Kurukshetra - August 2022

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Contents
Rural Industries .................................................................................................................................................. 1
DAY-NRLM – An Evaluation................................................................................................................................ 4
Agribusiness – The Concept ............................................................................................................................... 4

Rural Industries
Introduction
Rural industries consist of non-farm activities, meant for employment generation through effective
utilization of locally available resources. These are popularly known as small-scale
industries/village industries/rural industries. Rural industry includes khadi, village industries,
handloom, handicraft, sericulture, coir and service industries situated in the rural areas.

History of Rural Industries in India

Industrial Policy Resolution 1948

• It considered the importance of Cottage and small-scale industries in the national economy
• These industries are particularly suited for the better utilization of local resources and for
the achievement of the local self-sufficiency
• Certain classes of stores were reserved exclusively for purchase from village and small
industries
• A number of sales depots were established during first five-year plan for handloom,
handicrafts and village industries

Industrial Policy Resolution 1956

• Karve committee on village and small-scale industries submitted its report in 1955
• The recommendations were reflected in the IP 1956
• It stated that while such measures (safeguarding of small-scale industries) will continue to
be taken. At the same time, the aim of the State policy will be to ensure that the
decentralized sector acquires sufficient vitality to be self-supporting and its development is
integrated with that of large-scale industry.
• It also recognized the lack of technical and financial assistance, suitable working
accommodation, and inadequacy of facilities for repair and maintenance for small-scale
industries
• The Third Five Year Plan was focused on positive forms of assistance such as
improvement of skill, supply of technical advice, better equipment, and credit to these
industries.
• The Fourth Plan was focused on providing a combination of incentives and disincentives for
securing decentralization and dispersal of small industries

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Industrial Policy Resolution 1977

• It was focused on promotion of cottage and small-scale industries widely dispersed in rural
areas and small towns
• The number of reserved items for small-scale industries was increased to 504.
• District Industry Centers were set up to promote all the services and support required by
small and village entrepreneurs.
• The policy classified small sector into three broad categories –
▪ Cottage and Household Industries which provide self-employment on a large scale
▪ Tiny sector incorporating investment in industrial units in plant and machinery up to
Rs. 1 lakh and situated in towns with a population of less than 50,000 according to
1971 Census
▪ Small-scale industries comprising of industrial units with an investment of up to Rs.
10 lakh and in case of ancillary units with an investment up to Rs. 15 lakhs

Formation of SIDBI

• It was established to ensure both adequate and timely flow of credit facilities for the small-
scale industries.
• It was established in 1990 with its headquarters at Lucknow

MSME Act 2006

• It was enacted for promotion, development and enhancing the competitiveness of MSMEs
• The act classified the small-scale industries into Micro, Small and Medium
• National Board for MSMEs was set up in 200 for effective implementation of this act

Classification of Rural Industries

The 8th five-year plan classified the rural industries into 4 major groups –
• Traditional Village Industries include Khadi, leather tanning, woodwork, artisan industries,
sericulture and wool development, etc.
• Heavy Industries - include mini-steel plants, fertilizer plants which use bio-mass, pesticide
manufacturing plants using biological inputs, ancillary engineering units, etc.
• Medium Group Industries - includes mini-cement plants which use molasses or coal as
energy, minor paper plants, etc.
• Light Industries - include animal feed and fodder industries, industries producing building
materials like hinges, screens, doors and windows frames and roofing materials etc.

Advantages of Rural Industrialization

• It requires low capital investment
• It can take more advantage of local resources
• Transaction costs can be avoided by catering to local demand
• Employment generation
• Rural industrialization would result in three kinds of employment opportunities
▪ Regular employment for relatively better educated
▪ Casual employment of a daily wage type for less educated
▪ Self-employment for entrepreneurs
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Government Schemes for Rural Industries

• PM Employment Generation Program
• Start-Up Village Entrepreneurship Program
• Scheme of Fund for Regeneration of Traditional Industries (SFURTI)
• A Scheme for Promoting Innovation, Rural Industry and Entrepreneurship (ASPIRE)
• PM-Mega Integrated Textile Region and Apparel Parks (PM-MITRA)
• Pradhan Mantri MUDRA Yojana
• Credit Guarantee Scheme for Micro and Small Enterprises (CGTMSE)
▪ This scheme is being implemented by a trust Credit Guarantee Fund Trust for Micro
and Small Enterprises.
▪ This trust was set up by Ministry of MSME and SIDBI
▪ The trust It facilitates credit to MSME units through collateral-free credit facility
▪ 75% of the loan amount to the bank is guaranteed by the Trust Fund.
▪ The scheme provides collateral-free loan up to a limit of Rs. 2 crores for individual
MSMEs on payment of a guarantee fee to the bank by them

Programs under KVIC

• Gramodyog Vikas Yojana – Under this yojana, KVIC is implementing following programs –
▪ Bee-Keeping (Honey Mission) – It was launched in 2017 for promoting beekeeping
and generating employment in the beekeeping potential states of the country.
▪ Kumhar Sashaktikaran – It was launched to provide training, electric pottery wheels
and other tools like blunger, Pug Mill, etc. to the pottery workers,
▪ Khadi Institutions Registration and Certifications Sewa (KIRCS) – It is a portal for
easier registration of new Khadi Institutions.

Note – There were some more schemes mentioned in the Kurukshetra which have not been
mentioned here. This is because all of them have been provided in the government schemes
documents.

Challenges with Rural Industries

• Credit availability
• Lack of storage facilities
• Lack of education and awareness
• Lack of market access
• Unorganized nature
• High cost of transportation

Way Ahead
• Working on diversified agriculture system by exploring the opportunities by farming
completely a new range of grains, fruits or vegetables
• Increase of investment in post-harvest rural activities, such as agro-processing, packaging
cold chains, cold storage and transport.

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• Skill-building and training, technology upgradation, innovation, ease of access to credit to

the rural industries
• Non-farm product business establishment by promoting local rural artisan work.

DAY-NRLM – An Evaluation
Swarnjayanti Gram Swarojgar Yojana was launched in 1999 by restructuring the erstwhile self-
employment programmes like Integrated Rural Development programmes, Training of Rural Youth
for Self- Employment etc.
It was renamed as Aajeevika-NRLM in 2011. In 2015 it was restructured as Deendayal Antyodaya
Yojana – NRLM to overcome the deficiencies of SGSY

*The Scheme details have been provided in the government scheme document

Challenges Before the Mission

• It is a demand driven program, which requires more focus on social mobilization.
• It requires trained human resources to build up the capacity of poor women in taking
various activities at their levels.
• The 5th Common Review Mission 2019 of the Ministry of Rural development suggested –
▪ Filling the large number of vacancies
▪ Well-designed HR manual for contractual or outsourced personnel
▪ Implementation of the recommendations by Task Force for harmonizing personnel
across the schemes.
• The delay in the disbursement of funds from the State Treasury to the SRLM accounts
adversely affects various desired activities
• The frequent transfer of the SRLM Directors also adversely affects the progress

Agribusiness – The Concept

The term agribusiness was introduced in 1957 two Harvard Economists, namely Davis and
Goldberg. It is defined as "the sum total of all operations involved in the manufacture and
distribution of farm supplies; production operations on the farm; the storage, processing, and
distribution of farm commodities and items made from them.”
It can be grouped into three aggregates - (a) farm supply, (b) farm production, and (c) processing
distribution

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Sectors of Agribusiness
• Input Sector – In agriculture, the inputs are either biological or chemical or inorganic
compounds used in the production of agricultural and allied products. It has the potential to
employ a large number of people in the production process.
• Production Sector – This sector not only produces output to be supplied as food or other
final product to the consumer, but it also produces intermediate products for other industries
like jute or cotton for the textile industry.
• Processing and Value Addition - The processing sector deals with refining and
transforming the agricultural products available in the production sector with suitable
technology to add value to the product, which facilitates easy consumption of the end
consumer.
• Marketing and Sales – It consists of wholesalers and retail companies that trade
agricultural inputs and outputs.
• Support Sector – It provides support to all other sectors in the form of human capital
development, knowledge development, training, providing financial support etc.

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