MSME promotion is key to improving India’s rural income: Here is why

In this context, it is imperative to take up rural industrialisation in its various forms and ways on a mission mode. The mantra has to be to promote rural MSMEs through responsible use of natural resources of the area while ensuring that the local people benefit from the intervention. The local industry related to agri-allied/non-agri sectors, services and handicrafts unique to the region must be actively taken up and promoted to its fullest. In a country which is land-starved like us, innovative industry options which have the potential to create gainful employment at scale and but are not overly land-hungry will have to be explored and/or developed. The government with its motto of ‘Sabka Saath Sabka Vikas Sabka Vishwas’ needs to act as a catalyst to spur the new revolution of rural industrialisation.

Some of the key initiatives which can be taken to facilitate this process are:

A coordinated approach by all the government and private sector entities at centre as well as state to promote local produce like processed dairy/other food products, handicrafts, coir, footwear, khadi, hosiery and pottery in procurement and promotional events. A focused campaign to bring such MSMEs on various e-commerce platforms will increase market access substantially.

Access to credit is one of the biggest challenges for MSMEs and more so for rural enterprises. Lending through commercial banks is low primarily because of inability to provide the required collateral. Therefore, alternate modes of funding like NBFCs, cooperative banks, SHGs and VC/PE funds need to be encouraged. The government may setup a special fund of funds for rural enterprises to kick start this process.

MSMEs in services sector in rural areas can be supported by way of skilling in traits required for the local economy such as farm equipment operation and repair, construction, tourism and hospitality.

Having a tailored incubation and entrepreneurship development approach towards rural entrepreneur is a critical success factor. The need in most cases is not about cutting edge disruptive innovation but more about frugal and minor modifications to bring about incremental improvements in efficiency. This requires supporting hundreds and thousands of ideas and not a few selected through a highly competitive multistage selection process as is the case in the incubation centres being established by premier institutions like IITs, Startup India programme and innovation schemes by other ministries.

Commercialising existing research into usable technologies for the benefit of the rural entrepreneurs, for example technologies in the areas of post-harvesting and renewable energy. Here academia-industry linkage is critical and the government needs to enable this linkage.

Support alternative organisation models like SHGs, producer companies etc. to enable advantage of Economies of Scale for rural micro and small enterprises.

Improving infrastructure including last mile connectivity, common facility centres, IT, power and water supply are needed to form the right foundation for building a robust industrial base.

State-level interventions in skilling the rural workforce on all the aspects of running an enterprise, from project proposal creation to financial management to eventual marketing (including digital marketing) will give a boost to entrepreneurship.

The vision of achieving inclusive growth coupled with the objective of increasing the share of manufacturing sector to 25 percent of GDP from the current 16 percent can be achieved only if MSMEs in rural India are encouraged and supported. Governments at central as well as state levels need to play the anchor role to spur this wave of rural industrial revolution.