Grassroots women entrepreneurs need help

Thillai Rajan A/Sathya Anbajagane/Aarthi Ramachandran | Updated on July 03, 2020 Published on July 03, 2020

A part of the Govt’s ₹20-lakh-crore stimulus must reach these entrepreneurs to help them weather the Covid storm

Entrepreneurial instinct and activity among Indian women at the grassroots is exemplary. The number of women from small towns and villages launching their own micro business ventures to augment family income, even if not as a main bread winner, has noticeably increased in recent years.

An opportunity to work on a major development programme for the grassroots women entrepreneurs since 2015 has given us deep insights into the business ecosystem of these entrepreneurs. Large proportion of the programme participants were in the age group of 31-45 years. An important inference that can be drawn here is that entrepreneurship is pursued by most women during this phase of their life, when the motivation and need to support their family are the highest.

In terms of education, the highest proportion of participants had completed Class X. This indicates that women who have completed higher education are not keen on pursuing entrepreneurship. Policies and intervention programmes for grassroots entrepreneurs should, therefore, be designed, accommodating this age group and their educational background as an imperative for productive outcomes.

Reliable market

In general, access to capital is considered a major constraint for most micro entrepreneurs. But the common notion that lack of access to loans or inability to repay loans as being the key reasons for financial constraints did not hold true for the participants. Poor profit margins and inadequate collateral have been stated as the main reasons behind their financial constraints. High interest rates have been rated only as a moderate constraint by the participants.

These results suggest an important implication for policy-making: Providing access to multiple credit resources is not the solution to their financial constraint. Grassroots entrepreneurs are in need of reliable market access and alternative security mechanisms to collateral. Servicing the entrepreneurs with more and more credit options is like force feeding a child who is unable to consume.


In terms of non-fiscal aspects, competition has been rated as a severe hurdle, though only by a small number of participants. On the other hand, technology followed by marketing has been rated as one of the common constraints faced by a large number of participants. This again is a critical insight. Though the entrepreneurs seem to understand the importance of using technology for their businesses, they lack the wherewithal in adopting and deploying technology.

Micro entrepreneurs need support and hand-holding to leverage technology for their businesses. Governments, NGOs and other developmental organisations should focus on strengthening the technology and marketing capabilities of micro entrepreneurs.

The battle with Covid

The scourge of Covid has sucked the oxygen out of the system, leaving the economy gasping for breath. Already vulnerable, entrepreneurs at the ‘bottom of the pyramid’ have been disproportionately affected. In our sample of micro entrepreneurs in non-farming activities, 72 per cent are engaged in businesses that would not be classified as “essential” in the new scheme of things.

To hear about the fate of businesses that do not fall under the “essential” category is literally gut wrenching. For example, Prema, proprietor of Prema Garments, was well on target to transport her garments to all districts of Tamil Nadu when the lockdown was enforced. With mobility constraints the consignments never reached the showrooms, and are now no longer needed.

Mohanambal from Kanchipuram, who caters to wedding feasts, had only one order in the last three months, not to mention that chithirai and vaikashi are two of the most auspicious months for marriages. Similar is the case of KalaiSelvi, an entrepreneur from the silk weaving community. With no marriages and temple festivals, the looms have fallen silent. She is unhappy to rely on her abusive son to support herself and family.

In an yet another example, Selvi, who runs a millet sweets and savouries business, had to scale down her production by as much as 60 per cent. In general, the prognosis for a majority of the grassroots entrepreneurs is very grim.

Few transformations

While the concept of “pivoting” has become fashionable in the start-up world, at the grassroots level, pivoting is seen as a necessity for survival and is very instinctive. From a “non-essential” product or service, many businesses have transformed themselves to produce essential goods and services.

How else can we explain the transformation of garment manufacturing units to mask-making units overnight by investing in machinery, raw materials and safety protocols?

Similarly, catering units have changed their line of business to packaged spices and health-mix powders. Few more have started to produce need-of-the-hour products such as cleansers and sanitisers. However, for every business that has transformed itself, there are ten that have failed to cross the bridge.

The need of the hour

For many women that run such micro businesses, their enterprise is much more than just an income generator. It is about their social standing, having a voice and identity not only in the society, but even within the family.

It is their avenue for empowerment. Therefore, as business activity came to a halt, it was not only the income that dried up for these grassroots entrepreneurs, but also their social equation that stands altered.

If we conservatively account for one crore self-help groups in India with an enrolment of 15 crore members, the magnitude of the impact can be clearly understood. The ₹20-lakh-crore stimulus has clearly bypassed crores of such micro businesses, many of which operate outside of the formal economy and do not have a collective voice.

It is imperative that the government channels a part of the stimulus to meet the needs of the grassroots entrepreneurs to enable them to sustain their activities. Many of them cannot weather a storm of this intensity on their own. It is equally important that these micro businesses are also sustained, for they are the lubricants of the economy — rarely seen, but essential for the smooth functioning of society.

Rajan is a Professor at IIT Madras and co-founder of YNOS.in. Anbajagane and Ramachandran are Consultant and Project Officer, respectively, at IIT Madras

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Published on July 03, 2020
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