Boosting rural economy with start-up village entrepreneurship

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Boosting rural economy with start-up village entrepreneurship

Sunday, 11 September 2022 | Arvind Arahant and Narendra Kumar

This new wave of educated rural youth is a challenge for the policymakers to formulate a policy that caters to the large masses of the rural population

Rural poverty and inequality are significant roadblocks to building an egalitarian society. Even after 75 years of Independence, it is a significant challenge because a large section of the rural population depends on agriculture.

Looking for a way to economically empower rural India, a well-known management consultant, CK Prahalad, coined the word “future at the bottom of the pyramid” (BOP), eradicating poverty through profits.

Prahalad highlighted the challenges of rural poverty, which need to be addressed by multinational companies (MNCs). A book was also published under the same name with some innovative, fruitful ideas from the bottom of the pyramid.

Even today, MNCs’ reach to the remotely heterogenous rural population remains a distant dream. The horizon of the Indian rural market is so vast that the penetration of services and products is only possible through indigenous village entrepreneurs. And hence the concept and importance of village entrepreneurs is now taken into account by policymakers with the much-discussed rural economy now getting the limelight.

The rural economy of India has been facing an agrarian crisis because of poverty, unemployment and migration. The village economy of India is not sustainable, which is a big challenge for policymakers, and there are many reasons. Even after 75 years of Independence, the rural youth strive for jobs and a decent standard of life. The lack of employment creates migration of the rural population to urban cities. However, the educational campaign by the Government for the rural youth has motivated them.

Due to the increase in literacy rate among the rural youth, they look for holistic employment. The technological advancement in the agricultural sector has changed the dimensions of dependency of rural and marginal workers on agriculture sectors. Rural youths are looking after their career in entrepreneurship, services and self-employment. This new wave of educated rural youth is a challenge for the policymakers and the Government to formulate a policy that caters to the large masses of the rural population. The startup village entrepreneurship programme is the gem among all whose programmes to resolve the agrarian crisis.

Start-up Village Entrepreneurship Programme (SVEP) is a budget announced scheme and was approved by the Minister of Rural Development, Government of India, on May 6, 2015, as a sub-scheme under the DAY-NRLM and the guideline was issued on June 15 2015.

Deendayal antodaya Yojana (DAY-NRLM) has been centrally sponsored and implemented since May 2013. The main objective of the mission is to eliminate rural poverty through an innovative implementation strategy involving four core components viz., (1) social mobilisation and community institution building; (2) financial inclusion; (3) livelihood promotions; (4) convergence and social development.

The SVEP proposes to address the three major problems of start-ups. Through the programme, the rural entrepreneurs will get the technical support such that the enterprises (both existing and newly promoted) would be profitable through addressing ecosystem vis., (i) a missing knowledge ecosystem, (ii) a missing incubation ecosystem; and (iii) a missing financial ecosystem.

The SVEP programme is a four-tier structure from cluster level federation to village organisation to self-help group and finally reach beneficiary members. This four-tier structure gives an implementation roadmap for SVEP to block resource centres.

The SVEP is implemented in a project mode through Implementing Agencies (PIAs). The PIAs include the State Rural Livelihood Mission (SRLM), higher-level SHG federation and NGO/NRO with a good track record of promoting rural livelihood. The current pattern of Central assistance for SVEP projects is 60:40 (Centre-State). The ceiling on the administrative cost of the SVEP project is 6 per cent of the total approved budget. The SVEP intends to enable the rural poor to set up business enterprises through village-level Community Resource Persons (CRPs) support. It helps the rural entrepreneurs to get finance for starting their enterprises from the National Rural Livelihood Mission (NRLM), Self Help Groups (SHGs), banks and cluster level federation. There are a few conditions which entrepreneurs need to justify to get the benefits from this programme. These conditions are that the entrepreneur should be either a member of SHGs working in the blocks of a selected district or a member of their family, preferably a female member.

One of the mid-term reviews conducted by the Quality Council of India in 2019 highlights that 75 per cent of enterprises were managed and owned by women. We find the fulfilment of social inclusion one of the core ideas of the national rural livelihood mission satisfied because the sampled entrepreneurs across the blocks reported being from SC, ST, and OBC categories, which stood at 82 per cent. 

The number of enterprises supported under the SVEP from 2018-19 to 2020-2021 is 1,34,475. The breadth of block development is blossoming. The inception was with only 125 blocks across the country; during 2021-22, it stood at 205 blocks. A total of 19 blocks are under implementation in Uttar Pradesh which stood first; the second is Jharkhand, with 18 blocks under implementation. Policymakers should focus on this large chunk of the rural population through an income-generating innovative entrepreneurship model. The SVEP is all set to transform the lives of the rural poor, and women entrepreneurs have shown their capabilities to lead.


(Prof Narendra Kumar is chairperson at Center for Political studies; Arvind Arahant is an Associate Professor at School of Management & Entrepreneurship, both at JNU, New Delhi)

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