Challenges and Problems for Rural Entrepreneurs in India

Author: Prof. Kavita B. Ubarhande*

Abstract

India is country of Villages about 73% population lives in rural areas.

Majority of villages population is depends upon the agriculture for their live
hood. Therefore there is need to strengthen employment opportunities in
the rural areas by promoting rural entrepreneurship. Rural entrepreneur is
one of the most important inputs in the economic development of a country
and of region within the country.

The present descriptive study is made in the Shirur taluka Of Maharashtra

based on data collected of 50 entrepreneurs. This paper focuses on the
major problems Financial, Marketing of Products, Infrastructure sickness,
electricity, water supply and transportation etc. and challenges like, and
challenges like Financial, Social, Technological and Family.

Keywords- Rural Entrepreneur, Economic development, Challenges.

Introduction:

An Entrepreneur is the one who always searches for change, responds to it

and exploits it as an opportunity. Innovation is the specific tool of
Entrepreneurs, the means by which they exploit changes as an opportunity
for a different business or different service this is view of Drucker on
Entrepreneur. We know that India is a country of villages. About three-fourth
of India's population are living in rural areas out of which 75% of the labor
force is still earning its livelihood from agriculture and its allied activities.
Land being limited is unable to absorb the labour force in agriculture.
Therefore, there is a need to develop rural industries to solve rural
unemployment and rural migration to cities. Growth and development of
rural economy is an essential pre-condition to development of the nation as
a whole. The gap between rural urban disparities should be lessened.

The standard of living of the rural people should be increased.

Entrepreneurship in rural sector provides an answer to the above problems.
Indian rural sector is no longer primitive and isolated. Therefore,
entrepreneurship in the rural and tribal areas looms large to solve the
problems of poverty, unemployment and backwardness of Indian economy.
Rural industrialization is viewed as an effective means of accelerating the
process of rural development. Government of India has been continuously
assigning increasing importance and support for the promotion and growth of
rural entrepreneurship.

Due to liberalization, privatization and globalization, the entrepreneurship is

becoming popular. The government will play the role of the enabler and
facilitator providing infrastructure facilities appropriate to the section, region,
and production line.

Objective of the study:

To analyze the various problems and challenges faced by the rural
entrepreneurs in the country.

Entrepreneurship

The capacity and willingness to develop organize and manage a business

venture along with any of its risks in order to make a profit. E.g. to Start a
new business is an example of entrepreneurship. Peter ducker proposed that
entrepreneurship is not a state of being nor is it characterized by making
plans that are not acted upon. Entrepreneurship begins with action, creation
of new organization. This organization may or may not become self-
sustaining and in fact, may never earn significant revenues. But when
individuals create a new organization, they have entered the
entrepreneurship paradigm.

Rural Entrepreneur
Rural entrepreneurs are those who carry out entrepreneurial activities by
establishing industrial and business units in the rural sector of the economy. In other
words, establishing industrial and business units in the rural areas refers to rural
entrepreneurship. In simple words, rural entrepreneurship implies entrepreneurship
emerging in rural areas. Or, say, rural entrepreneurship implies rural
industrialization. Thus, we can say, entrepreneurship precedes industrialization.

According to Khadi and Village Industries Commission (KVIC)

Village industry or rural industry means any industry located in rural area,
population of which does not exceed 1000 or such other figure which
produces any goods or renders any services with or without use of power and
in which the fixed capital investment per head of an artisan or a worker does
not exceed a thousand Rupees.

According to the Government of India: An industry located in rural area,

village or town with population of 20,000 and below and an investment up to
Rs. 3 corers in plant and machinery, land and building is classified as village
industry.

Types of Rural Industries All the village industries come under the
following broad categories:

AGRO BASED INDUSTRIES : LIKE SUGAR INDUSTRIES , JIGGERY , OIL PROCESSING FROM
OIL SEEDS , PICKLES , FRUIT JUICE, SPICES , DAIRY PRODUCTS ETC .

Forest Based Industries: like wood products, bamboo products, honey,

coir industry, making eating plates from leaves.

Mineral based industry: like stone crushing, cement industries, red oxide
making, wall coating powders etc.

Textile Industry: like spinning, weaving, coloring, bleaching.

Engineering and Services: like agriculture equipments, tractors and pump

sets repairs etc.
Literature Review:

There are many journals and magazine are available for the entrepreneurship
in India for rural area I have selected some journal for the reference.
Srivastava and Syngkon (2008) study makes an in depth analysis of
the development of small scale industrial (SSI) sector in the rural areas of the
states North Eastern Region of India. The study also focuses specifically on
the role and profile of entrepreneurs. The findings reveal that the
manufacturing, assembling, processing, activity is the dominant group
among the various SSIs activities in the North Eastern states in rural and
urban areas. It is observed that in most of the North Eastern states,
concentration and growth of SSI activities is higher in rural areas than in
urban areas. The study also brings to light the rising number of women and
tribal entrepreneurs in the region.
Nicola Mecchari, and Gianluigi Pelloni (2006) presents and analyses the
results emerging from a questionnaire submitted to a sample of 123 rural
entrepreneurs and business in a mountainous area of central Italy. In
particular, they test for six hypotheses concerning the correlation between
different factors, reflecting entrepreneur and business specific
characteristics, and the adoption of instruments of institutional assistance.
Their study also examines and proposes potential polices for fostering
entrepreneurship and the development of the rural region under study.
Barua and Mali (2011), in their study, found that the micro, small and
medium enterprises in Assam had registered an average growth of 20.63%
per annum from 1987-88 to 2006-07. This was accompanied by an average
annual growth of 45.3% in investment and 89.5% in output. However, there
was an element of upward bias in estimates of growth in investment and
output as price rise over the years had significantly inflated their values. The
whole study was based on secondary data. It can be concluded from the
study that entrepreneurial performance indicated by the output is largely
affected by the quantum of investment rather than the level of employment.
Govindappa and Geetha (2011), in their study on Soico-economic
Background and problems of entrepreneurs in Industrial estate, A case study
of Industrial estate in Davangere District of Karnataka studied 30
entrepreneurs selected randomly from manufacturing units and found that
participation of women in entrepreneurial activities was nil, Majority of
entrepreneurs were from nuclear family and were below 40 years of age.
Main motivating factors were family environment, practical experience
gained in the field and 53.3 percent participated in Entrepreneurship
Development Programmed (EDP). Entrepreneurs faced different kinds of
problems like, problem of raw materials, problem of marketing, problem of
power, problem of labour, problem of finance, problem of technical and
management assistance in operating their units.
Laxman and Ambana (2011), in their study on Implementation and
impact of Prime Minister Employment generated programmed (PMEGP)
scheme in Hyderabad Karnataka Region found that the success of the
Government sponsored schemes depends to a great extent on the socio-
economic conditions in which the beneficiaries live and perform their
economic activities. The survey was conducted among the 150 PMEGP
beneficiaries to know about their social like, sex, age, education and the
economic factors like loan, income, repayment, employment generation,
problems they encountered and impact of the bank loan. The scientific
evaluation of PMEGP indicates that the scheme is economically viable. In the
backward districts of the Hyderabad-Karnataka region, the scheme has
yielded positive results. Its performance may be still better in economically
advanced regions. In view of the growing unemployment in the country, such
viable schemes are the need of the time.

Jyoti kumar and Lalhunthara (2012), in their study on socio-economic

background of Micro entrepreneurs in Aizawl district, Mizoram found that
Education, experience, age and family play an important role in shaping the
entrepreneurial ambition of the aspirant. It was found that nearly one-fourth
of entrepreneurs were females. Their study also reveals that entrepreneurs
were engaged in different lines of business activities ranging from tailoring to
food processing, involving complex technologies and different skills sets.

Brief Profile of the Study Area

The Shirur Taluka is located in the Pune district. For the Industrial
development of the Pune District, shirur Taluka is very much important
because of geographic location of the area that is Bhima River is passes
from the shirur taluka and Ranjangaon MIDC (Five Star MIDC) Located in this
taluka. The MIDC in Ranjangoan is a five star industrial area, in which
several manufacturing companies including LG, Whirlpool, Carraro, Fiat,
Bombay Deying, Maccaferri, Beakaert etc.

Challenges faced by Rural Entrepreneurs

There are various challenges faced by the rural entrepreneurs in India
because of family resistance, Social Behavior, Technological changes,
Financial Support and Policy Changes etc. Following are some challenges
faced by the rural entrepreneur.
Family Challenge:
 In rural India most of the people they want secure job they are not
easily ready to take the risk. In the entrepreneurship people think like there
may be high risk and it might be converted in to the losses so that family
member are resist to their children to start a new venture. This is where it
becomes almost impossible to convicts that from business they can generate
profit and more cash.
Social Challenge:
In the todays world people are getting more social we can say that it
might be effect of social media. People are comparing themselves and others
on the basis of their incomes, profession, life partner etc. Hence everyone
wants fast income to fulfill desires. Let us take an example of two graduated
guys one who stars his own business and other one is doing job. The guy
who is doing job he has a flat, car with the help of bank loan but the guy who
started business still have nothing to show off and this is where the
challenge comes.
Technological Challenge:
Technology is changing very fastly day by day so to be updated every
time is little bit difficult for entrepreneurs for the rural area. The basis reason
behind is the trainer are not easily available all the time because of the
limited resources.
Policy Challenges:
Government rules and regulations are changing yearly. Now there are
many changes in the policies than the older days. As our India government
changes the policies and rules are also changes accordingly so, sometimes it
is difficult to accept the changes.
Educational Background:

In Rural areas people are not very much aware about professional
courses of business management so, most of the entrepreneurs starts their
business and then they join some professional courses. The basic knowledge,
Theories, Techniques of management is very important for entrepreneur to
start the new business.

Problems face by rural entrepreneurs

There are various problems faced by the rural entrepreneurs, following are
some problems faced by the entrepreneurs in rural area in India.

1. Financial: a) Paucity of Funds: Unavailability of finance in the rural region

because global recession is the biggest problem which rural entrepreneurs
facing now a days. Small businesses face a different range of problems due
to their inability to enjoy some of the same advantages in the marketplace.
Most of these problems are due to revenue and cash-on hand availability
when the bills come due.

b) Lack Of Infrastructure: In the rural region adequate infrastructure is not

available so the growth of rural entrepreneurs is not healthy.

2. Marketing
a) Competition:
Rural entrepreneurs face severe completion of large sized organizations and
urban entrepreneurs. They incur the high cost of production due to high input
cost. Major problems faced by marketers are the problem of standardization
and competition from large scale units. They face the problem in fixing the
standards and sticking to them. Competition from large scale units also
creates difficulty for the survival of new ventures. New ventures have limited
financial resources and hence cannot afford to spend more on sales
promotion. These units are not having any standard brand name under which
they can sell their products. New ventures have to come up with new
advertisement strategies which the rural people can easily understand. The
literacy rate among the Problems Faced by Rural Entrepreneurs and
Remedies to Solve It rural consumer is very low.

b) Distribution:
The rural entrepreneurs are heavily dependent on middlemen for marketing
of their products who pocket large amount of profit. Storage facilities and
poor mean of transport are other marketing problems in rural areas. In most
of the villages, farmers store the produce in open space, in bags or earthier
vessels etc. So these indigenous methods of storage are not capable of
protecting the produce from dampness, weevils etc. The agricultural goods
are not standardized and graded.
3. Management
Lack of knowledge of I.T
Information technology is not very much aware in the rural area of the
because of the less qualification and unavailability of the recourses.
Procurement of row Material
It encompasses all items that are part of finished products, such as raw
material, components and parts. Direct procurement, which is the focus in
supply chain management, directly affects the production process of
manufacturing firms. Some of the entrepreneurs they are facing the problem
of procurement of row material.
Legal Formalities In rural area entrepreneur are not very much aware
about the legal formalities in initial stages so; they incurred high cost to
complete it.
4. Human Resources Programs
a. Low skill level of workers: Unskilled labor is a segment of the work
force associated with a low skill level or a limited economic value for the
work performed. Unskilled labor is generally characterized by low education
levels and small wages.
b. Negative attitude: The environment in the family, Society and support
system is not conducive to encourage rural people to take up
entrepreneurship as a career. It may be due to lack of awareness and
knowledge of entrepreneurial opportunity.

Data Analysis:
Are you facing any type of problems while doing business?

a) Financial?
b) Marketing?
c) Management?
d) Human Resources Programs?

Sr.
No. Type Responses
Yes No
1 Financial 41 9
2 Marketing 29 21
3 Management 32 18
Human resources
4 Program 30 20
 "Problem faced by rural entrepreneurs"
41
45
40 32
29 30
35
30
25
20
15
10
5
0
Financial Marketing Management
Human resources Program

2. Is there any challenges you are facing to run your organization smoothly? If Yes
Which?
a. Family Challenge.
b. Social challenge.
c. Technology challenge.
d. Financial.
e. Policy challenge.

No Of
Sr. No. Type of Challenge Entrepreneurs
1 Family Challenge. 33
2 Social challenge. 42
3 Technology challenge. 23
4 Financial. 41
5 Policy challenge. 25
 Challenges faced by rural Entrepreneurs
42 41
45 33
40 25
35 23
30
25
20
15
10
5
0

Conclusion:
In this research paper of rural entrepreneurship in India the data of 50
existing entrepreneur is collected from the sample area, on the basis of the
analysis it is found that most of the entrepreneurs are facing the financial
problem like paucity of funds & Lack of Infrastructure in rural region. Near
about 82% of entrepreneurs faced the financial problems. 58% of
entrepreneurs are facing the problem of marketing of their products, In
todays scenario there is cut thought competition in the market , and
because of the long of the distribution channel entrepreneurs are facing the
problem to sale their product at adequate profit margin. 64% and 60%
entrepreneurs are facing problem of management and Human Resources
programs problems respectively. In management problem they are facing
problems like lack of IT Knowledge, Procurement of row Material, Legal
Formalities etc. 60% of entrepreneurs are facing problems of low skilled
worker and negative attitude of Society.
In this research it was found that there are various challenges faced by the
rural entrepreneurs in the study area. There are 66% entrepreneurs are
facing family challenge, 84% are facing Social challenge, 46% are facing
technology problem, 82% are facing Financial and 50% entrepreneur are
facing problem of policies.

References:

Brijesh patel, K. C. (2013). Rural entrepreneurship in Indi. International journal of

Advance research in computer Science and Mangement , 1 (2).

Jebadural, D. (n.d.). An overview of problems of rural entrepreneurs in India.

International Journal of Advanced Research in Management and social Science .
Kalpana, N. (2011). Role of Rural Entrepreneurship in rural development.
International journal referied research journal , 2 (26).

Mohd wahid, A. (n.d.). Rural Entrepreneurship in India Challenges & Problems.

Sexena, S. Problem faced by rural entrepreneurs and remedies to solve it. IOSr
journal of Business and management , 3 (1), 23-29.