heritage of rural India is preserved by promoting and protecting
handicrafts and arts through rural entrepreneurship.
• Check on social evils existing in society:
• The growth of rural entrepreneurship can reduce social evils like the growth of slums,
poverty, pollution in cities etc.
• Awaken the rural youth:
• Rural entrepreneurship can awaken the rural youth and also expose them to various
avenues to adopt entrepreneurship and promote it as a career.
• Improved standard of living:
• Rural entrepreneurship will also increase the literacy rate of the rural population.
Their education and self-employment will also prosper the community, thus
increasing their standard of living.

Problems in Rural Entrepreneurship
1. Financial Problem
(a) Paucity of funds:
• Due to the absence of tangible security and credit in the market most of the rural
entrepreneurs fail to get external funds.
• Also the procedure to avail of the loan facility from the banks is too time-consuming that
its delay often disappoints the rural entrepreneurs.
• Lack of finance available to rural entrepreneurs is by far one of the biggest problems
faced by rural entrepreneurs nowadays especially due to the global recession.
(b) Lack of infrastructural facilities:
• In spite of efforts made by the government the growth of rural entrepreneurs is not very
healthy due to a lack of proper and adequate infrastructural facilities.
(c) Risk Element:
• Rural Entrepreneurs have very less risk-bearing capacity due to a lack of financial
resources and external support.

2. Marketing Problem
(a) Competition:
• Rural entrepreneurs face stiff and severe competition from large-sized organizations and urban
entrepreneurs.
• They incur a high cost of production due to high input costs.
• Problem of standardization and competition from large scale units are some of the major problems faced by
marketers.
• They face the problem of fixing the standards and then sticking to them.
• For the survival of new ventures competition from large scale units also creates difficulty.
• New ventures have limited financial resources and hence cannot afford to spend more on sales promotion
and advertising.
• These units are not having any standard brand name under which they can sell their products.
(b) Middlemen:
• Middlemen exploit rural entrepreneurs.
• Rural entrepreneurs are heavily dependent on middlemen for marketing their products who necessarily
pocket a large amount of profit.
• Poor means of transportation facilities and storage facilities are also other marketing problems in rural
areas.

3. Management Problem
(a) Lack of knowledge of information technology:
• Information technology as such is not very common in rural areas.
• Entrepreneurs rely on internal linkages that encourage the flow of services, goods, ideas and
information.
• The intensity of family and personal relationships in rural communities can sometimes be very
much help but they may also present obstacles to effective and efficient business relationships.
(b) Legal formalities:
• In complying with various legal formalities and in obtaining licenses rural entrepreneurs find it extremely
difficult due to ignorance and illiteracy.
(c) Lack of technical knowledge:
• Rural entrepreneurs to a major extent suffer a severe problem of lack of technical knowledge.
• Lack of training facilities and other extensive services create a hurdle for the development of rural
entrepreneurship.
(d) Poor quality products:
• Another important problem in the growth of rural entrepreneurship is the inferior quality of products produced
due to lack of availability of standard tools and other equipment as well as poor quality of raw materials.

4. Human resource problems:
(a) Low skilled workers:
• Most of the entrepreneurs working in rural areas are unable to find workers with high skills.
• In this case turnover rates are also high. They have to be provided with on the job training and their
training too generally is a serious problem for the entrepreneur as they are mostly uneducated and the
training should be imparted in local language which they can understand easily
(b) Negative attitude:
• Sometimes environment in the family, society and support system is not much conducive enough to
encourage rural people to take up entrepreneurship as a career.
• It may be certainly due to a lack of awareness and knowledge of entrepreneurial opportunities.
• Young and mostly well-educated youths mostly tend to leave.
• Continuous motivation is needed in the case of a rural employee who is sometimes very much difficult
for an entrepreneur to impart.

Major Remedies to Solve Problems in RE
• Provide loans at a concessional rate of interest:
• Finance should be provided to rural entrepreneurs at concessional rates of interest and
also on an easy repayment basis.
• Creation of finance cells:
• Special finance cells must be created by financial institutions and banks to provide
easy finance to rural entrepreneurs.
• Setting up marketing co-operatives:
• Assistance and encouragement should be provided to rural entrepreneurs for setting
up marketing co-operatives in rural areas.
• Co-operatives certainly can help in getting inputs at quite a reasonable rate and also
turn out to be helpful in selling their products at remuneration prices.
• Moreover to boost rural entrepreneurs common production and marketing centres
should be set up with sophisticated modern infrastructural facilities.

Major Remedies to Solve Problems in RE
• Supply of raw materials:
• On a priority basis, rural entrepreneurs should be ensured of a proper supply of
scarce raw materials.
• Besides subsidy must also be offered to make the products manufactured by
rural entrepreneurs which are reasonable and also competitive in terms of cost.
• Offering high-quality training facilities:
• As proper training imparts required skills to run an enterprise it enables rural
entrepreneurs to undertake their venture successfully.
• Economically weaker entrepreneurs of the society are presently offered such
training facilities under Programmed FICCI (NGO‟s), Prime Minister’s
Rozgar Yojana (PMRY), Rotary clubs, Lion clubs and various other voluntary
organizations

Women Entrepreneurship

Introduction
• The educated Indian women have to go a long way to achieve equal rights and positions because
traditions are deep-rooted in Indian society where the sociological set-up has been a male-
dominated one.
• Despite all the social hurdles, Indian women stand tall from the rest of the crowd and are
applauded for their achievements in their respective fields.
• The transformation of the social fabric of the Indian society, in terms of the increased educational
status of women and varied aspirations for better living, necessitated a change in the lifestyle of
Indian women.
• She has competed with man and successfully stood up with him in every walk of life and business
is no exception for this.
• These women leaders are assertive, persuasive and willing to take risks. They managed to survive
and succeed in this cut-throat competition with their hard work, diligence and perseverance.
• In India, women’s entrepreneurship is a recent topic that started only after the 1970s with the
introduction of the Women’s Decade (1975 to 1985) and which mostly picked up in the late 70s.
• This phenomenon was particularly visible only in the metropolitan and state capitals in India. It
took a much longer time to percolate to the other cities and municipalities.

Definition
• Women entrepreneurship is the process where women organize all the factors of
production, undertake risks and provide employment to others.
• Women who innovate initiate or adopt business actively are called women
entrepreneurs”. Women entrepreneurship is based on women’s participation in
equity and employment in a business enterprise.
• Women entrepreneurship is an economic activity of those women who think of a
business enterprise, initiate it, organize and combine the factors of production,
operate the enterprise and undertake risks and handle economic uncertainty
involved in running a business enterprise.
• Woman entrepreneur is a person who is an enterprising individual with an eye for
opportunities and an uncanny vision, commercial acumen, tremendous
perseverance and above all a person who is willing to take risks with the unknown
because of the adventurous spirit she possesses

Functions of a Women Entrepreneur
• Exploration of the prospects of starting a new business enterprise.
• Undertaking of risks and the handling of economic uncertainties involved in
the business.
• Introduction of innovations or imitation of innovations.
• Coordination, administration and control.
• Supervision and leadership

Organizations Promoting
Women Entrepreneurship in India
• National Resource Centre for Women (NRCW)
• Women’s India Trust (WIT)
• Women Development Corporation (WDC)
• Development of Women and Children in Urban Area (DWCUA)
• Association of Women Entrepreneurs of Karnataka (AWAKE)
• Working Women’s Forum (WWF)
• Association of Women Entrepreneurs of Small Scale Industries (AWESSI)
• Women’s Occupational Training Directorate
• Aid The Weaker Trust (ATWT)
• Self-Employed Women’s Association (SEWA)
• Women Entrepreneurship of Maharashtra (WIMA)
• Self-Help Group (SHG)
• The National Resource Centre for Women (NRCW)
• Women Development Cells (WDC)

Obstacles faced by Women Entrepreneurship
• General obstacles to women engaging in entrepreneurship
• Specific obstacles to start-ups
• Specific obstacles to managing a small firm
• Specific obstacles to growing firms

REASONS FOR SLOW PROGRESS OF
WOMEN ENTREPRENEURS IN INDIA
1. The greatest deterrent to women entrepreneurs is that they are women. A kind of
patriarchal-male-dominant social order is the building block to them in their way
towards business success. Male members think it is a big risk financing the ventures
run by women.
2. Women entrepreneurs have to face stiff competition from the men
entrepreneurs who are easily involved in the promotion and development area and
carry out easy marketing of their products with both the organized sector and their
male counterparts. Such a competition ultimately results in the liquidation of women
entrepreneurs.
3. Lack of self-confidence, willpower, strong mental outlook and optimistic
attitude amongst women creates fear of committing mistakes while doing their
piece of work. The family members and the society are reluctant to stand beside
their entrepreneurial growth.

4. Women in India lead a protected life. They are even less educated, economically
not stable nor self-dependent which reduces their ability to bear risks and
uncertainties involved in a business unit.
5. The old and outdated social outlook to stop women from entering the field of
entrepreneurship is one of the reasons for their failure. They are under social
pressure that restrains them to prosper and achieve success in the field of
entrepreneurship.
6. Women’s mobility in India is highly limited due to many reasons. The
cumbersome exercise involved in starting with an enterprise coupled with officials’
humiliating attitude towards women compels them to give up their spirit of
surviving in enterprise altogether.

7. Women's family obligations also bar them from becoming successful
entrepreneurs in both developed and developing nations. The financial institutions
discourage women entrepreneurs on the belief that they can at any time leave their
business and become housewives again.
8. Indian women give more emphasis to family ties and relationships. Married
women have to make a fine balance between business and family. Business success
also depends on the support the family members extended to women in the business
process and management.
9. Women‘s family and personal obligations are sometimes a great barrier to
succeeding in a business career. Only a few women are able to manage both home
and business efficiently, devoting enough time to perform all their responsibilities
in priority.

10. The educational level and family background of husbands also influence
women’s participation in the field of enterprise.
11. Absence of proper support, cooperation and back-up for women by their
own family members and the outside world people force them to drop the idea of
excelling in the enterprise field. They are always making many pessimistic feelings
to be aroused in their minds and making them feel that family and not a business is a
place meant for them.
12. Lack of awareness about financial assistance in the form of incentives, loans,
schemes etc. by the institutions in the financial sector. So the sincere efforts taken
toward women entrepreneurs may not reach the entrepreneurs in rural and backward
areas.

What are Small Entrepreneurs??
• Small businesses are either services or retail operations like grocery stores,
medical stores, tradespeople, bakeries and small manufacturing units. Small
businesses are independently owned organizations that require less capital and less
workforce and less or no machinery.
• These businesses are ideally suited to operate on a small scale to serve a local
community and to provide profits to the company owners.
• Indian government defines small businesses on the basis of the business’s ability
to invest in the plant and machinery.

Classification of Business

Role of SME in India
• Employment Opportunities: After the agriculture sector, small industries provide the largest employment
opportunities.
• Diverse Variety: Small businesses provide a wide variety of consumer and specialized products using simple
technology and local resources.
• Optimum Utilization of Resources: Small business facilitates optimum utilization of resources through locally
available resources and simple technology.
• Encourage Locals: It provides and encourages local people to entrepreneur, and makes the best use of their
handicraft and other artistic skills.
• Less Costly: The cost of production is low, as production is because of low overhead costs, and making use of
inexpensive locally available resources.
• Quick Decisions: It facilitates quick and timely decisions due to the small size of the business.
• Rural Development: Through the provision of employment opportunities, and encouraging locals to use their
skills, regional development is made possible.
• Balanced Development: These business units can be set up anywhere at any location and region, as they are
dependent on locally available resources, simple technology, and labour class people. This facilitates the balanced
development of the country.

Role of SME in Rural Areas
• Encourages people in rural areas for setting up agro-based industries.
• Providing employment opportunities to traditional artisans or workers.
• Helps in the reduction of income inequalities.
• It prevents the inclination and migration of rural populations to urban areas.
• Helps in the industrialization and development of rural areas.

Need for Rural Entrepreneurship
• Employment Generation: Rural Entrepreneurship may be labour intensive and
requires a sizable amount of human resources. Therefore, it has a large potential
for employment generation and can reduce the problem of unemployment in rural
areas.
• Income Generation: By providing employment, rural entrepreneurship has
potential for income generation and thus bridging the gap between the rural and
urban disparities.
• Rural development: Rural entrepreneurship helps in setting industries in rural
areas and thus leads to employment generation and income generation which
directly help in rural development.
• Curbs Rural-Urban migration: Rural development helps in curbing rural-urban
migration by reducing the unequal growth in cities.

Need for Rural Entrepreneurship
• Environment Friendly: Rural industries are more environment friendly thus
leading to the development without damage.
• Builds up Village republics: Development of the rural industries serves as an
effective means to build village republics and thus make them more independent.
• Improved standard of living: Rural entrepreneurship helps in income generation
which helps in prospering the community and thus improving their standard of
living.
• Balanced regional growth: Rural entrepreneurship will direct the concentration
of industries in rural areas which leads to the balanced regional growth

Scope for Rural Entrepreneurship
• Rural area has the capacity for small and medium enterprises and these sectors act as
the economy builders by generating Employment and income for poor and
unemployed people and is contributing more than 52% of the GDP.
• Moreover, there is a rapid expansion in the small and medium industry arena.
Therefore, Repair shops, service centres, PCOs, internet cafés, hiring of agriculture
implements & tractors, computers and other skill training centres have a good scope
in a cluster of villages.
• Entertainment, cable TV, rural tourism and amusement parks (near urban areas) also
are a number of the potential areas for rural entrepreneurs in the commission sector.
• Various development programs are being executed through Panchayati Raj
Institutions, which are engaging contractors for civil /mechanical works. Rural youth
can start this business.

Scope for Rural Entrepreneurship
• Changed consumption pattern has opened up new avenues for trading activities in
rural areas.
• Rural areas are also using a large number of agricultural products like fertilizers,
seeds, pesticides and insecticides etc.

Rural Industrialization and Women Entreprenuership

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