Boosting the rural economy with start-up village entrepreneurship

This new wave of educated rural youth is a challenge for policymakers to formulate policy that speaks to the broad masses of the rural population.

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

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

Prahalad highlighted the challenges of rural poverty, which must be addressed by multinational enterprises (MNEs). A book was also published under the same name with innovative and fruitful ideas from the bottom of the pyramid.

Even today, the reach of multinational corporations among the highly heterogeneous rural population remains a distant dream. The horizon of Indian rural market is so vast that penetration of services and products is only possible through indigenous village entrepreneurs. And as a result, the concept and importance of village entrepreneurs are now being taken into consideration by policy makers, with the much-discussed rural economy now coming into the limelight.

India’s rural economy is facing an agrarian crisis due to poverty, unemployment and migration. India’s village economy is unsustainable, which is a big challenge for policy makers, and there are many reasons. Even after 75 years of independence, rural youth are struggling for jobs and a decent standard of living. The lack of jobs creates a migration of the rural population towards the urban cities. However, the government’s education campaign for rural youth has motivated them.

Due to the increasing literacy rate among rural youth, they are looking for holistic employment. Technological progress in the agricultural sector has changed the dimensions of the dependence of rural and marginal workers on agricultural sectors. Rural youth envision their careers in entrepreneurship, services and self-employment. This new wave of educated rural youth is a challenge for policymakers and government to formulate policy that speaks to the broad masses of the rural population. The startup village entrepreneurship program is the gem among all whose programs to solve the agrarian crisis.

The Startup Village Entrepreneurship Program (SVEP) is a program announced in the budget and was approved by the Minister of Rural Development, Government of India on May 6, 2015, as a sub-programme under the DAY- NRLM and Directive was published 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 eradicate rural poverty through an innovative implementation strategy involving four main components, to namely (1) social mobilization and community institution building. ; (2) financial inclusion; (3) promoting livelihoods; (4) convergence and social development.

The SVEP proposes to respond to the three major problems of start-ups. Through the program, rural entrepreneurs will receive the technical support needed to make businesses (existing and newly promoted) profitable by addressing the ecosystem vis-à-vis (i) a missing knowledge ecosystem, (ii ) a missing incubation ecosystem; and (iii) a missing financial ecosystem.

The SVEP program is a four-level structure ranging from the federation at the cluster level to the village organization through the self-help group and finally reaching the beneficiary members. This four-tier structure provides an implementation roadmap for SVEP to block resource centers.

The SVEP is implemented in project mode through Executing Agencies (AIP). The PIAs include the State Rural Livelihood Mission (SRLM), a federation of higher level SHGs and an NGO/NRO with a good track record in promoting rural livelihoods. The current central support model for SVEP projects is 60:40 (Central-State). The ceiling for the administrative costs of the SVEP project is 6% of the total approved budget. The SVEP aims to enable the rural poor to start businesses through the support of Community Resource Persons (CRPs) at the village level. It helps rural entrepreneurs obtain finance to start their businesses from the National Rural Livelihood Mission (NRLM), Self-Help Groups (SHGs), banks and federation at the cluster level. There are a few conditions that entrepreneurs must justify in order to receive the benefits of this program. These conditions are that the contractor must either be a member of the self-help groups working in the blocks of a selected district or a member of their family, preferably a woman.

One of the mid-term reviews conducted by the Quality Council of India in 2019 highlights that 75% of businesses were managed and owned by women. We believe that achieving social inclusion is one of the core ideas of the National Rural Livelihoods Mission Satisfied, as the sampled entrepreneurs in the blocks reported being in the SC, ST and OBC categories, which amounted to 82%.

The number of companies supported under the SVEP from 2018-19 to 2020-2021 is 1,34,475. The scope of block development is flourishing. The start was with just 125 blocks across the country; in 2021-2022 it was 205 blocks. A total of 19 blocks are being implemented in Uttar Pradesh, which held the top spot; the second is Jharkhand, with 18 blocks being implemented. Policymakers should focus on this large segment of the rural population through an innovative income-generating entrepreneurship model. SVEP is poised to transform the lives of the rural poor, and women entrepreneurs have demonstrated their leadership capabilities.

(Prof Narendra Kumar is Chairman of the Center for Policy Studies; Arvind Arahant is Associate Professor at the School of Management & Entrepreneurship, both at JNU, New Delhi)

About Keneth T. Graves

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