Editorials/Opinions Analysis For UPSC 21 April 2023
- An Upswing in Rural Entrepreneurship
- Recognising NABARD’s Preeminent Function
An Upswing in Rural Entrepreneurship
The vast potential for rural entrepreneurship in sectors like business, industry, and agriculture can propel development.
GS Paper-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
Talk about the difficulties rural young entrepreneurs face in expanding their businesses and offer a comprehensive strategy that combines policy support, infrastructure development, capacity building, and the promotion of indigenous skills to increase their productivity. (250 words)
- Rural entrepreneurship has the potential to drive development in a variety of sectors, including agriculture, business, and industry.
- The Indian government has launched a number of flagship programmes to promote and support rural entrepreneurship, including the National Rural Livelihoods Mission (NRLM), Make in India, Skill India, Startup India, and Mudra Yojana.
- Rural entrepreneurship still faces many obstacles despite these initiatives.
Principal Projects Promoting Rural Entrepreneurship
- NRLM and DDU-GKY: Since the NRLM program’s 2011 launch, millions of rural entrepreneurs have had access to funding, training, and market connections.
- The establishment of India’s extensive network of Self Help Groups (SHGs), which enables people to band together into small groups to save and borrow money while encouraging self-employment and entrepreneurship, was made possible in large part by NRLM.
- Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDU-GKY), an organised programme run by NRLM, helps rural youth find employment through Public-Private Partnerships (PPPs).
- RSETI: The Rural Self Employment and Training Institutes (RSETI) programme, which encourages entrepreneurship, is another promising initiative.
- It was established in 2013 with the goal of assisting community members with microenterprise development and skill-building, resulting in better employment and entrepreneurship outcomes.
- Startup India: The 2016 launch of the Startup India initiative aims to encourage entrepreneurship among Indian youth.
- It offers a variety of incentives to startups and business owners, including free mentorship programmes, tax credits, and simpler patent registration.
- Deen Dayal Antyodaya Yojana (DDAY): Introduced in 2014, DDAY is a comparable programme that assists rural entrepreneurs with funding, training, and market connections.
- The programme focuses on providing the rural poor with sustainable means of subsistence through a variety of interventions that address supply- and demand-side barriers to livelihood promotion.
- ODOP: The One District One Product (ODOP) initiative also identifies products particular districts are known for and encourages their production and marketing.
- The initiative gives local business owners a platform to advertise their goods and facilitates job creation by utilising available resources.
Obstacles to Rural Entrepreneurship
- Rural entrepreneurship continues to face a number of obstacles despite the existence of several flagship programmes.
- The biggest challenges are limited financial access, poor infrastructure, and a lack of education and training.
- According to the Periodic Labour Force Survey (PLFS) 2020–21, the share of self-employed workers in rural areas is higher than that in urban areas (61.3%), but most of them (43.48%) are own-account workers who work in small, family-based, own-account units with low investment and technical knowledge. o Rural entrepreneurs create jobs more often than they create jobs in urban areas. Most people who work for themselves are Own account employees, not employers.
- The PLFS 2020-21 report also reveals that only 12% of independent contractors sell their entire product. A little more than 13% of self-employed people consume all of their own output.
The Way Ahead
- To address these issues, a comprehensive strategy that combines infrastructure development, policy support, and capacity building for rural youth entrepreneurs is required.
- In order to expand operations, support for promoting indigenous/hereditary skills is also necessary.
- Additionally, rural entrepreneurs need to receive vocational/technical training.
- Finally, collaborating with private entities, NGOs, and other stakeholders in shaping potential entrepreneurs’ business models, marketing strategies, and product development could help ensure rural entrepreneurship success. For instance, 69.73 percent of workers out of all rural manufacturing workers have not received any training, indicating the need for comprehensive training programmes.
- Rural entrepreneurship has the potential to spur growth in a number of industries and business sectors, including agriculture.
- Rural entrepreneurship has the potential to boost innovation in rural areas, reduce poverty, and empower women with the help of the public and private sectors.
- To unleash the full potential of rural entrepreneurship, it is necessary to provide access to finance, infrastructure development, thorough training programmes, and supportive policy.In order to provide access, resources, and training for rural entrepreneurs to succeed, all stakeholders must collaborate and approach rural entrepreneurship holistically.
Recognising NABARD’s Preeminent Function
To highlight the significance of cooperatives, a panel led by ex-Union Minister Suresh Prabhu has proposed the National Cooperative Policy.Concern has been voiced by the All-India Nabard Employees Association (AINBEA) over rumoured proposals that fail to recognise the National Bank for Agricultural and Rural Development’s (Nabard) important role in India’s economic development.
GS Paper-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Analyse how India’s National Bank for Agricultural and Rural Development (Nabard) has helped to foster long-term growth and fortify the country’s cooperative economy. Identify ways in which Nabard’s role can be strengthened in supervising the cooperative sector and expanding access to financial services for farmers in India. (250 words)
Giving Nabard a Key Function
- The General Secretary of AINBEA has stated that since its inception in 1982, Nabard has been instrumental in bolstering cooperatives.
- Despite this, Nabard’s knowledge and experience in regulating cooperatives, both primary agricultural credit societies (PACS) and other types of co-ops, seem to be ignored in the National Cooperative Policy.
- He proposes that Nabard can oversee the entire cooperative sector, much like the Reserve Bank of India (RBI) oversees commercial banks.He also praises Nabard for implementing the Vaidyanathan Committee’s suggestions to revive the short-term agri-finance cooperative sector and the SHG Bank linkage programme.Nabard could strengthen its development banking at low cost if the Central Government transferred some of the CRR and SLR from commercial banks, RRBs, and cooperative banks to its development fund.
NABARD’s Overreliance on Credit
- Nabard has been one of the largest borrowers from the money market since the early 1990s, when it was forced to begin doing so.
- The transfer of almost the entire annual surplus by the RBI to the Centre has resulted in an increase in interest rates for farmers, the cooperative sector, and rural development. o Own funds account for only 10% of the total balance sheet size of 7,57,472 crore in end-March 2022. The rest is borrowed resources.
- In accordance with the applicable provisions of the Nabard and RBI Acts, these funds could have been used to meet the long-term, low-cost investment needs of cooperatives and RRBs.
Threat of Losing NABARD’s Preeminent Position
- The National Cooperative Policy suggests establishing a new Development Financial Institution to fund the proposed National Cooperative Bank, but the General Secretary of AINBEA has pointed out that this goes against the principles of the RBI-appointed Committee to Review the Arrangements for Institutional Credit for Agriculture and Rural Development (Craficard).
- Nabard, according to the Craficard, is merely an extension of the Reserve Bank of India.
- India’s Central Bank has a long and distinguished history of nurturing and developing the country’s development banking sector.
- Since Nabard is the preeminent development finance institution (DFI), it is imperative that all cooperative sector funding be directed through it.
The Next Steps
- The National Cooperative Policy must acknowledge Nabard’s preeminent position in and importance to the cooperative movement.
- The proposed centralization of a sector that essentially falls under the State list of the Constitution needs to be rethought in light of Nabard’s unparalleled expertise and experience in supervising the cooperative sector and making financial services more accessible to the farmers in India.
- Finally, the AINBEA asks that all funds earmarked for the cooperative sector be channelled through Nabard, which can play a crucial role in ensuring that these funds are used effectively. o The AINBEA urges the Centre to strengthen Nabard’s basic mandate and DFI character with a low-cost fund flow from the Centre and the RBI.
- Any proposals to form a National Cooperative Bank bypassing Nabard should be reviewed.
NABARD has been instrumental in the country’s rural development. It has accomplished much that is praiseworthy and repeatedly demonstrated its proficiency in rural areas.Because of its importance to the cooperative sector, the Centre must work to boost Nabard’s standing; otherwise, the rural economy could suffer.Nabard’s knowledge can help India become more self-sufficient in the agricultural and rural sectors.