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Essay on Entrepreneurship in Rural Areas

Essay Contents:

  1. Essay on the Introduction to Entrepreneurship in Rural Areas
  2. Essay on the Unemployment Scenario in India
  3. Essay on Shrinking Agricultural Fields
  4. Essay on Agriculture to Agribusiness
  5. Essay on the Need for Entrepreneurship Development
  6. Essay on the Policies for Entrepreneurship Development in Rural Areas
  7. Essay on the Conclusion to Entrepreneurship in Rural Areas

Essay # 1. Introduction to Entrepreneurship in Rural Areas:


From the 1960s onwards, India has had a population growth of around 23% per decade resulting with current population of more than 1.2 billion. Ours is the second country in the world after China to cross this mark. Half of the population in India is under 25 years of age and the percentage of literates to the Indian population is around 76%. This is an immense task ahead to provide meaningful employment to those ever-growing populations.

Also, the national employment pattern has undergone considerable change over the years. The agro-sector has witnessed a slide in employment from 64 to 54%, whereas opportunities in manufacturing and service sectors have gone up from 15 to 18% and 20 to 27%, respectively, which is a clear indication of the employment future of the country.

According to the ‘Global Employment Trends for Youth 2004’ report of the International Labour Organisation (ILO), Geneva, a large number of (42 million) unemployed in India comprises the youth. Days have gone when a higher secondary qualification or a graduate could fetch a job. There are over 99.54 lakh students enroll in higher education in India at present. India produces 36 lakhs graduates every year. The 1400 engineering colleges alone in the country produce 4.5 lakhs graduate annually.

However, to create and provide jobs to such a large population will not be easier either for the government or the private sector. Therefore, the need of the hour is to encourage job creator rather than job seekers through entrepreneurship. Inculcation of entrepreneurial spirit among youth can resolve this enormous problem on the one hand and bring about speedier development of rural areas on the other side.


For a country like India where unemployment is a major problem, entrepre­neurship can prove to be a gainful employment opportunity for our educated youth. Entrepreneurship is a strategy which is creating prospects through train­ing, monitoring and providing other kinds of support system. Entrepreneurship is not inborn but can be developed through appropriate education, skills development and guidance.

Despite the serious need to create opportunities for the unemployed, entrepreneurship is one sector which has not been given the right focus as yet. Even the few institutes imparting entrepreneurship education are more focused on producing managers than entrepreneurs.

Some institutes offer short-term courses of 3 days to 4 weeks duration training and research programmes. But the scale on which entrepreneurial behaviour is needed to be enhanced among youth of present times, such courses fall short of expectations and effectiveness. Awareness generation, entrepreneurial skills inculcation and survival mechanism to cope with ambiguous market fluctuations is the need of the hour for making dent in the burgeoning problem of employment and rural farm distress situations.

Today agriculture in general is not in good health. National commission on farmer report, ‘Jai Kisan—A National Policy for Farmers’, states agriculture needs an all-round boost by providing farmers the necessary credit and marketing back up. Only this can save them from starvation and suicide conditions.


Warning that there was “no time to relax”, the report says if agriculture was neglected, the country could revert back to the times of “ship to mouth” existence, depending on imports to meet food requirements. “If agriculture goes wrong, nothing else will have a chance to go right. If conversely, agriculture goes right, the vision of a hunger and poverty-free India can become a reality, sooner than the time-frame set under the UN Millennium Development Goals”.

Dr. MS Swaminathan, Chairman National Commission on Farmers suggested one of the solutions to the present crisis was the creation of more jobs in the non-farm sector, with a massive rural non-farm livelihood initiative on the pattern of the township and village enterprises of China. He gave a call to take about 20 million people from farm to non-farm sector by 2010 by integrating small farmers agribusiness centres, food parks, etc. into rural non-farm livelihood initiative to provide employment in rural areas.

This article highlights basic issues having bearing on country’s employment scenario, needed interventions and possible outcomes through entrepreneurial efforts.

Essay # 2. Unemployment Scenario in India:


Unemployment is one of the basic problems the world is faced with. Estimates of the total number of people unemployed or under-employed in India vary from 50 to 100 million. Unemployment is the key link in the food security issue in the society these days. Unless a person is employed, he or she may not have the purchasing power to buy enough food for his or her family, though the food supplies may be abundant in the society and the market.

The employment growth rate is lower than the growth of the labour force rate and also, the division between these two has grown over the period. The employment growth rate being less than 1% during the major part of the last decade, accordingly growth of employment decreased from 2.82% in 1972-73 to 1.15% in 1987-88. It was only 1% during the 1996-97 and continuously decreasing.

Jobless growth is joyless growth as termed by Dr. MS Swaminathan. The most worrisome issue is the near jobless growth of many sectors in the economy, arising mainly from the increased capital intensity of many sectors, including the unorganized sectors. Further, the share of organized sector in the total employment is less than 10% and has decreased over time, pointing out the imperatives of employment generation in the informal sector. Our education system also has not resulted into employable human resources. According to an estimate given by NSSO, around 118 million youths are unemployed who are in the age group of 15-20 years. Out of these, more than 60% are educated.

Many economists believe that the way to solve the unemployment problem in general, is through higher economic growth, but this is not universally true as growth can be ‘jobless’ and being propelled by the use of capital- intensive technologies that enhance productivity growth. Industrialisation, mechanization and more use of innovative technologies requires less people to do the same job. For example, the robotics has changed the way car frames were earlier welded by workers.


Today automatic robots are performing the same job much faster and with high level of precisive productivity. The direct labour deployment in hi-tech industry is decreasing. Mechanised conveyer system has reduced the need for labour. The effect of mechanisation on employment is more visible in agriculture sector, be it ploughing, sowing, weeding, irrigation, harvesting, transportation, every activity is performed mechanically drastically reducing employment potential in this sectors which directly or indirectly support two-thirds population of our country.

In developing countries like ours, only labour intensive techniques will absorb more workers and the variety of skills that the labour force possesses can be utilized. In our case, a large proportion of unemployed are young and many due to poverty, have dropped out of schools and are doing petty farm jobs instead of having a proper long-term employment.

Many do not have any ’employable’ skills. But there are also thousands of educated youth who are finding it difficult to find jobs because they lack job oriented skills. The skills like critical thinking, effective team playing, and multi-tasking, multilingual and positive customer orientation are demanded by industries and other multinationals rather than just rote learning and rigid attitude.

Essay # 3. Shrinking Agricultural Fields:


Population growth, rapid urbanisation and industrialisation have resulted in decline in average size of holding and per capita land availability. If we see the population figures, it was 361 m in 1950-51, 439 m in 1960-61, 548 m in 1970-71, 683 m in 1980-81, 846 m in 1990-91, 1000 m in 1999-2000 and by 2020 India’s population is like to be about 1300 m.

Comparing that to food grain production as depicted in Table 6.1, we can conclude that it will be difficult in the years to come to properly feed out total population. The rate of food grain production is not increasing the way we are witnessing growth in nation’s population.

The number of small holders, encompassing small (1 to 1.99 ha), marginal (0.5 to 0.99 ha) and sub-marginal (less than 0.5 ha) increased from 49.1 m holders in 1971 to 83.4 m farm holders in 1991. The average size of land holding in India which was 2.28 ha in 1970-71 reduced to 1.55 ha in 1990-91 due to steady increase in number of families and almost no expansion of agriculture land.


It has policy implications towards farm efficiency as an inverse relationship of productivity and farm size group has been found. It may also be noticed that land-man ratio has declined from 0.400 ha in 1971 to 0.258 ha in 1991 for all farm size groups and therefore, the pressure on land to attain household food security is further intensifying (Table 6.2).

There is continuous fragmentation of land due to ownership multiplication and division of joint families into smaller nuclear families; resulting in low per capita availability of land. The land to man ratio in our country is becoming very narrow. The employment situation in rural areas is rather more alarming in view of the shrinking agricultural land area.

Due to low land-man ratio, more and more farmers and their children are finding themselves out of work. Increasing influence of education has also created a higher need for jobs amongst the rural masses. After finishing their education, rural youth also line up in front of employment exchange for seeking jobs.

Although they have an option of starting their own enterprise but this option is usually ignored by them and they join the long queue of job seekers in front of offices. Sometimes they have to accept those jobs also which are not in accordance with their qualifications and experience. Thus unemployment and underemployment both are in existence.

A large number of studies have clearly brought to light that the rural youth are serious victims of frustration, cynicism, goallessness, normlessness and misanthropy largely due to lack of employment opportunities. Their energy is not channelised in a positive direction. The situation has led to alarming increase in the rate of migration from rural areas to cities.


If it continues uncontained, only a few years from now, it will not only create chaos in cities and towns, but it would also destroy the socio-cultural-fabric of rural India. Hence, even if agricultural productivity of India improves, a lot needs to be done in other aspects also for attaining economic prosperity and proper development of the rural India.

Many years ago, Mahatma Gandhi wrote in “Harizan” issue dated 29th August, 1936, “If the village perishes, India will perish too. India will be no more India. Her own mission in the world will get lost.” He gave much emphasis on village industries and visualised village as a self-contained, independent and fully functional unit of Indian society.

Fulfillment of his vision and much of the problems which have arisen because of lack of gainful employment opportunities in rural areas can be tackled effectively if village industries are developed and agriculture moves from being just a way of life, i.e., culture to become a dynamic entity, i.e., agribusiness. Growth of village industries based on agriculture in rural areas has also been given priority by the government and policy makers in latest plans.

Essay # 4. Agriculture to Agribusiness:

Well-developed inter-linkages between agriculture and rural industry will be an effective mechanism of promoting rural transformation. While on one hand, farmers get just few rupees in the exchange of their produce; it is multinationals who are grabbing the major chunk of profits after selling it to the ultimate users.

Whether it is potatoes, tomatoes and other perishable commodities, farmers are forced to sell their produce for very less amount while the ultimate consumer pays huge amount in case it is processed and packaged after grading the same produce. The cases of farmers of Ratnagiri district in Maharashtra and potato farmers of Farukhabad district in UP, illustrate this very situation where they suffered huge post-harvest losses and were forced to sell their produce at a throw away price.


This is not a single case but true for all the perishable commodities which are produced in plenty during crop season but due to non­-availability of storage and processing facilities locally, producers are not getting their due share. The big industrial houses having processing facilities and middlemen are making unbelievable profits.

Take the case of potato chips. A farmer gets only Re 1 to 1.50 for one kg potato during potato harvest season or sometimes even less than this but beautifully packed potato chips are sold as high as Rs. 300 per kg to the ultimate consumer. Similarly there are some regions where tomato production is very high and local demand is not enough to consume the produce and the farmers do not get remunerative price in absence of processing facility at the doorstep. So the same tomato purchased from the farmers at the rate of 1-2 rupees per kg is sold at the rate of 70-80 rupees per kg after making tomato ketchup. Here both the producer (farmer) and the consumer are at a loss and middlemen are making high profits.

Hence, there is a great need to develop rural industries in villages itself based on agricultural products so as to reduce post-harvest losses and provide good returns to the farmers. It can be done and is highly in demand because of changing food consumption pattern and sufficient demand for value added products. The need is to prepare our people to go for such kind of economic activity.

Essay # 5. Need for Entrepreneurship Development:

One of the major tasks before the developing countries is the building of human assets which is as important a pre-requisite of economic prosperity, as is the growth of physical and financial assets. In fact human resources can bring about transformations if they are able and efficient. Several empirical studies have shown that the- entrepreneurs as the human capital have made a large contribution to economic development than non-human capital.

Increase in population, which is considered a liability can also contribute positively towards overall national development if entrepreneurial qualities are inculcated among the masses. An attempt to develop entrepreneurial activity among persons may create a situation where people become capable of optimal utilization of the limited and scattered resources.


In fact there are four basic requirements for development to take place. These are financial, technical and infrastructural support along with matching human resource.

Somehow our policy and planning emphasized only on first three and ignored the fourth one, i.e., human resource which is the most important. If a person is motivated, has a high need for achievement; he or she can mobilise other factors of development for the environment, but once this basic factor is missing all other facilities be it financial or technical, it will go waste or blatantly un-utilised or under-utilised.

Where Does this Lead?

Then what is the solution or the needed way out? We cannot always look up to the Government, the trade or the industry for employment. On the other hand, land availability cannot be increased; rather it is going to decline due to population growth and rapid urbanisation and industrialisation.

Fortunately, now there are several opportunities in agriculture where the farmers can generate more income and employment per unit of time and land. This is possible through diversification and commercialization of agriculture one hand and exploitation of entrepreneurial opportunities in rural non-farm sector.

Here is where the entrepreneurs come to fill this vacuum. These are people who see potential gaps and perform value added jobs. These are people with a vision and see an opportunity for value addition and thereby getting that extra money, even by taking the risk associated with the job. Economic development will result in development of rural regions.


The entrepreneurship concept is as old as the existence of human being. Even in Greek Mythology, the image of Hermes fits into the description of entrepreneur. The mythological story describes Hermes to have discovered a tortoise, from which he made an immense fortune by constructing its shell into a musical instrument. This was a simple technological invention, an indicative of the entrepreneurial behaviour.

The entrepreneur with his vision finds out new opportunities and thereby creates wealth for himself and for others in the society. Many of today’s industrial houses employing thousands of people were once started by entrepreneurs, who had the vision and the courage to take risks associated with the opportunities. Role models emerging amongst us like Dhirubhai Ambani, Suichiro Honda, Narayanamurthy of Infosys are cases of tremendous inspiration. Once started off as small ventures have grown big today providing employment to a large number of people.

According to one definition, an entrepreneur is someone who makes something commercial happens, or one who makes something sold which benefits others and which produces a profit of sufficient magnitude to justify the risks inherent in providing funding for the entrepreneur.

According to another version, entrepreneurship is to reform or revolutionize the pattern of production by exploring an invention, or more generally an untried technological possibility for producing a new commodity or producing an old one in a new way by opening up new source of supply or materials or a new outlet for products. Entrepreneurship as defined, essentially consists in doing things that are not generally done in the ordinary course of business routine.

Entrepreneurs directly contribute to the nation’s economy. It is known from the history, that the Greek civilization grew from 900 BC to 100 BC, due to the entrepreneurs, and in Spain the growth took place from 1692 to 1710 due to the same spirit. England also witnessed the growth in the triggering of the industrial revolution around 1770 AD. In case of United States, the onset of World War I, triggered corporate growth mainly by entrepreneurs. During the II World war, again the American industry witnessed the growth of companies, mainly due to new entrepreneurs.

Japan is known for its business giants, like Sony, Honda, Yamaha, Mitsubishi, etc. But it is also worth noting Japan’s small industry strengths, which is the first abode of an entrepreneur.


Imperative Path:

There is a need to develop entrepreneurship among the farmers in particular and rural masses in general. To convert a farm into an enterprise or business, the identity of the person managing it must change from a farmer to that of farm business operator or an entrepreneur.

Any advancement in technology can never bring fruitful achievement until farmers become entrepreneurs. Agricultural advancement inspires farmers to be entrepreneurial, away from their conventional and hereditary vocational system. There is a great need to make our farmers entrepreneurial and this is an achievable proposition since the characteristics of entrepreneurs are not inherited but can be developed through systematic motivational training.

Entrepreneurship among farmers may be developed through systematic awareness spread programmes and training interventions. Awareness about available technologies, opportunities, resource support system and about market potential has to be systematically spread among the rural masses especially, the farming community. Then comes the second step of motivation development. Prior to it, an environment of awareness and need has to be prepared. This awareness and motivation has to be developed not only in the farmers but also in the field level extension workers.

Once they become aware about entrepreneurship and convinced about its need in agriculture, they will be able to provide some thrust towards commercializing agriculture, as they are the one who are implementing government sponsored schemes. Entrepreneurship development programme (EDP) for agriculture has to go via the existing system itself. EDP aims to develop entrepreneurship through motivation development, providing support services and sustaining the efforts for the first time entrepreneurs.

Krishi Vigyan Kendras are nodal institutions, which are now making their presence felt in every district. Entrepreneurship development programme should be included in the mandate of KVKs. The staff of KVKs should be trained in entrepreneurship development in agriculture so that it reaches the ultimate users, i.e., the fanners who can then avail of the opportunities already existing in the system.

Experts feel that the spirit of entrepreneurship should be inculcated in students at the school level since by the time they undertake their graduation and post-graduation education they become too job centric. The Central Board of Secondary Education (CBSE) has recently introduced a two-year course on entrepreneurship at the senior school level as an elective subject.

The curriculum will focus on developing entrepreneurial skills, values, motivation, and understanding of patents, copyrights and trademarks and would provide inputs on managerial skills. Apart from the government sector, the B-schools and private sector should contribute to initiate more programmes in entrepreneurship, especially in rural areas.

Some State Agricultural Universities have already included entrepreneurship development in their course curriculum but it needs to be made broad based. Vocational training can be given to school graduates and drop outs at various urban and rural centres using IT and this would prepare them better for getting jobs in the future. Training in manufacturing activities reserved for the small-scale sector should also be included and emphasized to enable the young to be self-employed. Young women should be given different types of training for income generation from home also.

Scientists should give emphasis on development of technologies which can be adopted by farmers rather than going on increasing the body of knowledge of science. It is not to deny the research efforts in basic sciences but applied aspects are more pragmatic and practical in present scenario. They must give priority to applied science in preference to basic science.

Presently, outcome of majority of researchers is in the form of body of knowledge. If the consumer is willing to take up the knowledge, the application part is lacking. Scientists should develop adaptable technological packages. For example, lot of research has been done in the field of mushroom, floriculture or vermin-culture but hardly any package in the form of project proposal is available for farmers.

This package should be adaptable on farmer’s fields. If a farmer is having a piece of land and money to invest even then there is hardly any package available to guide him to set up a viable enterprise. Farmers are developing interest in new technologies but these are not available in package form which can be adopted.

Many of the states like IJP, MP, Bihar, Gujarat, Maharashtra, etc. have centers for entrepreneurship development or institutes of entrepreneurship development at state level. They are already providing entrepreneurship development training in rural non-farm sector for self-employment. They need to widen their area and effectively carry out entrepreneurship development activities in agriculture which is almost virgin and most potential area for entrepreneurship development in our country.

Micro-Enterprises to be Promoted:

Micro-enterprises in rural areas based on agriculture and related non-farm activities can generate employment for rural youth in the villages itself; thus reducing the pulling factors for migration to nearby towns. Micro-enterprises can serve four major objectives of poverty reduction; employment generation, empowerment and enterprise development as an end in itself.

Regardless of the stage of economic development among the Asia-Pacific countries, small and medium enterprises (SMEs) are generally considered as major sources of employment generation. They dominate the non-agricultural sector not only in the number of enterprises but also in the numbers employed. Promotion of such enterprises, therefore, is generally regarded as part of an employment-intensive industrialization strategy. They need to be promoted in agriculture sector as well.

Small and medium-sized enterprises are contributing to employment growth at a higher rate than larger firms. In the EU, economies about 99.9% of the enterprises are SMEs of which 93% are micro-enterprises. The private sector and in particular SMEs form the backbone of a market economy and for the transition economies in the long-term might provide most of the employment (as is the case in the EU countries). The World Bank sector policy paper shows that their labour intensity is 4-10 times higher for small enterprises. Benefits of SMEs are well evident now; the only need is to apply it to agribusiness development.

Micro-Credit and Self-Help Group:

Rural areas are characterized by the poor resource base and lack of capital and investment. Micro-credit support would stop this resource crunch and strengthen the development of micro-enterprises both the farm-based ones and non-farm-based enterprises. Micro-credit, in the sense of small loans to the poor, has its roots in the ancient India. But our neighbour Bangladesh’s Grameen Bank has well established that micro-credit is the way out for rural enterprises to take shape and flourish.

Group action at fanner’s level by forming self-help groups in rural areas will enable farmers to overcome the common problems experienced by all in terms of marketing and delivery of services. The imperative issues facing micro-enterprises sustenance and smooth functioning can be addressed to a large extent by promoting self-help groups in rural areas.

It provides the farmers greater bargaining power at micro-and macro-levels of our system. Their interests are kept into accounts at policy levels. The SHGs have excellent opportunities to work together to initiate small business or extend various essential services.

There is an immediate need to identify new opportunities, which should be based on the demand for the output both in local and outside markets. This calls for a network of SHGs, who can share information among themselves. They can also set up a common information service centre to learn about the demand- supply situations for their produce and modify their plans accordingly to optimize profits. Also there is need to train the members of SHGs regularly. The training should emphasize on managerial aspects of the business, in addition to technical skills.

SHGs can also initiate several development activities such as improvement in hygiene, sanitation, public utilities, kindergarten, primary school, adult education, child health care and immunization, family planning, safe drinking water and management of local bodies and public institutions. Indeed, these indirect benefits highly empower the local people to monitor public services and utilities provided by the government.

With the local people demanding punctual services, staff working in the Panchayat institutions will have to be accountable by assuming their responsibilities. The enlightened community can participate in Gram Sabha meetings and pressurize the Gram Panchayat to improve their services. This will ensure transparency in public affairs. This indeed is the sustainable development managed by the people themselves.

Essay # 6. Enabling Policies for Entrepreneurship Development in Rural Areas:

Facilitating the flow of information on jobs and markets for products, e.g. through publications and through the establishment of NGOs and other organizations that can provide such services. Local economic development programmes need to be inclusive, and ensure that the urban poor benefit from them. Then equally important is the issue of providing practical job training.

The ability of the poor to benefit from growth requires good basic education and can be enhanced through job training programmes. Cities can organize job training programmes and workshops in collaboration with the private sector and central government to enhance the skills of the labour force.

Facilitating childcare to enable women to work, governments can initiate simple and cost-effective programmes with the help of NGOs and community- based organizations (CBOs). These child-care programmes can be supported with modest subsidies. Cities must ensure basic hygiene and safety through advisory services and minimal regulations.

Community day-care centres started in Latin America are an example for such programmes, supporting the sectors that have higher employment generation capacity. For example, the construction sector (including housing and infrastructure) accounts for between 40 and 70% of gross fixed capital formation in developing countries. It also tends to be labour intensive. Therefore, both national and city level policies should be designed to eliminate factors that may impede development of the construction sector.

Lack of financing mechanisms for both developers and homebuyers and undeveloped land markets can easily impede development of construction activity. Labour-intensive construction methods, like self-help housing, can also be supported. Government support of formal housing construction programmes, as well as self-help housing (which is more labour intensive), would boost employment and investment.

Cities can also take a role in the creation of short-term employment, e.g. through public works programmes. Such programmes typically address urban infrastructure deficiencies through small works investments. Although the jobs created are only short-term, such programmes provide temporary supplements to income and promote small-scale entrepreneurs.

Essay # 7. Conclusion to Entrepreneurship in Rural Areas:

Way from agriculture to agribusiness and rural entrepreneurship development will stop migration to cities. Increasing population in cities can also be stopped and rural people will get employment in rural areas itself. Hence, this will help in maintaining villages as dynamic entities while reducing the chaotic conditions in cities and put a stop to ever increasing boundaries of townships.

This will also help in shifting the economic power to rural areas and will be really a step towards decentralization of power. Rural manpower will be utilised by rural industries. Rural income can be increased which will pave the way for real development to occur in rural areas. Exploitation of farmers by traders and middlemen can thus be avoided. Agro enterprise can help in achieving a balanced growth and development which will be eco-friendly. Misuse and over-exploitation of natural resources will be minimized. Transportation costs as well as post- harvest losses of perishable commodities can be reduced if agro-industries are in rural areas.

Nowadays, most of the processing of agricultural products is being done in cities which means farmers have to bear the cost of transportation. This is another thing which makes farmers frustrated. If agro-industries are developed in villages, a cycle can be developed whereby “agricultural products” can be utilised by these industries and also some enterprises can produce products which can be utilised in farming.

Enterprises in rural areas will improve their infrastructure and will have a boosting effect on other aspects like transports, roads, availability of products, economy, etc. Thus, it will result in overall development of these areas. Employment opportunities in rural areas will be able to utilize the energies of rural youth and thereby lessen the social evils and mischief in the villages.

Hence, it will pave the way for developing a healthy society in rural areas. Thus, micro- enterprise promotion by providing training inputs to farmers, infrastructural support and micro-credit availability will make a dent in the vicious cycle of poverty, unemployment and scarcity in rural areas. It will help in fostering rural development and will help the majority of our population to have secure livelihood.