1. INTRODUCTION TO RURAL ENTREPRENEURSHIP ENTREPRENEUR Entrepreneurs are people who create and grow enterprises.

Entrepreneurship is the process through which entrepreneurs create and grow enterprises.Entrepreneurship development refers to the infrastructure of public and private policies andpractices that foster and support entrepreneurship. ENTREPRENEURSHIP The concept of entrepreneurship has a wide range of meanings. On the one extreme an entrepreneur is a person of very high aptitude who pioneers change, possessingcharacteristics found in only a very small fraction of the population. On the other extreme of definitions, anyone who wants to work for himself or herself is considered to be anentrepreneur.The word entrepreneur originates from the French word, entreprendre , which means "toundertake." In a business context, it means to start a business. The Merriam-WebsterDictionary presents the definition of an entrepreneur as one who organizes, manages, andassumes the risks of a business or enterprise. WHAT IS RURAL ENTREPRENEURSHIP? The problem is essentially lop-sided development which is development of one area at thecost of development of some other place, with concomitant associated problems of underdevelopment. For instance, we have seen unemployment or underemployment in the villagesthat has led to influx of rural population to the cities. What is needed is to create a situation sothat the migration from rural areas to urban areas comes down. Migration per se is not alwaysundesirable but it should be the minimum as far as employment is concerned. Rather thesituation should be such that people should find it worthwhile to shift themselves from townsand cities to rural areas because of realization of better opportunities there. In other words,migration from rural areas should not only get checked but overpopulated towns and citiesshould also get decongested. The question is, is it really possible? If it is so, ways can alwaysbe found out. One is by forcibly stopping villagers from settling in the slums of towns andcities, making use of all powers to clear the slums so the villagers are forced to go back. Butsuch practices have not achieved the desired results in the past. Apart from causing sufferingto the poor people and adding to the expenditure for the Government, social tensions andeconomic hardships created by the government officials and their staff in every demolition of slums is not desirable from a sane government. Moreover, when a slum is demolished peopledo not move out of urban locality. They only relocate to a nearby place because they areentrenched in the economy of the town or city. Though governments have tried out variousschemes for generating incomes in the rural areas such government initiatives have notstopped people from moving out of villages to cities. This is because such governmentinitiatives are not on their own capable of enabling people to earn adequately and amelioratetheir conditions. There has to be some committed enterprising individual or a group of people

who should be capable of making use of the government policies and schemes for thebetterment of rural people. Some individuals who happen to be local leaders and NGOs andwho are committed to the cause of the rural people have been catalytic agents fordevelopment. Though their efforts need to be recognized yet much more needs to be done toreverse the direction of movement of people, i.e. to attract people to the rural areas. It meansnot only stopping the outflow of rural people but also attracting them back from the

townsand cities where they had migrated. This is possible when young people consider rural areasas places of opportunities. Despite all the inadequacies in rural areas one should assess theirstrengths and build on them to make rural areas places of opportunities. This is much to dowith the way one sees the reality of the rural areas. The way a survivor or a job seeker wouldsee things would be certainly different from those who would like to do somethingworthwhile and are ready to go through a difficult path to achieve their goals. It isn't thatthere is a dearth of people with such mindset. But with time they change their minds and jointhe bandwagon of job seekers due to various compulsions. Enabling them to think positively,creatively and Entrepreneurship purposefully is utmost for the development of rural areas.Young people with such perspective and with the help of rightly channelized efforts wouldusher in an era of rural entrepreneurship. In this country successful rural entrepreneurs wouldsolve many of the chronic problems within a short time. To promote entrepreneurs who would take to rural entrepreneurship in utmost earnestnessand sincerity is to ensure rural development. Such enterprising people who prefer ruralentrepreneurship may or may not themselves belong to rural areas. Entrepreneurs taking torural entrepreneurship should not only set up enterprises in rural areas but should be alsousing rural produce as raw material and employing rural people in their production processes. Rural entrepreneurship is, in essence, that entrepreneurship which ensures value addition to rural resources in rural areas engaging largely rural human resources. In other words, this means that finished products are produced in rural areas out of resourcesobtained in rural areas by largely rural people. The entrepreneur may or may not be of rural origin. The entrepreneurs may be fromanywhere, but their enterprises have to be located in a rural area, using mainly local resourcesboth material as well as human. Also, the enterprises have to be located in a rural area thoughit need not be actually using 100% local material and human resources. Some amount of material and some people may be from urban cities. But certainly large portion of materialused has to be locally produced and an appreciable number of people engaged in theproduction of finished goods should be people based or living in rural areas.Even a unit set up by the government or a large company in a rural area could promote ruralentrepreneurship depending on how much opportunities it throws up for entrepreneurs to uselocal resources, to fulfill the demands of such large units and the multiplier effect such largeunits create. Any large unit coming up in rural areas more or less does have an impact inactivating the surrounding economy for entrepreneurs to take advantage of. This is preciselythe reason why it is recommended to shift industries from urban centers to neighboring ruralareas. Such shifting initially may be a difficult proposition but in the long run beneficial inmany ways. Moreover, it would throw up lots of opportunities in the rural areas and result indecongestion of the urban centers. Urban slums would start disappearing with large numberof industries getting shifted to rural areas resulting in increasing opportunities in the ruralareas. Thus, both the rural as well as urban areas get benefited by setting up more industrialunits in the rural areas, making rural areas attractive locations for investments

Constraints of Potential Rural Entrepreneurs and Development InputsSr. No. Constraints Inputs 1. Low self-image and confidence. Motivational inputs, unfreezing andexperience sharing by successful localentrepreneurs.2. No faith on others includes friends. Group building experiences. 3. No exposure to industry/business. Field visit to factories and big markets.4. Who to contact for starting a venture,what formalities and procedures are tobe followed?Information inputs on procedures andformalities. 5. How to know whether the identifiedbusiness is a viable and soundproposition?Opportunity identification andguidance.6. How to know whether the identifiedbusiness is a viable and soundproposition?Market survey, project reportpreparation.7. How does one carry out bank operations?Training in simple banking procedureslike filing up deposit and withdrawalslip etc. 8. How to manage the business? Basic management orientation throughsimulation exercises.9. How to read and write accounts? Functional and numerical literacy.Simple accounting in terms of writingincome and expenditure.10. Almost no technical skills Technical training (onthe-job training) 2. TYPES OF RURAL ENTREPRENEURSHIP Rural entrepreneurial activity can be broadly classified in four types such as:i) Individual Entrepreneurship - It is basically called proprietary i.e. single ownership of the enterprise.ii) Group Entrepreneurship - It mainly covers partnership, private limited company andpublic limited company.iii) Cluster Formation - It covers NGOs*, VOs*, CBOs*, SHGs* and even networking of these groups. These also cover formal and non-formal association of a group of individualson the basis of caste, occupation, income, etc.iv) Cooperatives - It is an autonomous association of persons united voluntarily for acommon objective.An entrepreneur has to decide on a particular type of entrepreneurship based on thevarious options available. 1] INDIVIDUAL ENTREPRENEURSHIP/PROPRIETORSHIP In this; it is the entrepreneur who is the only (100%) owner. The entrepreneur bearsfull responsibility for each and every activity and is alone the strategic thinker and decisionmaker to make the unit viable as well as profitable. There is hardly any difference betweenpersonal assets and business assets. The entrepreneur has "unlimited liability under the law".This type of entrepreneurship is quite prevalent in rural areas where an entrepreneur haslimited resources . 2] GROUP ENTREPRENEURSHIP It is classified into mainly three types such as i) Partnership; ii) Private LimitedCompany and iii) Public Limited Company. a. Partnership In this case there is no individual ownership of the unit. There is another partner with you who works with you and also bears the responsibility and shares profit.

Likeproprietorship, the liability is "Joint and Several". For partnership type of entrepreneurship, mutual trust is a must. Besides both the partners in partnership mustunderstand their respective responsibilities and complement each other for commonobjectives and goal.The characteristics of partnership are a) association of two or more persons(maximum twenty), b) contractual relation: c) lawful business, d) sharing of profit, e)agency relationship, f) unlimited liability; and g) non-transferability of interest.The requirements of ideal partnership are good faith, common approach, writtenagreement, registration, adequate capital, skills and stability. Partnership is governedby Indian Partnership Act, 1932.

The merits of partnership are ease of formation, large resources, and combinedabilities and judgment, flexibility, quick decisions, cautions operations, survivalcapacity, better human and public relations, improved chances of growth andprotection of minority interest.The demerits could be lack of harmony, divided authority, instability of business, lack of public confidence, risk of implied authority, unlimited liability, non-transferabilityof interest and social losses. b. Private Limited Company In this case the shareholders are the owners. There must be a minimum of 2 (two)shareholders. The Indian law allows maximum of 50 (fifty) shareholders. The liabilityis limited in this case. As such if the company goes bankrupt then no one has to partwith one's other personal assets to meet the obligation of the creditors.Being a private limited company, one can raise far less money than a public limitedcompany. But there is better control as the number of shareholders is few besides theymay be your kith and kin. Many provisions of Company Law are not applicable toprivate limited companies. There is much less paperwork too. Companies aregoverned by Companies Act, 1956. c. Public Limited Company In this case the shareholders are also the owners. There must be minimum 7 (seven)shareholders. There might be millions of shareholders as there is no such upper limit.Being a, public limited company it can raise more money from the public by issuingequity shares, debentures, etc. to meet various expenses of the company.All provisions of the Company Law are applicable here. It is more of a professionalorganization and is fully governed by the Companies Act, 1956. It is to be noted thatmerit of forming a company are many such as large financial resources, limitedliability, continuity, transferability of shares, benefits of large scale operations,professional management, public confidence, scope of expansion and growth, socialbenefits, tax benefits, etc. 3] CLUSTER FORMATION I t is primarily a formal and non-formal group of people to achieve a common objective.It basically covers Non-Governmental Organizations (NGOs), Voluntary Organization (VOs), Self-Help Groups (SHGs), Community-Based Organizations (CBOs) and networking of all these.a. NGOs These are non-profit making organizations registered under the Society's Registration Act,1860. A group of seven people come on a common platform to carry out defined activities forthe socio-economic development of

people.The main characteristics of NGOs are:i) These are initiated, sponsored and constituted mainly by the Government as autonomousbodies to fulfill specific developmental objectives.ii) These receive funds mainly from the Govt. and channelize them through VOs. iii) T hese are usually non-political in nature

iv) These are formal organizations with rules, regulations and procedures with professionalmanagement.b. VOs These are voluntary agencies initiated by individual for welfare and development. They mayor may not be registered under any appropriate Act. Generally these are registered under anyappropriate Act like Societies Registration Act, 1860, Indian Trusts Act, 1882 or ReligiousAct, 1920. These frame their own Memorandum of Associations, rules and regulations andsystems for their governance. The VOs receive funds from various donor agencies includingNGOs.VOs are generally managed by persons with motivated leadership and commitment. Theirmain promoters are honorary with a strong desire to serve the people.c. SHGs Self-help groups are a platform of 10-20 people mainly, below the poverty line (BPL) to forma social group not only to mutually help each other but also to achieve common objective.Only one member from a family is eligible for membership group. The Swanjayati GramSwarozgar Yojana (SGSY) of the Ministry of Rural Development, Govt. of India covers allaspects of self-employment of the rural poor viz. organisation of the poor in SHGs and theircapacity building, training, selection of , key activities, planning of activity clusters,infrastructure building up, technology and marketing support.This is a non-formal group. The SHGs get funding from the NGOs, VOs and even from theGovernment to carry out various activities in areas of common interest and an objective foreconomic empowerment.d. CBOs These are community based organizations and are informal in nature. Specific communitywith a specific avocation forms a group to carry out various activities in a group. A CBO is agroup of people from a common living area of habitat who get together for a common cause.The overall objective is to enhance the bargaining strength of individuals in the group. Forexample: fishermen group, cobbler group, milk producers, etc. 4] COOPERATIVES According to ILO, a cooperative organization is an association of persons usually of limited means,who have voluntarily joined together to achieve a common economic end, through formation of ademocratically controlled business organisation making equitable contributions to the capital requiredand accepting a fair share of risks and benefits of the undertaking.According to International Cooperative Alliance (ICA) "A cooperative is an autonomous associationof persons united voluntarily to meet their common economic, social and cultural needs andaspirations through a jointly-owned and democratically controlled enterprise".