By Lakshmi Venkataraman Venkatesan
Ease of doing business for MSMEs: India, with a current GDP of $3.5 trillion is slated to become a $5 trillion economy by 2025. The major challenge in realizing this vision is to create jobs for its working-age population, mostly below the age of 35. Large private sector expansion or government infrastructure development, be it building roads and airports, is not enough to create employment opportunities for the over 1 crore people who enter the workforce every year. Since more than 85% of the jobs are created in the informal sector, it is imperative to help young people tap into the entrepreneurial opportunities available at the district level, in small towns and rural areas.
Mass entrepreneurship supports millions of grassroots businesses to use local inputs to create local jobs, serve the needs of the local community and contribute to the micro, small and medium enterprises (MSME) ecosystem. Mass entrepreneurship also fuels innovation and enhances competitiveness, culminating in a dynamic and inclusive local economy, well prepared to connect with national and global supply chains.
Job creation is at the heart of successful small businesses. A young woman hailing from rural Tamil Nadu successfully converted her traditional house cleaning activity into a flourishing facility services business for corporates, IT Parks, hospitals, hotels and residential complexes. With continuous support from an industry mentor, in 12 years of running her business, she not only achieved revenues of nearly Rs 4 crores but has also created jobs for over 2000 workers across major cities.
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A state-wide entrepreneurship programme in Assam supporting young, underserved micro-entrepreneurs from 2012-17 created a big impact. Over a thousand grassroots entrepreneurs were helped to set up, get access to bank finance and be mentored by industry experts. This resulted in the creation of more than 55,000 jobs within five years.
Community development stands as another significant outcome of grassroots entrepreneurship. Local entrepreneurs play a pivotal role in uplifting underserved communities. Grassroots entrepreneurs are instrumental in adopting sustainable business practices and contribute to community development by reinvesting profits locally.
A young tribal entrepreneur is a perfect example! He leveraged the Government’s National Solar Mission to promote solar energy in the remote villages of Maharashtra. Starting out with a small loan he has expanded to offer customised solar power solutions for agriculture, industry, domestic and commercial applications, in the process becoming a catalyst for wealth creation and empowerment.
Grassroot entrepreneurs form the backbone of India’s Atmanirbhar Bharat mission which aims to make MSMEs independent and self-reliant. At the core of the mission is PM Modi’s assertion that when every Indian gets ‘vocal for local’, it does not take much time for the “local to become global.” Local supply chains offer numerous benefits, including increased flexibility, greater control, reduced costs, access to new customers, and the ability to foster innovation and collaboration. By supporting grassroots entrepreneurs and promoting their integration into the larger ecosystem, policymakers and stakeholders can create a resilient and thriving business environment.
A graphics designer in Pune was assisted in launching his helmet decals design and printing business. He was helped to avail of a bank loan and received mentoring support. Today, he is a supplier to leading safety helmets manufacturers and his firm provides direct and indirect employment to ninety workers.
However, in the post-pandemic world, small businesses have taken a hit – as per Government of India data, well more than 10,00 MSMEs shut in 2022-23. Mass entrepreneurship needs policy, financial and business development tools to facilitate self-employment and accelerate the growth of MSMEs.
The following are some key recommendations to recognize the significance of these entrepreneurs and provide them with the necessary support and opportunities to unlock their full potential, leading to inclusive and sustainable economic development.
First, inculcate a grassroots entrepreneurial culture by increasing business ownership among underprivileged youth. A “Business Idea Contest” can be run in rural areas and small towns to encourage youth to come up with creative business ideas that could be converted into successful, dynamic micro-enterprises with appropriate counselling and mentoring.
Secondly, coach students from marginalised communities in higher-order skills like entrepreneurship and business management by partnering with industry, NGOs and educational institutions. Young entrepreneurs can be offered free training in the basic concepts of entrepreneurship to help them fine-tune and convert their ideas into concrete business plans.
Thirdly, improve access to bank finance for underprivileged entrepreneurs, particularly women. Each entrepreneur can be assigned a mentor who monitors the progress of the business, helps solve operational problems and supports business development until the unit becomes viable. In rural areas, mobile mentor clinics can serve to improve reach and impact. Group and peer mentoring help strengthen the bonds of community. Here entrepreneurs are encouraged to share business tips and ideas and provide tangible support to each other. An all-India mentoring programme can scale mentoring to guide grassroots entrepreneurs in every state.
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Fourthly, help MSMEs adopt ESG good practices and improve linkages with national and international supply chains. The circular economy aims to reduce, reuse, and recycle materials, extending the lifecycle of products and establishing a more efficient and sustainable production model. Strengthening the MSME ecosystem emerges as a critical imperative to meet ESG goals, with grassroots entrepreneurs playing a significant role in this regard. Expert talks and webinars can help small entrepreneurs understand the benefits and embrace ESG good practices.
Collaboration between grassroots entrepreneurs, industry associations, and research institutions is crucial for developing new products, services, and technologies. Moreover, leveraging digital technologies and e-commerce platforms can enhance the visibility and reach of grassroots enterprises.
Successful entrepreneurs should be nominated for national and international awards and coached to serve as youth icons. This will motivate many more young people to take up entrepreneurship.
Concerted collaboration between multiple stakeholders – public and private sectors, government and NGOs can help grassroots entrepreneurship realise its immense potential in driving job creation, community development, and growth of the MSME ecosystem. By harnessing the power of grassroots entrepreneurs, we can build a vibrant and resilient economy that benefits individuals, communities, and the nation as a whole.
Lakshmi Venkataraman Venkatesan is the Founding and Managing Trustee of Bharatiya Yuva Shakti Trust. Views expressed are the author’s own.