Role of small scale industries in rural development

Rural area of India accounts for almost 65.07 % in 2020, according to the World Bank. India’s economic development is dependent on economic and financial well-being of the Rural part of India which accounts for more than half of the total area of the country.

Rural parts of our country are largely involved in the agricultural activities. Even though 42.6 percent of total workforce is involved in agricultural sector (data from 2019), the agricultural activities only contributed 19.9 per cent of the total GDP (data of 2019-20). This is argued to be the result of inadequate infrastructure, lack of alternative employment opportunities, increasing casualisation of employment etc.. Even the Agarian reform that brought forth the Green Revolution in India was unevenly divided increasing the inter-state disparity and still leaving a large part of rural farmers, particularly small and marginal farmers with small plots of land, with an unfulfilled promise of surplus produce increasing the economic divide between the rich and poor farmers. Agricultural sector, which is the main source of livelihood in rural areas, contributes to disguised unemployment.

The major issues regarding and leading to lack of jobs, low earning opportunities and unemployment in rural areas can be solved by promoting the setting up and spread of Small Scale Industries (SSIs) and Micro, Small and Medium Industries (MSMEs).

As per the revised and updated definition by the Ministry of Micro, Small and Medium Enterprises,

Micro Scale Enterprises has an investment not more than Rs.1 crore and Annual Turnover not more than Rs.5 crore.

Small Scale Enterprises has an investment not more than Rs.10 crore and Annual Turnover not more than Rs.50 crore.

Medium Scale Enterprises has an investment not more than Rs.50 crore and Annual Turnover not more than Rs.250 crore.

Small businesses play an important role in rural India as it provides multiple source of income, non-agricultural employment opportunities and supports people involved in traditional occupations, such as handicraft industry, and the weaker sections of society, such as widowed women. MSME also contributes to decreasing the rate of rural-urban migration, thereby avoiding overcrowding in urban areas. Vi

The merits of MSMEs are:

  • Balanced regional development
  • Labour-Intensive
  • Use of Conventional and Simple equipments
  • Locally available Resources
  • Opportunity for generating employment and Entrepreneurship

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