Kurukshetra Magazine August 2022 - 3 | Monthly Yojana & Kurukshetra Magazine (English) - UPSC PDF Download

 Page 1


Kurukshetra      August  2022 32
Manjula Wadhwa
A strong linkage between farm and non-farm sectors needs to be developed for augmenting income and creating jobs in rural 
areas. Farm-sector driven industrialisation may be evolved from production to processing and marketing. Such a linkage will 
help the farm sector to produce market-driven commodities, reduce transportation costs, receive remunerative prices at farm 
gate, and minimise farm waste.
Roadmap for Rural Industrialisation
OVID-19 induced pandemic has thrown 
up several socio-economic challenges 
for India, the most critical being how to 
revive the economy. To surmount this  
hurdle and leap over, India needs to re-engineer 
and reconfigure its socio-economic set-up. One 
of the key drivers of this reconfiguration would 
be the behaviour of migrant labourers. This has 
become crucial because the proportion of the 
labour-dependent informal sector in our economy 
is very large. India has an estimated 497 million 
workers, of which about 94 percent work in the 
unorganised sector. A large percentage of this 
population has been severely hit by COVID-19. 
During the lockdown, despite severe restrictions, 
C
many workers, with no cash left, returned to their 
native villages by whichever means available. The 
less-adventurous workers stayed back, but without 
any income. The reasons behind this desire to 
return home are not far to seek. Even today, they 
feel that the village ecosystem provides them 
emotional security and, to a large extent, food 
security. Over the years, India has witnessed a 
phenomenal increase in rural-to-urban migration 
due to declining opportunities in rural areas, 
dwindling returns from agriculture, and rapid 
urbanisation/industrialisation in cities.
This has led to a mushrooming of slum-clusters 
in cities, resulting in a severe strain on the urban 
infrastructure such as water, sewage, transport and 
Page 2


Kurukshetra      August  2022 32
Manjula Wadhwa
A strong linkage between farm and non-farm sectors needs to be developed for augmenting income and creating jobs in rural 
areas. Farm-sector driven industrialisation may be evolved from production to processing and marketing. Such a linkage will 
help the farm sector to produce market-driven commodities, reduce transportation costs, receive remunerative prices at farm 
gate, and minimise farm waste.
Roadmap for Rural Industrialisation
OVID-19 induced pandemic has thrown 
up several socio-economic challenges 
for India, the most critical being how to 
revive the economy. To surmount this  
hurdle and leap over, India needs to re-engineer 
and reconfigure its socio-economic set-up. One 
of the key drivers of this reconfiguration would 
be the behaviour of migrant labourers. This has 
become crucial because the proportion of the 
labour-dependent informal sector in our economy 
is very large. India has an estimated 497 million 
workers, of which about 94 percent work in the 
unorganised sector. A large percentage of this 
population has been severely hit by COVID-19. 
During the lockdown, despite severe restrictions, 
C
many workers, with no cash left, returned to their 
native villages by whichever means available. The 
less-adventurous workers stayed back, but without 
any income. The reasons behind this desire to 
return home are not far to seek. Even today, they 
feel that the village ecosystem provides them 
emotional security and, to a large extent, food 
security. Over the years, India has witnessed a 
phenomenal increase in rural-to-urban migration 
due to declining opportunities in rural areas, 
dwindling returns from agriculture, and rapid 
urbanisation/industrialisation in cities.
This has led to a mushrooming of slum-clusters 
in cities, resulting in a severe strain on the urban 
infrastructure such as water, sewage, transport and 
Kurukshetra      August  2022 33
on social resources. It seems like the coronavirus 
has pushed a reset button to ensure seamless 
reverse migration from urban cities to rural areas, 
and we, if we so desire, have an opportunity to 
capitalise on this situation. In the effort to jump-
start the economy, mainly the Micro, Small and 
Medium Enterprises (MSMEs) sector, we could try 
and integrate these reluctant-to-return migrant 
workers into India's rural economy. This may also 
be an occasion to realise the dream of Mahatma 
Gandhi, by making his concept of gram swaraj a 
reality. After this reverse migration, these skilled 
migrants are available in a cluster in rural areas. 
This can be leveraged to set up MSME units and 
provide them with credit, technical know-how 
and market support. It is time for the Ministry 
of MSME and the state governments to come 
up with a workable plan to encourage a cluster 
of the cottage, small and medium enterprises 
in villages and mofussil towns. The educated 
among the skilled labourers could lead this MSME 
effort, especially in the food and fruit processing 
sectors. The Central Government led Micro Units 
Development and Refinance Agency (MUDRA) 
could be a big help here.
In this backdrop, it would be pertinent to 
understand the concept of Rural Industrialisation. 
It includes economic activities outside agriculture, 
carried out in villages and varying in size from 
households to small factories like cottage, tiny, 
village, small-scale manufacturing and processing 
industries, and services of various kinds. 
Industrialisation in rural areas not only leads to 
increase in per capita income and augmentation 
of living conditions by generating appropriate 
employment opportunities for rural folks but also 
causes reduction in income disparities between 
urban and rural areas thus ensuring social justice. 
Rural industrialisation is important not only for 
its contribution to GDP but also for its stellar 
performance in exports. The major advantages of 
rural industrialisation are as follows.
(i) Small and cottage industries require low 
capital investment
(ii) Rural industries can take more advantage of 
local resources 
(iii) Transaction costs can be avoided by catering 
to local demand 
(iv) Employment generation
Mahatma Gandhi aptly said, “The crying 
need of India is production by masses through 
rural entrepreneurship and not mass production 
by heavy industries”.
For uplifting the rural sector of our country, 
Ministry of Rural Development in coordination 
with Department of Land Resources has been 
carrying forward various schemes. Pradhan Mantri 
Gram Sadak Yojana, launched in 2000, is the first 
step in this direction which ensures sustainable 
poverty reduction in the long run as people in 
rural areas get an opportunity to get connected 
with the rest of the country. According to the 
current data under the scheme the government 
has completed length of 705,179 km, and a total 
of 1,69,129 roads have been completed.
The promotion of small scale industries has 
been a major plan of Indian Industries Policy 
of 1948, 1956, 1977, 1980, 1991 on account 
of reasons like generation of employment 
opportunities, assisting individuals in generating 
supplementary income by making use of their 
capital and skills, contribution to capital formation, 
less dependence upon imported machinery and 
raw materials, etc. The small scale industries are 
also regarded as useful in generating more sources 
for the demand and supply opportunities for the 
large scale industries. 
The three way approach which may help 
in increasing the rural industrialisation are: 
i) Agriculture diversification by exploring the 
opportunities by farming completely a new 
range of grains, fruits or vegetables; ii) Establish 
agro-food processing units or related units like 
beverages production and many others; iii) 
non-farm product business establishment by 
promoting local rural artisan work. With this view, 
the following initiatives have been taken by the 
Government of India.
The Scheme of Funds for Regeneration of 
Traditional Industries (SFURTI): This Scheme 
launched by Ministry of MSME in 2005 aims at 
ensuring that the various traditional clusters 
of industries like bamboo, honey, Khadi spread 
throughout the country, especially in rural India, 
are met with amenities and benefits that can help 
them become more competitive in the industry 
and gain larger revenue in profits. The core 
Page 3


Kurukshetra      August  2022 32
Manjula Wadhwa
A strong linkage between farm and non-farm sectors needs to be developed for augmenting income and creating jobs in rural 
areas. Farm-sector driven industrialisation may be evolved from production to processing and marketing. Such a linkage will 
help the farm sector to produce market-driven commodities, reduce transportation costs, receive remunerative prices at farm 
gate, and minimise farm waste.
Roadmap for Rural Industrialisation
OVID-19 induced pandemic has thrown 
up several socio-economic challenges 
for India, the most critical being how to 
revive the economy. To surmount this  
hurdle and leap over, India needs to re-engineer 
and reconfigure its socio-economic set-up. One 
of the key drivers of this reconfiguration would 
be the behaviour of migrant labourers. This has 
become crucial because the proportion of the 
labour-dependent informal sector in our economy 
is very large. India has an estimated 497 million 
workers, of which about 94 percent work in the 
unorganised sector. A large percentage of this 
population has been severely hit by COVID-19. 
During the lockdown, despite severe restrictions, 
C
many workers, with no cash left, returned to their 
native villages by whichever means available. The 
less-adventurous workers stayed back, but without 
any income. The reasons behind this desire to 
return home are not far to seek. Even today, they 
feel that the village ecosystem provides them 
emotional security and, to a large extent, food 
security. Over the years, India has witnessed a 
phenomenal increase in rural-to-urban migration 
due to declining opportunities in rural areas, 
dwindling returns from agriculture, and rapid 
urbanisation/industrialisation in cities.
This has led to a mushrooming of slum-clusters 
in cities, resulting in a severe strain on the urban 
infrastructure such as water, sewage, transport and 
Kurukshetra      August  2022 33
on social resources. It seems like the coronavirus 
has pushed a reset button to ensure seamless 
reverse migration from urban cities to rural areas, 
and we, if we so desire, have an opportunity to 
capitalise on this situation. In the effort to jump-
start the economy, mainly the Micro, Small and 
Medium Enterprises (MSMEs) sector, we could try 
and integrate these reluctant-to-return migrant 
workers into India's rural economy. This may also 
be an occasion to realise the dream of Mahatma 
Gandhi, by making his concept of gram swaraj a 
reality. After this reverse migration, these skilled 
migrants are available in a cluster in rural areas. 
This can be leveraged to set up MSME units and 
provide them with credit, technical know-how 
and market support. It is time for the Ministry 
of MSME and the state governments to come 
up with a workable plan to encourage a cluster 
of the cottage, small and medium enterprises 
in villages and mofussil towns. The educated 
among the skilled labourers could lead this MSME 
effort, especially in the food and fruit processing 
sectors. The Central Government led Micro Units 
Development and Refinance Agency (MUDRA) 
could be a big help here.
In this backdrop, it would be pertinent to 
understand the concept of Rural Industrialisation. 
It includes economic activities outside agriculture, 
carried out in villages and varying in size from 
households to small factories like cottage, tiny, 
village, small-scale manufacturing and processing 
industries, and services of various kinds. 
Industrialisation in rural areas not only leads to 
increase in per capita income and augmentation 
of living conditions by generating appropriate 
employment opportunities for rural folks but also 
causes reduction in income disparities between 
urban and rural areas thus ensuring social justice. 
Rural industrialisation is important not only for 
its contribution to GDP but also for its stellar 
performance in exports. The major advantages of 
rural industrialisation are as follows.
(i) Small and cottage industries require low 
capital investment
(ii) Rural industries can take more advantage of 
local resources 
(iii) Transaction costs can be avoided by catering 
to local demand 
(iv) Employment generation
Mahatma Gandhi aptly said, “The crying 
need of India is production by masses through 
rural entrepreneurship and not mass production 
by heavy industries”.
For uplifting the rural sector of our country, 
Ministry of Rural Development in coordination 
with Department of Land Resources has been 
carrying forward various schemes. Pradhan Mantri 
Gram Sadak Yojana, launched in 2000, is the first 
step in this direction which ensures sustainable 
poverty reduction in the long run as people in 
rural areas get an opportunity to get connected 
with the rest of the country. According to the 
current data under the scheme the government 
has completed length of 705,179 km, and a total 
of 1,69,129 roads have been completed.
The promotion of small scale industries has 
been a major plan of Indian Industries Policy 
of 1948, 1956, 1977, 1980, 1991 on account 
of reasons like generation of employment 
opportunities, assisting individuals in generating 
supplementary income by making use of their 
capital and skills, contribution to capital formation, 
less dependence upon imported machinery and 
raw materials, etc. The small scale industries are 
also regarded as useful in generating more sources 
for the demand and supply opportunities for the 
large scale industries. 
The three way approach which may help 
in increasing the rural industrialisation are: 
i) Agriculture diversification by exploring the 
opportunities by farming completely a new 
range of grains, fruits or vegetables; ii) Establish 
agro-food processing units or related units like 
beverages production and many others; iii) 
non-farm product business establishment by 
promoting local rural artisan work. With this view, 
the following initiatives have been taken by the 
Government of India.
The Scheme of Funds for Regeneration of 
Traditional Industries (SFURTI): This Scheme 
launched by Ministry of MSME in 2005 aims at 
ensuring that the various traditional clusters 
of industries like bamboo, honey, Khadi spread 
throughout the country, especially in rural India, 
are met with amenities and benefits that can help 
them become more competitive in the industry 
and gain larger revenue in profits. The core 
Kurukshetra      August  2022 34
objective of the scheme is to provide economically 
sustained employment to the industry workers, 
local business heads, and rural artisans. It targets 
at advancing and enhancing the market value and 
advertising value of products provided by local 
clusters. This is done by providing economic and 
financial support to the worker or artisan’s new 
products, intervening in the design process and 
remedying it, improving the packaging of the 
product, and ensuring a sound marketing plan 
for the product. The subsidies they get from the 
SFURTI scheme depend on the amount of grant 
that the cluster has received. A maximum budget 
of Rs. 8 crore is allotted to the densest clusters in 
a district which is then lowered as the clusters get 
thinner and sparse.
A Scheme for Promotion of Innovation, 
Rural Industries and Entrepreneurship (ASPIRE): 
This is another initiative to set up incubation 
centres and network of technology centres for 
enhancing entrepreneurship across India. The 
main objectives of the scheme are:
• creation of new jobs and reducing 
unemployment,
• grassroots level economic development,
•  promoting entrepreneurship culture in India,
• facilitating innovative business solutions for 
meeting the social needs of the people,
•  promoting innovation for further strengthening 
the competitiveness in the MSME sector.
For Livelihood business Incubations, a 
onetime grant of 100 percent of the cost of plant 
and machinery other than infrastructure and land 
or an amount of up to Rs. 100 lakh, whichever 
is less is provided. For Technology Business 
Incubations, the grant is limited to 50 percent of 
the cost. 
Prime Minister’s Employment Generation 
Programme (PMEGP): It is yet another credit-
linked subsidy scheme launched by merging two 
schemes namely Prime Minister’s Rozgar Yojana 
and Rural Employment Generation Programme 
for generating employment opportunities by 
establishing micro-enterprises in urban and rural 
areas. The programme is being implemented 
by the Khadi and Village Industries Commission 
(KVIC) at the national level, through banks, District 
Industries Centres (DICs), State KVIC Directorates, 
and State Khadi and Village Industries Boards 
(KVIBs) at the state level. Individuals above the 
age of 18 years, Self Help Groups, cooperative 
level societies involved in the production, and 
institutions that are registered under the Societies 
Registration Act of 1860 are eligible for benefits 
under this programme. KVIC has approved and 
forwarded 1.03 lakh project applications to the 
banks in 2020 as compared to 71,556 projects 
during the corresponding period in 2019.The 
higher number of projects approved signifies the 
government’s resolve to create self-employment 
and sustainable livelihood for the people by 
promoting local manufacturing.
Pradhan Mantri MUDRA Yojana: Micro 
Units development and Refinance Agency Ltd 
(MUDRA) provides refinance support to Banks 
/MFIs for lending to micro units having loan 
requirement upto 10 lakh. Launched in 2015, 
It provides its services to small rural and semi-
urban entrepreneurs outside the service area of 
regular banks, by using last mile agents.The three 
interventions under the scheme are:-
• Shishu : covering loans upto Rs. 50,000
• Kishor : covering loans above Rs. 50,000 and 
upto Rs. 5 lakh
• Tarun : covering loans above Rs. 5 lakh and 
upto  Rs. 10 lakh
As of March 2022, the number of loans 
sanctioned under the Pradhan Mantri MUDRA 
Yojana (PMMY) was 48.92 million and the amount 
disbursed was Rs. 3,02,948.49 crore.
Credit Guarantee Scheme for Micro and 
Small Enterprises (CGTMSE): This scheme is 
another initiative for reviving rural industries and 
entrepreneurship. It facilitates credit to MSME 
units through collateral-free credit facility (term 
loan and/or working capital) extended by eligible 
lending institutions to new and existing micro and 
small enterprises. The Ministry of MSME and Small 
Industries Development Bank of India (SIDBI) 
jointly established a Trust named Credit Guarantee 
Fund Trust for Micro and Small Enterprises in 
order to implement Credit Guarantee Scheme 
for MSMEs. The corpus of CGTMSE is contributed 
by Government of India and SIDBI. Seventy 
Page 4


Kurukshetra      August  2022 32
Manjula Wadhwa
A strong linkage between farm and non-farm sectors needs to be developed for augmenting income and creating jobs in rural 
areas. Farm-sector driven industrialisation may be evolved from production to processing and marketing. Such a linkage will 
help the farm sector to produce market-driven commodities, reduce transportation costs, receive remunerative prices at farm 
gate, and minimise farm waste.
Roadmap for Rural Industrialisation
OVID-19 induced pandemic has thrown 
up several socio-economic challenges 
for India, the most critical being how to 
revive the economy. To surmount this  
hurdle and leap over, India needs to re-engineer 
and reconfigure its socio-economic set-up. One 
of the key drivers of this reconfiguration would 
be the behaviour of migrant labourers. This has 
become crucial because the proportion of the 
labour-dependent informal sector in our economy 
is very large. India has an estimated 497 million 
workers, of which about 94 percent work in the 
unorganised sector. A large percentage of this 
population has been severely hit by COVID-19. 
During the lockdown, despite severe restrictions, 
C
many workers, with no cash left, returned to their 
native villages by whichever means available. The 
less-adventurous workers stayed back, but without 
any income. The reasons behind this desire to 
return home are not far to seek. Even today, they 
feel that the village ecosystem provides them 
emotional security and, to a large extent, food 
security. Over the years, India has witnessed a 
phenomenal increase in rural-to-urban migration 
due to declining opportunities in rural areas, 
dwindling returns from agriculture, and rapid 
urbanisation/industrialisation in cities.
This has led to a mushrooming of slum-clusters 
in cities, resulting in a severe strain on the urban 
infrastructure such as water, sewage, transport and 
Kurukshetra      August  2022 33
on social resources. It seems like the coronavirus 
has pushed a reset button to ensure seamless 
reverse migration from urban cities to rural areas, 
and we, if we so desire, have an opportunity to 
capitalise on this situation. In the effort to jump-
start the economy, mainly the Micro, Small and 
Medium Enterprises (MSMEs) sector, we could try 
and integrate these reluctant-to-return migrant 
workers into India's rural economy. This may also 
be an occasion to realise the dream of Mahatma 
Gandhi, by making his concept of gram swaraj a 
reality. After this reverse migration, these skilled 
migrants are available in a cluster in rural areas. 
This can be leveraged to set up MSME units and 
provide them with credit, technical know-how 
and market support. It is time for the Ministry 
of MSME and the state governments to come 
up with a workable plan to encourage a cluster 
of the cottage, small and medium enterprises 
in villages and mofussil towns. The educated 
among the skilled labourers could lead this MSME 
effort, especially in the food and fruit processing 
sectors. The Central Government led Micro Units 
Development and Refinance Agency (MUDRA) 
could be a big help here.
In this backdrop, it would be pertinent to 
understand the concept of Rural Industrialisation. 
It includes economic activities outside agriculture, 
carried out in villages and varying in size from 
households to small factories like cottage, tiny, 
village, small-scale manufacturing and processing 
industries, and services of various kinds. 
Industrialisation in rural areas not only leads to 
increase in per capita income and augmentation 
of living conditions by generating appropriate 
employment opportunities for rural folks but also 
causes reduction in income disparities between 
urban and rural areas thus ensuring social justice. 
Rural industrialisation is important not only for 
its contribution to GDP but also for its stellar 
performance in exports. The major advantages of 
rural industrialisation are as follows.
(i) Small and cottage industries require low 
capital investment
(ii) Rural industries can take more advantage of 
local resources 
(iii) Transaction costs can be avoided by catering 
to local demand 
(iv) Employment generation
Mahatma Gandhi aptly said, “The crying 
need of India is production by masses through 
rural entrepreneurship and not mass production 
by heavy industries”.
For uplifting the rural sector of our country, 
Ministry of Rural Development in coordination 
with Department of Land Resources has been 
carrying forward various schemes. Pradhan Mantri 
Gram Sadak Yojana, launched in 2000, is the first 
step in this direction which ensures sustainable 
poverty reduction in the long run as people in 
rural areas get an opportunity to get connected 
with the rest of the country. According to the 
current data under the scheme the government 
has completed length of 705,179 km, and a total 
of 1,69,129 roads have been completed.
The promotion of small scale industries has 
been a major plan of Indian Industries Policy 
of 1948, 1956, 1977, 1980, 1991 on account 
of reasons like generation of employment 
opportunities, assisting individuals in generating 
supplementary income by making use of their 
capital and skills, contribution to capital formation, 
less dependence upon imported machinery and 
raw materials, etc. The small scale industries are 
also regarded as useful in generating more sources 
for the demand and supply opportunities for the 
large scale industries. 
The three way approach which may help 
in increasing the rural industrialisation are: 
i) Agriculture diversification by exploring the 
opportunities by farming completely a new 
range of grains, fruits or vegetables; ii) Establish 
agro-food processing units or related units like 
beverages production and many others; iii) 
non-farm product business establishment by 
promoting local rural artisan work. With this view, 
the following initiatives have been taken by the 
Government of India.
The Scheme of Funds for Regeneration of 
Traditional Industries (SFURTI): This Scheme 
launched by Ministry of MSME in 2005 aims at 
ensuring that the various traditional clusters 
of industries like bamboo, honey, Khadi spread 
throughout the country, especially in rural India, 
are met with amenities and benefits that can help 
them become more competitive in the industry 
and gain larger revenue in profits. The core 
Kurukshetra      August  2022 34
objective of the scheme is to provide economically 
sustained employment to the industry workers, 
local business heads, and rural artisans. It targets 
at advancing and enhancing the market value and 
advertising value of products provided by local 
clusters. This is done by providing economic and 
financial support to the worker or artisan’s new 
products, intervening in the design process and 
remedying it, improving the packaging of the 
product, and ensuring a sound marketing plan 
for the product. The subsidies they get from the 
SFURTI scheme depend on the amount of grant 
that the cluster has received. A maximum budget 
of Rs. 8 crore is allotted to the densest clusters in 
a district which is then lowered as the clusters get 
thinner and sparse.
A Scheme for Promotion of Innovation, 
Rural Industries and Entrepreneurship (ASPIRE): 
This is another initiative to set up incubation 
centres and network of technology centres for 
enhancing entrepreneurship across India. The 
main objectives of the scheme are:
• creation of new jobs and reducing 
unemployment,
• grassroots level economic development,
•  promoting entrepreneurship culture in India,
• facilitating innovative business solutions for 
meeting the social needs of the people,
•  promoting innovation for further strengthening 
the competitiveness in the MSME sector.
For Livelihood business Incubations, a 
onetime grant of 100 percent of the cost of plant 
and machinery other than infrastructure and land 
or an amount of up to Rs. 100 lakh, whichever 
is less is provided. For Technology Business 
Incubations, the grant is limited to 50 percent of 
the cost. 
Prime Minister’s Employment Generation 
Programme (PMEGP): It is yet another credit-
linked subsidy scheme launched by merging two 
schemes namely Prime Minister’s Rozgar Yojana 
and Rural Employment Generation Programme 
for generating employment opportunities by 
establishing micro-enterprises in urban and rural 
areas. The programme is being implemented 
by the Khadi and Village Industries Commission 
(KVIC) at the national level, through banks, District 
Industries Centres (DICs), State KVIC Directorates, 
and State Khadi and Village Industries Boards 
(KVIBs) at the state level. Individuals above the 
age of 18 years, Self Help Groups, cooperative 
level societies involved in the production, and 
institutions that are registered under the Societies 
Registration Act of 1860 are eligible for benefits 
under this programme. KVIC has approved and 
forwarded 1.03 lakh project applications to the 
banks in 2020 as compared to 71,556 projects 
during the corresponding period in 2019.The 
higher number of projects approved signifies the 
government’s resolve to create self-employment 
and sustainable livelihood for the people by 
promoting local manufacturing.
Pradhan Mantri MUDRA Yojana: Micro 
Units development and Refinance Agency Ltd 
(MUDRA) provides refinance support to Banks 
/MFIs for lending to micro units having loan 
requirement upto 10 lakh. Launched in 2015, 
It provides its services to small rural and semi-
urban entrepreneurs outside the service area of 
regular banks, by using last mile agents.The three 
interventions under the scheme are:-
• Shishu : covering loans upto Rs. 50,000
• Kishor : covering loans above Rs. 50,000 and 
upto Rs. 5 lakh
• Tarun : covering loans above Rs. 5 lakh and 
upto  Rs. 10 lakh
As of March 2022, the number of loans 
sanctioned under the Pradhan Mantri MUDRA 
Yojana (PMMY) was 48.92 million and the amount 
disbursed was Rs. 3,02,948.49 crore.
Credit Guarantee Scheme for Micro and 
Small Enterprises (CGTMSE): This scheme is 
another initiative for reviving rural industries and 
entrepreneurship. It facilitates credit to MSME 
units through collateral-free credit facility (term 
loan and/or working capital) extended by eligible 
lending institutions to new and existing micro and 
small enterprises. The Ministry of MSME and Small 
Industries Development Bank of India (SIDBI) 
jointly established a Trust named Credit Guarantee 
Fund Trust for Micro and Small Enterprises in 
order to implement Credit Guarantee Scheme 
for MSMEs. The corpus of CGTMSE is contributed 
by Government of India and SIDBI. Seventy 
Kurukshetra      August  2022 35
five percent 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. 
200 lakh for individual MSMEs on payment of a 
guarantee fee to the bank by them. In the Union 
Budget of 2022-23 MSMEs sector was allocated an 
Emergency Credit Line Guarantee Scheme (ECLGS) 
of Rs. 50,000 crore.
Foregoing analysis shows that India has made 
sufficient achievement in industrial development 
during the last one decade but considering the size 
of rural India, concerted and continuous efforts 
need to be made. Underutilisation of existing 
capacity is another challenge which is due to lack 
of power, raw material and demand, unsatisfactory 
labour relations, lack of capital and industrial raw 
materials are some of the problems which are 
hindering the overall industrial development in 
rural India. The entrepreneurs are forced to take 
credit from village money lenders who charge 
exorbitant rates of interest. As rural industries 
are labour intensive, they cannot afford to 
introduce sophisticated techniques and methods 
of production which are very expensive. Lack of 
technical know-how, appropriate technology 
and training create immense problems in the 
growth of rural industries. Though information 
technology has substantially developed in the 
modern India and has penetrated into the rural 
areas through internet, rural folks hardly availed 
its benefits because of not having adequate 
information avenues. Again, procuring and storing 
raw materials is a tough task for rural industries. 
Since rural industries are small-sized, they procure 
raw materials from middlemen at higher prices. 
Lack of warehousing facilities in the rural sector 
also costs more towards storing of raw materials. 
To accomplish the goal of USD 5 trillion 
economy as well as AatmaNirbhar Bharat by 2025, 
rural revitalisation requires a transformative 
approach that envisions making rural areas a 
better place to live and work. Growth in rural areas 
should be driven by agro-based industrialisation, 
which may gradually shift to the non-farm sector. 
It will require investment in post-harvest rural 
activities, such as agro-processing, packaging, 
cold chains, cold storage and transport. It will 
also require creating an enabling and favourable 
regulatory environment to stimulate private 
sector investment in rural areas. The efforts of 
the Government towards augmenting capital 
investment in agriculture through Agriculture 
Infrastructure Fund, is of course a welcome 
step. This calls for creating clusters for specific 
commodities and developing appropriate supply 
chains. It is proposed to develop agro-based 
‘special economic zones’ in rural areas to leverage 
economies of scale and increase income and 
employment opportunities.
A strong linkage between farm and non-farm 
sectors needs to be developed for augmenting 
income and creating jobs in rural areas. Farm-
sector driven industrialisation may be evolved 
from production to processing and marketing. 
Such a linkage will help the farm sector to produce 
market-driven commodities, reduce transportation 
costs, receive remunerative prices at farm gate, 
and minimise farm waste. Amul is an excellent 
example of farm-led processing, branding and 
marketing of milk for various dairy products. Such 
a model should be replicated for other agricultural 
commodities in different parts of the country. 
Collectivising farmers through FPOs and Off-
farm Producer Organisations (OFPOs) would also 
offset scale disadvantages for small and marginal 
farmers and raise bargaining powers to enhance 
their incomes. The role of MSMEs will be very 
critical in developing rural industrialisation. Their 
share in national gross value added is about 32 
percent. They provide employment to about 111 
million workers. Keeping the figures in view, huge 
investment to create necessary infrastructure; 
effective institutions for enabling MSMEs to have 
access to technologies, finance and markets; 
and vocational education and skill development 
in manufacturing and business planning are 
required. The role of rural-urban linkages can be 
a key driver in rural transformation. Strengthening 
rural-urban linkages, from farms to small towns to 
megacities, will benefit rural labour, production, 
distribution, markets, services, consumption 
and environmental sustainability. New market 
opportunities created by growing urban areas and 
new technologies will promote local, regional and 
global value chains.
(The author is Deputy General Manager in 
NABARD, Uttar Pradesh Regional Office, Lucknow. 
Views expressed are personal. Email: manjula.
jaipur@gmail.com)
Page 5


Kurukshetra      August  2022 32
Manjula Wadhwa
A strong linkage between farm and non-farm sectors needs to be developed for augmenting income and creating jobs in rural 
areas. Farm-sector driven industrialisation may be evolved from production to processing and marketing. Such a linkage will 
help the farm sector to produce market-driven commodities, reduce transportation costs, receive remunerative prices at farm 
gate, and minimise farm waste.
Roadmap for Rural Industrialisation
OVID-19 induced pandemic has thrown 
up several socio-economic challenges 
for India, the most critical being how to 
revive the economy. To surmount this  
hurdle and leap over, India needs to re-engineer 
and reconfigure its socio-economic set-up. One 
of the key drivers of this reconfiguration would 
be the behaviour of migrant labourers. This has 
become crucial because the proportion of the 
labour-dependent informal sector in our economy 
is very large. India has an estimated 497 million 
workers, of which about 94 percent work in the 
unorganised sector. A large percentage of this 
population has been severely hit by COVID-19. 
During the lockdown, despite severe restrictions, 
C
many workers, with no cash left, returned to their 
native villages by whichever means available. The 
less-adventurous workers stayed back, but without 
any income. The reasons behind this desire to 
return home are not far to seek. Even today, they 
feel that the village ecosystem provides them 
emotional security and, to a large extent, food 
security. Over the years, India has witnessed a 
phenomenal increase in rural-to-urban migration 
due to declining opportunities in rural areas, 
dwindling returns from agriculture, and rapid 
urbanisation/industrialisation in cities.
This has led to a mushrooming of slum-clusters 
in cities, resulting in a severe strain on the urban 
infrastructure such as water, sewage, transport and 
Kurukshetra      August  2022 33
on social resources. It seems like the coronavirus 
has pushed a reset button to ensure seamless 
reverse migration from urban cities to rural areas, 
and we, if we so desire, have an opportunity to 
capitalise on this situation. In the effort to jump-
start the economy, mainly the Micro, Small and 
Medium Enterprises (MSMEs) sector, we could try 
and integrate these reluctant-to-return migrant 
workers into India's rural economy. This may also 
be an occasion to realise the dream of Mahatma 
Gandhi, by making his concept of gram swaraj a 
reality. After this reverse migration, these skilled 
migrants are available in a cluster in rural areas. 
This can be leveraged to set up MSME units and 
provide them with credit, technical know-how 
and market support. It is time for the Ministry 
of MSME and the state governments to come 
up with a workable plan to encourage a cluster 
of the cottage, small and medium enterprises 
in villages and mofussil towns. The educated 
among the skilled labourers could lead this MSME 
effort, especially in the food and fruit processing 
sectors. The Central Government led Micro Units 
Development and Refinance Agency (MUDRA) 
could be a big help here.
In this backdrop, it would be pertinent to 
understand the concept of Rural Industrialisation. 
It includes economic activities outside agriculture, 
carried out in villages and varying in size from 
households to small factories like cottage, tiny, 
village, small-scale manufacturing and processing 
industries, and services of various kinds. 
Industrialisation in rural areas not only leads to 
increase in per capita income and augmentation 
of living conditions by generating appropriate 
employment opportunities for rural folks but also 
causes reduction in income disparities between 
urban and rural areas thus ensuring social justice. 
Rural industrialisation is important not only for 
its contribution to GDP but also for its stellar 
performance in exports. The major advantages of 
rural industrialisation are as follows.
(i) Small and cottage industries require low 
capital investment
(ii) Rural industries can take more advantage of 
local resources 
(iii) Transaction costs can be avoided by catering 
to local demand 
(iv) Employment generation
Mahatma Gandhi aptly said, “The crying 
need of India is production by masses through 
rural entrepreneurship and not mass production 
by heavy industries”.
For uplifting the rural sector of our country, 
Ministry of Rural Development in coordination 
with Department of Land Resources has been 
carrying forward various schemes. Pradhan Mantri 
Gram Sadak Yojana, launched in 2000, is the first 
step in this direction which ensures sustainable 
poverty reduction in the long run as people in 
rural areas get an opportunity to get connected 
with the rest of the country. According to the 
current data under the scheme the government 
has completed length of 705,179 km, and a total 
of 1,69,129 roads have been completed.
The promotion of small scale industries has 
been a major plan of Indian Industries Policy 
of 1948, 1956, 1977, 1980, 1991 on account 
of reasons like generation of employment 
opportunities, assisting individuals in generating 
supplementary income by making use of their 
capital and skills, contribution to capital formation, 
less dependence upon imported machinery and 
raw materials, etc. The small scale industries are 
also regarded as useful in generating more sources 
for the demand and supply opportunities for the 
large scale industries. 
The three way approach which may help 
in increasing the rural industrialisation are: 
i) Agriculture diversification by exploring the 
opportunities by farming completely a new 
range of grains, fruits or vegetables; ii) Establish 
agro-food processing units or related units like 
beverages production and many others; iii) 
non-farm product business establishment by 
promoting local rural artisan work. With this view, 
the following initiatives have been taken by the 
Government of India.
The Scheme of Funds for Regeneration of 
Traditional Industries (SFURTI): This Scheme 
launched by Ministry of MSME in 2005 aims at 
ensuring that the various traditional clusters 
of industries like bamboo, honey, Khadi spread 
throughout the country, especially in rural India, 
are met with amenities and benefits that can help 
them become more competitive in the industry 
and gain larger revenue in profits. The core 
Kurukshetra      August  2022 34
objective of the scheme is to provide economically 
sustained employment to the industry workers, 
local business heads, and rural artisans. It targets 
at advancing and enhancing the market value and 
advertising value of products provided by local 
clusters. This is done by providing economic and 
financial support to the worker or artisan’s new 
products, intervening in the design process and 
remedying it, improving the packaging of the 
product, and ensuring a sound marketing plan 
for the product. The subsidies they get from the 
SFURTI scheme depend on the amount of grant 
that the cluster has received. A maximum budget 
of Rs. 8 crore is allotted to the densest clusters in 
a district which is then lowered as the clusters get 
thinner and sparse.
A Scheme for Promotion of Innovation, 
Rural Industries and Entrepreneurship (ASPIRE): 
This is another initiative to set up incubation 
centres and network of technology centres for 
enhancing entrepreneurship across India. The 
main objectives of the scheme are:
• creation of new jobs and reducing 
unemployment,
• grassroots level economic development,
•  promoting entrepreneurship culture in India,
• facilitating innovative business solutions for 
meeting the social needs of the people,
•  promoting innovation for further strengthening 
the competitiveness in the MSME sector.
For Livelihood business Incubations, a 
onetime grant of 100 percent of the cost of plant 
and machinery other than infrastructure and land 
or an amount of up to Rs. 100 lakh, whichever 
is less is provided. For Technology Business 
Incubations, the grant is limited to 50 percent of 
the cost. 
Prime Minister’s Employment Generation 
Programme (PMEGP): It is yet another credit-
linked subsidy scheme launched by merging two 
schemes namely Prime Minister’s Rozgar Yojana 
and Rural Employment Generation Programme 
for generating employment opportunities by 
establishing micro-enterprises in urban and rural 
areas. The programme is being implemented 
by the Khadi and Village Industries Commission 
(KVIC) at the national level, through banks, District 
Industries Centres (DICs), State KVIC Directorates, 
and State Khadi and Village Industries Boards 
(KVIBs) at the state level. Individuals above the 
age of 18 years, Self Help Groups, cooperative 
level societies involved in the production, and 
institutions that are registered under the Societies 
Registration Act of 1860 are eligible for benefits 
under this programme. KVIC has approved and 
forwarded 1.03 lakh project applications to the 
banks in 2020 as compared to 71,556 projects 
during the corresponding period in 2019.The 
higher number of projects approved signifies the 
government’s resolve to create self-employment 
and sustainable livelihood for the people by 
promoting local manufacturing.
Pradhan Mantri MUDRA Yojana: Micro 
Units development and Refinance Agency Ltd 
(MUDRA) provides refinance support to Banks 
/MFIs for lending to micro units having loan 
requirement upto 10 lakh. Launched in 2015, 
It provides its services to small rural and semi-
urban entrepreneurs outside the service area of 
regular banks, by using last mile agents.The three 
interventions under the scheme are:-
• Shishu : covering loans upto Rs. 50,000
• Kishor : covering loans above Rs. 50,000 and 
upto Rs. 5 lakh
• Tarun : covering loans above Rs. 5 lakh and 
upto  Rs. 10 lakh
As of March 2022, the number of loans 
sanctioned under the Pradhan Mantri MUDRA 
Yojana (PMMY) was 48.92 million and the amount 
disbursed was Rs. 3,02,948.49 crore.
Credit Guarantee Scheme for Micro and 
Small Enterprises (CGTMSE): This scheme is 
another initiative for reviving rural industries and 
entrepreneurship. It facilitates credit to MSME 
units through collateral-free credit facility (term 
loan and/or working capital) extended by eligible 
lending institutions to new and existing micro and 
small enterprises. The Ministry of MSME and Small 
Industries Development Bank of India (SIDBI) 
jointly established a Trust named Credit Guarantee 
Fund Trust for Micro and Small Enterprises in 
order to implement Credit Guarantee Scheme 
for MSMEs. The corpus of CGTMSE is contributed 
by Government of India and SIDBI. Seventy 
Kurukshetra      August  2022 35
five percent 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. 
200 lakh for individual MSMEs on payment of a 
guarantee fee to the bank by them. In the Union 
Budget of 2022-23 MSMEs sector was allocated an 
Emergency Credit Line Guarantee Scheme (ECLGS) 
of Rs. 50,000 crore.
Foregoing analysis shows that India has made 
sufficient achievement in industrial development 
during the last one decade but considering the size 
of rural India, concerted and continuous efforts 
need to be made. Underutilisation of existing 
capacity is another challenge which is due to lack 
of power, raw material and demand, unsatisfactory 
labour relations, lack of capital and industrial raw 
materials are some of the problems which are 
hindering the overall industrial development in 
rural India. The entrepreneurs are forced to take 
credit from village money lenders who charge 
exorbitant rates of interest. As rural industries 
are labour intensive, they cannot afford to 
introduce sophisticated techniques and methods 
of production which are very expensive. Lack of 
technical know-how, appropriate technology 
and training create immense problems in the 
growth of rural industries. Though information 
technology has substantially developed in the 
modern India and has penetrated into the rural 
areas through internet, rural folks hardly availed 
its benefits because of not having adequate 
information avenues. Again, procuring and storing 
raw materials is a tough task for rural industries. 
Since rural industries are small-sized, they procure 
raw materials from middlemen at higher prices. 
Lack of warehousing facilities in the rural sector 
also costs more towards storing of raw materials. 
To accomplish the goal of USD 5 trillion 
economy as well as AatmaNirbhar Bharat by 2025, 
rural revitalisation requires a transformative 
approach that envisions making rural areas a 
better place to live and work. Growth in rural areas 
should be driven by agro-based industrialisation, 
which may gradually shift to the non-farm sector. 
It will require investment in post-harvest rural 
activities, such as agro-processing, packaging, 
cold chains, cold storage and transport. It will 
also require creating an enabling and favourable 
regulatory environment to stimulate private 
sector investment in rural areas. The efforts of 
the Government towards augmenting capital 
investment in agriculture through Agriculture 
Infrastructure Fund, is of course a welcome 
step. This calls for creating clusters for specific 
commodities and developing appropriate supply 
chains. It is proposed to develop agro-based 
‘special economic zones’ in rural areas to leverage 
economies of scale and increase income and 
employment opportunities.
A strong linkage between farm and non-farm 
sectors needs to be developed for augmenting 
income and creating jobs in rural areas. Farm-
sector driven industrialisation may be evolved 
from production to processing and marketing. 
Such a linkage will help the farm sector to produce 
market-driven commodities, reduce transportation 
costs, receive remunerative prices at farm gate, 
and minimise farm waste. Amul is an excellent 
example of farm-led processing, branding and 
marketing of milk for various dairy products. Such 
a model should be replicated for other agricultural 
commodities in different parts of the country. 
Collectivising farmers through FPOs and Off-
farm Producer Organisations (OFPOs) would also 
offset scale disadvantages for small and marginal 
farmers and raise bargaining powers to enhance 
their incomes. The role of MSMEs will be very 
critical in developing rural industrialisation. Their 
share in national gross value added is about 32 
percent. They provide employment to about 111 
million workers. Keeping the figures in view, huge 
investment to create necessary infrastructure; 
effective institutions for enabling MSMEs to have 
access to technologies, finance and markets; 
and vocational education and skill development 
in manufacturing and business planning are 
required. The role of rural-urban linkages can be 
a key driver in rural transformation. Strengthening 
rural-urban linkages, from farms to small towns to 
megacities, will benefit rural labour, production, 
distribution, markets, services, consumption 
and environmental sustainability. New market 
opportunities created by growing urban areas and 
new technologies will promote local, regional and 
global value chains.
(The author is Deputy General Manager in 
NABARD, Uttar Pradesh Regional Office, Lucknow. 
Views expressed are personal. Email: manjula.
jaipur@gmail.com)
Kurukshetra      August  2022 36
Debabrata Samanta
Agribusiness leads to the increase in the efficiency and productivity of the farm sector. Increase in the productivity of farm 
sector leads to the increases in productivity and incomes in other industries as well. In the Indian context, agribusiness plays 
a significant role in the development of the Indian economy as it contributes about one-fifth of gross domestic product (GDP) 
and employs a large number of people, and ensures their livelihood.
Agribusiness and Rural Industries
griculture plays a significant role 
in securing food and livelihood in 
developing countries like India. Though 
agriculture and allied contributed 
around 20.2 percent as the percentage share of 
gross value addition of agriculture and allied 
sector to the total economy in the year 2020-2021, 
the International Labour Organisation, in the year 
2020 reported that employment in agriculture was 
41.49 percent of total employment in India. Post 
pandemic in 2020-2021, the situation has changed 
due to the reverse migration to rural areas and 
more people are expected to become part of 
the agricultural sector. This implies that the role 
of agriculture in ensuring livelihood, especially 
in rural India, has become more challenging. As 
per the Indian Council of Agriculture Research 
(ICAR), India has 15 agro-climate zones and all 
types of weather conditions and soil types which 
are capable of growing a variety of crops. India is 
one of the top producers of milk, spices, pulses, 
tea, cashew, jute, rice, wheat, oilseeds, fruits 
and vegetables, sugarcane and cotton. With 
this vast agricultural backbone and increasing 
demand caused by increase in population and 
their purchasing power, there is a huge scope 
of agribusiness in India, especially in rural 
areas. Agribusiness is a process, and activities 
of the agricultural sector integrated in terms of 
production, processing, marketing, and shipments 
A
(exports/imports) under different organisational 
networks. It explores the production, marketing, 
and trading of products related to agriculture. As 
the process of an agribusiness enterprise involves 
the selling of either input to farmers/traders or 
output to traders/consumers, agribusiness has 
the potential to transform the employment and 
livelihood scenario of rural India. Agribusiness can 
play a major role in sustaining food production 
and improving agricultural practices across the 
world to ensure an abundance of food supply. 
This way, the agribusiness process contributes 
to attaining the second sustainable development 
goal of reducing hunger in the world.
Agribusiness: The Concept 
Post the Second World War, the green 
revolution led to the technological revolution in 
the agricultural sector. As a result, the agrarian 
pursuits went through significant growth and 
augmented specialisation, which was significantly 
impacted by the economic growth and urban 
expansion. The technological intervention 
redefined the meaning of agriculture, which 
called for the integration of agriculture and 
the market. In 1956, in an article titled, From 
Agriculture to Agribusiness, J.H Davis pointed out 
that technological change has brought agriculture 
and market closer together and has made them 
interdependent on one other. Later in 1957 two 
Harvard Economists, namely Davis and Goldberg, 
introduced the term ‘agribusiness’ in their seminal 
book ‘A concept of agribusiness’ and defined 
agribusiness 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. Thus, 
agribusiness essentially encompasses, today, the 
functions which the term agriculture denoted 150 
years ago”. This definition of agribusiness explains,