Rural entrepreneurship encompasses the complete range of farm and non-farm activities, which aid in triggering a virtuous cycle of employment creation, income diversification, migration-avoidance and facilitation of socially inclusive development.

A robust rural entrepreneurship model is the most sustainable and scalable means of formulating a resilient rural development strategy for India.

Capitalising on the strengths and efficiencies of the rural masses, particularly of women and youth, is undoubtedly the key to achieving this.

The story so far

Lack of adequate and relevant skills and technical knowhow, inadequate enabling infrastructure, poor market linkages, unavailability of institutional finance and lack of facilitating organisational/ institutional structures are a few challenges that have inhibited the true potential of budding entrepreneurs to set up successful rural enterprises.

However, some pioneering examples have already been set by various organisations in augmenting rural entrepreneurship in India.

The co-operative dairy model is one successful example wherein the system has enabled more than 15 million farmers to become entrepreneurs in their own right.

Another instance is that of Shri Mahila Griha Udyog Lijjat Papad, which employs more than 40,000 women today.

Some of the other successful initiatives include National Innovation Foundation’s Business Development and Micro Venture Innovation Fund, Honeybee Network’s Sristi and GIAN (Grassroot Innovation Augmentation Network), Nabard’s REDP, Villgro programmes, MANAGE’S Agriclinic and Agribusiness centres and various programmes of BASIX.

A number of Indian corporates, including ITC, HUL and Nestle, have sponsored/ facilitated initiatives that have interwoven elements of rural entrepreneurship into their core business, thus lending substantial self-sustaining capability to these programmes.

Four focus sectors

The four farm and non-farm sectors — dairy farming, farm mechanisation, food processing and handicrafts — have tremendous potential across geographies in India to maximise the benefits of rural entrepreneurship.

The government, corporate, NGO and multilaterals space needs to focus on these key sectors in a concerted manner.

The dairy sector continues to be one of the major livelihood sources for rural India and a significant contributor to the country’s agricultural economy. Over 70 million Indian rural households are dependent on dairy farming for a livelihood.

Farm mechanisation is another sector that has a huge growth potential and the ability to generate significant farm and non farm employment opportunities through various modes.

A case in point is the custom hiring model that enables a large number of farmers to afford farm equipment at nominal prices and for the entrepreneur it is an unremitting source of income.

Food processing, due to its diverse nature, plays a predominant role in the rural economy. The majority of raw material in the industry is supplied by small-scale growers from the rural areas directly or indirectly through various channels.

Small scale food processing initiatives have been taken up in rural areas through institutional structures of producer companies and co-operatives. These group-based ventures are, in general, successful due to pooling of resources and economies of scale.

Boost handicrafts sector

India is one of the major suppliers of handicrafts to the global market. The handicrafts industry employs millions of artisans, a major section being women and people from the weaker sections of society.

The sector also has a low capital investment requirement. Organisations such as Khamir, Lepakshi and Dastkar have been supporting craftsmen in terms of marketing, product development, design and skills training.

E-commerce platforms such as Craftsvilla, Ecraftindia and Chokhi have brought the Indian handicrafts to the mainstream markets and connected these artisans to urban India.

The recent launch of a USTAAD programme by the NDA government reiterates the importance of handicrafts and such artisans in India.

The following are critical elements for a robust rural entrepreneurship approach:

Capacity building: Entrepreneurship is not a new concept for the rural economy. Time and again the creativity and innovativeness of the rural populace has been demonstrated at various forums.

What is lacking is a vision and action agenda for large-scale commercialisation of these innovations. A number of skill development initiatives, especially in the rural domain, need to migrate from a pure technical skill-building approach to a multi- disciplinary approach as well as a tangible, result-orientation approach.

Financial linkages: The Central and State governments have been extending help to rural entrepreneurs and their enterprises, but with limited outreach and awareness of such programmes. There is a strong need for impact investing as well as developing professionally managed funds with substantial resources to finance innovative and viable ideas.

Target youth and women: As many successful socially inclusive development initiatives in the past have shown, participation of women creates a more sustainable and scalable model for large-scale development initiatives.

Special awareness drives and capacity building programs should be targeted at women and youth, who will be the drivers of the growth story of the rural economy.

Private partnership: The private sector can play a crucial role in fostering rural entrepreneurship in the country. Many companies in India require intermediate goods for final manufacturing.

More institutionalised incorporation of rural enterprise channels to supply goods to corporate players needs to be incorporated.

Given the new CSR norms, what better way of enabling socially inclusive development can we think of than deploying these CSR resources for rural entrepreneurship?

The writer is Managing Director & CEO, YES BANK