While nine out of 10 rural businesses in India are first-generation enterprises, an increasing number of young men and women in rural India want to own businesses, finds a survey.
Seema Yadav, 22, a rickshaw driver who lost everything to Covid, is now getting back on her feet, after she received a loan of Rs 1 lakh. She wants to be an inspiration for other rural women entrepreneurs like her. What do the many young, first generation rural business owners like her aspire? What are their opportunities and obstacles?
To understand certain important aspects of rural businesses in India, the Development Intelligence Unit (DIU) conducted a pan-national survey covering 2,041 rural businesses, with design inputs from Development Alternatives. It also covered a total of 1,906 adolescents and young adults aged between 16 and 29 years, exploring their entrepreneurial aspirations.
Also Read | Losing livelihood, landless families bear the lockdown brunt
The survey report titled Insights into Rural Entrepreneurship was released at JobsWeMake 2022, an event jointly hosted by Development Alternatives and “la Caixa” Foundation on 24 November, 2022.
The survey sheds light on several crucial aspects of rural businesses in India – from how many households are currently engaged in running businesses to how they raise capital, who are employed in these enterprises and the attitudes of the young towards entrepreneurship.
The survey’s key findings are:
In 2021, India’s rural population crossed 900 million, which is more than the combined population of Europe. India is projected to remain predominantly rural till 2050. Moreover, the rural economy constitutes 46% of the national income and employs 70% of the workforce.
Also Read | For women in Ayodhya, becoming micro-entrepreneurs is not just about money
The last two decades have seen profound changes in India’s rural economy. As per the 1991 Census, 48.4% of the main workers in rural India were cultivators and 31.6% were agricultural labourers. By 2011, the census estimated that there are 40.3% cultivators and 32.9% agricultural labourers.
This not only points to a significant shift in the agrarian base of our country but also hints at the fact that the shift has primarily gone to the secondary and tertiary sectors of the rural economy, and not to wage labour.
Data shows that about two-thirds of rural income is now being generated in non-agricultural activities, and more than half of the value added in the manufacturing sector is being contributed by rural areas. Unfortunately, this has not yielded any significant employment gains.
After the COVID-19 pandemic, the return of migrants to cities within a short time and a much lesser quantum of migration in the second wave showed limits of rural and transition habitats to provide productive engagement. In a scenario dominated by informal and fragile jobs, the poverty slide asks of the New Rural to become a productive habitat of human development, and social and economic mobility.
Today, the rural, peri-rural, and circular migrants are younger than ever, they are agile, aspirational, with higher school years, and with mobile and digital access. Rural areas today typify a highly diversified household economy that includes agriculture and allied sectors, and is heavily connected with the urban/migration economy too.
But there is growing unemployment, and opportunities have not grown in comparison. Government jobs have remained stagnant while the competition has soared, and the private sector has not been able to create sufficient job opportunities too. While entrepreneurship promotion has grown over the years, this again is limited to urban technology start-ups while a large section of people is ignored in this process.
Entrepreneurship promotion in rural India tends to follow more of a ‘self-employment’ promotion with a major focus on Own Account Enterprises. The approaches towards entrepreneurship are top-down that do not let the ecosystem emerge.
In addition, the definitions used by the Ministry of Micro, Small and Medium Enterprises are too broad (and based on investment thresholds) and do not aptly capture the nano and mini businesses, making them visibly invisible.
Also Read | How Manipur’s rural women are weaving wonders from Kauna weed
In this line of thought, there are some important questions.
Is the ecosystem to support job creation and promote entrepreneurship being built? What are the aspirations of the people, especially adolescents and young adults?
Are the entrepreneurs pursuing entrepreneurship only in subsistence/survival mode, or are they also creating more jobs?
If we need to move towards job creation, what are the factors in the ecosystem that need to be nudged/connected/unlocked?
Also Read | COVID-19 assistance helps villagers find a footing
The survey addresses these questions. As the results indicate, the rural youth are more inclined to owning businesses now, and they need a supportive ecosystem, so that the likes of Seema Yadav can follow their dreams.
The lead image shows a woman and a girl selling eatables and vegetables on a village roadside, who are part of the rural economy (Photo by Rahul Raman)
Sandeep Ghosh is the Director of Development Intelligence Unit.
