Ensuring Sustainability of
Rural micro-enterprises contribute significantly to job creation and local economic development. Rural micro-enterprises have salient features like, they are generally lower in terms of investment and revenue as compared to their urban counterparts. These enterprises are family-owned and run on traditional knowledge. A large part of their target customers are local. They work in an informal setting with lack of documentation, record keeping, registration or insurance, which often does not give them access to government schemes, bank loans etc.2 Owing to these factors, rural micro-enterprises often struggle with multiple challenges in their business. These vulnerabilities have been exposed through the current COVID-19 situation as well. There is little hope of any bailout in the near future, unless they formalise their functioning.
The lockdown since March 25th has broken the back of the already cash strapped rural micro enterprises. From across the country, the small rural micro enterprises are struggling with some immediate challenges like lack of cash, weak supply chain and market connectivity leading to unmet demands, misinformation, restriction on operations etc. Post the lockdown as well, the situation of the entrepreneurs is not going to immediately improve as macro-economic conditions and reduced purchasing power in rural areas will affect the recovery process. Almost 25% of MSMEs are going to be impacted heavily due to the cash crunch.3
This crisis is unprecedented in the modern economy of the world, and thus requires an immediate response as well as long term strategy for recovery. In terms of relief during the lockdown, the rural micro-entrepreneurs can take some of the following steps:
In the post lockdown scenario, the focus should be on recovery, reimagining and redesigning. Few suggestions are:
Rural entrepreneurs will also require support from the entrepreneurial ecosystem players in the process of recovery. These actors include government officials, National Rural Livelihood Mission, banks, micro finance institutions and skilling institutes like RSETI, universities etc. In order to expedite the recovery process and enable rural entrepreneurs to create inclusive jobs, it is imperative that these ecosystem actors coordinate their efforts.
Development Alternatives in its social innovation based programme Work 4 Progress has successfully demonstrated that these ecosystem meso-level players can play a vital role in accelerating the process of enterprise development, through its regional entrepreneurship coalition prototype. Along with bringing in multi stakeholders, the process can also be accelerated by the introduction of digital solutions like adoption of digital payment, innovative financial products, digital channel for last mile service delivery, tapping the e-commerce sector etc.
Rural enterprises in India can become the backbone of the country’s economy, as their decentralised nature and large customer base potential makes them resilient to global economic fluctuations. Post COVID-19, in order to create a systemic shift for rural economic development, to reduce migration and accelerate job creation, it is imperative to strengthen the rural microenterprises. This can happen by creating a robust ecosystem and easier access to enterprise support which in turn can unleash the entrepreneurial energies in rural entrepreneurs. ■