entrepreneurship development among scheduled castes and scheduled tribes in marathwada region
TRANSCRIPT
The Indian Journal of Commerce vol. 59, No.1, January-March 2006 P. No. 64 -76
Entrepreneurship Development Among ScheduledCastes And Scheduled Tribes In Marathwada
Region
Prof. M. A. Lokhande
Entrepreneurial qualities and skills are essential forindustrial development as well as eradication of poverty bymeans of creating self employment and employment to others.The Central and the State governments are trying their bestfor promotion of entrepreneurship among the economicallybackward castes, particularly scheduled castes and scheduledtribes through policy measures and institutional network.Keeping in view the need and importance of theentrepreneurship development among underprivileged communitiesin the present era of globalisation, the present study isundertaken to probe into the entrepreneurial process, problemsand challenges faced by the SC/ST entrepreneurs and to makesome possible suggestions.
Introduction:
In a developing country like India, entrepreneurship has apivotal role to play for acceleration of industrialization,generating employment and eradication of poverty andexploitation of natural resources for the economic developmentof our country. In the era of liberalisation, privatisationand globalisation, the government has been eliminating itsrole as a job provider through disinvestments in publicsector. Obviously, the reservations for backward communitiesin services would be meaningless. The need of the hour is toattract more and more young people to undertakeentrepreneurial activities for self employment and employmentto others also.
The principal objectives of the study are:
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To study the progress of entrepreneurship among SC/STcommunities in Marathwada.
To ascertain the problem and challenges faced by SC/STentrepreneurs and to the make some possible suggestions.
Review of Literature
Entrepreneurship and economic development are correlated.Economic development of a country depends on pace ofindustrialization and supply of dynamic entrepreneurs. Theword “Entrepreneurship” has its origin from French word“enterprendre” which means to undertake. It is the ability tobuild something from practically nothing. Entrepreneurship isthe function of economic activity, undertaking risk, creatingsomething new, organizing and
––––––––––––––––––––
Dr. M. A. Lokhande is reader and Head, Department of Commerce,
Smt. Dankuwar college, Jalna, Maharashtra.
Coordinating resources (Gupta, 2004). Entrepreneurship is
necessarily a creative activity (Shumpeter, 1954).
Entrepreneurship is the economic activity associated with
innovation and creativity, risk bearing and adaptability. In
real sense, it is the driving force which accelerates economic
development of the country.
A person having entrepreneurial qualities is an entrepreneur.
An entrepreneur is the person who bearer the risk of
uncertainty in business (Richard Cantillion). An entrepreneur
is change agent (J B say, 1827). In nutshell, an entrepreneur
is an innovator, a risk bearer, a resources assembler and an
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organizer. Entrepreneurship development is upward change and
one change leads to another change.
The ward caste has the origin from the Portuguese word caste
which means a race, a breed. The British government had issued
Government of India (Scheduled Castes) order, 1935 specifying
certain classes as scheduled castes. In India, the word caste
is used to denote a varna, a gotra or jati. Scheduled castes
are those castes mentioned in the scheduled castes order of
the government of India in August, 1950 (Victor, 2000).
Scheduled castes and scheduled tribes have been mentioned in
the clause 24 and 25 of articles 366 of the constitution in
the social structure and have inadequate share in trade,
industry and commerce.
For centuries, backward classes were deliberately kept away
from education, knowledge and culture on religious ground
(Wankhede, 1999). Attention is needed to be given to enhance
occupational mobility that is, shifting over to modern and
high yielding occupation saying good bye to traditional
occupations. So, entrepreneurship has to play a crucial role
in the cause of up-liftment of the underprivileged people i.e.
weaker sections of the society. In view of this situation,
conductive environment is being created by the government and
the institutions established for development institutions such
as, SIET (Small Industries Extension and Training Institute),
SISI (Small Industries Service Institute), NISBUD (National
Institute for Entrepreneurship and small Business
Development), EDII (Entrepreneurship Development Institute of
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India), DICs (District Industries Centres), KVIBs (Kahdi and
Village Induties Boards) have been working in the field of
entrepreneurship taining and development. In addition, the
government has set up financial and promotional institutations
to assist the entrepreneurs and priority is given to the
entrepreneurs from SC/STs. However, they have negligible share
in modern trade, industry and commerce because of ingerent
poverty and their inclination towards government jobs.
The entrepreneurs belonging to backward classes have lower
technical profile which naturally cripples them while carrying
their business (Lokhande A., 1993). It should be noted that
due to poor financial position, SC/STs students cannot afford
the high profile technical and professional courses. In
addition, they do not have easy access to bank finance as they
hardly possess property required for pledging with the bank.
Social discrimination, high illiteracy rate, inherent poverty
as some of the major obstacles resulting in low profile
entrepreneurship among SC/STs. Another research sholer
observed that financial assistance rendered by MPBDC and banks
under 20 point economic programmes was found to be
instrumental in raising economic status of the beneficiaries
from backward classes (Dahiwale, 1986).
The SC/ST entrepreneurs are not able to provide security for
getting among backward class people (Reddy, 2003). They had
been the victims of the neglect and exploitation for thousands
of years which made them the poorest, oppressed and deprived.
Education is crucial for positive change and has direct
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linkage to development of entrepreneurship and occupational
mobility.
Research Methodology
Marathwada, one of the region in Maharashtra state, has been
deliberately selected for the purpose of study as it has all
the characteristics of an economically and industrially
backward region defined by the central government. The present
study attempts to probe in to the problems and difficulties in
the way of entrepreneurship development process among SC/STs
with the help of statistical tools such as, percentages and
simple averages. For the purpose of the study, 150
entrepreneurs (Small) from scheduled castes and scheduled
tribes were selected from three districts (viz.Jalna,
Aurangabad and Beed categorized as D. C. and D+ districts) out
of eight districts in the region. Primary data were collected
with help of a authorities and experts. Secondary data were
collected from the literature on the topic.
Caste wise Classification of Entrepreneurs
Out of 150 respondents, 40% (60) belonged to Mahar caste, 26%
(39) belonged to Mang caste (Table -1). The respondents from
Minimading, Mang garudi, Chamar,Koli and Andh castes accounted
12%, 8%, 6%, and 4% each respectively backward and need more
attention to be given for their upliftment through
entrepreneurship training.
Educational Background of Entrepreneurs
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As far as educational background of the respondents under
study is concerned, 40% (60 respondents) had education below
matriculation while 34% (51) respondents were educated up to
SSC/HSC, 12 respondents had passed technical courses and 3
respondents were postgraduates (Table-1). Educational
development among SC/ST communities in Maharashtra region is
not up to the mark and needs to be enhanced substantially to
inculcate entrepreneurship qualities and skill among the youth
belonging to SC/STs.
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Table 1:- Entrepreneurship among scheduled castes-Surveyresults.
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Factor No. OfRespondents % to total1. Caste wise classification of entrepreneurs
Mahar 6040
Mang 39 26
Minimading 1812
Mang garudi 1208
Chamar 09 06
Koli 06 04
Aandh 0604
2. Educational background of entrepreneurs
Below SSC 60 40
SSC/HSC 51 34
Graduate 24 16
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Post graduate 0302
Technical 12 083. Form of organisation
Proprietary 10570
Partnership 3624
Co-operative 0906
Company - -4. Occupational background of entrepreneurs
Farming 51 34Agriculture labor 7550Traditional occupation 15
06Service 15
10
5. Consideration for selecting location
Birth Place 72
48
Availability of infrastructural facilities 15
10 Availability of market
15 10
Government incentives 30
20
Raw material availability 09
06
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Other considerations -
-6. Nature of entrepreneurial activities
Bricks manufacturing 12 08
Rolling Shutters 0604
Readymade garments 2416
Broom making 1208
Beauty parlor 0916
Catering & mandap 1510
Printing 0604
Shoe making 0906
Goat farming 1208
Automobile service 1510
Xerox, fax 2114
Dairy 0906
7. Motivational factors
Knowledge and skill 81
54
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Non availability of jobs 99
66 Lower income from the previous occupation
42 28
Social and economical status 87
58
Government’s supportive policies 111
74
Package scheme of incentives 57
38
Encouragement by friends 33
22
Any other reason if any -
-
8. Awareness of entrepreneurs regarding schemes ofassistance
Have a little information 8758Have full information 30
20No information 33 22
9. Causes of delays in getting assistance
Indifferent attitude of officers 8154
Too much paperwork 135 90Lengthy procedure 117 78Negligence of the beneficiary 15
1010. Facilities availed from promotional/financial agencies
Sale tax 30 20
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Subsidy 135 90
Seed capital 123 82
Margin money 60 40
Loan at concessional interest rate 105
70
Concession in excise duty 09
06
Concession in income tax 12 08
Refund of electricity duty 15
10
Assistance under PMRY 27 18
Marketing assistance 09
0611. Exposure to entrepreneurship development programme
Attended 57 38
Not attended 75 50
No response12 - -12. Sources of fund
Owned funds 15 10
MPBDC 66 44
LASDC 39 26
BANKS 117 78
MSFC 15 10
Moneylenders 33 22
Friends/relatives 60 40
Other 12 08
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13. Loan securityFamily members 63 42Friends/relatives 51 34
Own resources 27 18Others 09 06
14. Initial capital investment
Rs.10, 000-25,000 24 16
Rs.25, 000-50,000 21 14
Rs.50, 000-1, 00,000 30
20
Rs.1, 00,000-1, 50,000 39 26
Rs.1, 50,000-2, 50,000 27 18
Rs.2, 50,000-above 09 0615. Use of advertising media
Hoardings 15 10Local News paper 33 22Pamphlets 48 32Show Room 06 04Local cable 36 24Radio - -No advertising 12 08
16. Use of distribution channelsPersonal selling 81 54Wholesale dealers 12 08Retailers 57 38
17. Difficulties faced by entrepreneursLack of proper education 111 74Economic backwardness 129 86Lack of confidence 54 36
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Low risk bearing capacity 7248
Social discrimination 8154
Inadequate financial assistance 6342
Too delay in disbursement of loan /subsidy 4832
Lack of collateral security 5134
High in interest rates 2718
Shortage of raw material 3322
Shortage of electricity and water 2416
Stiff competition 99 66Sources: Field Survey -2005.
Form of organization
Majority of the entrepreneurs i.e. 105 (70%) under study hadpreferred proprietary organization, 36 (24%) respondents hadchosen partnership organization, and 9 (6%) respondents hadselected co-operative as form of organization. Not a singleentrepreneur from SC/ST category had selected companyorganization obviously because of small size ofentrepreneurial activities.
Occupational Mobility:
Occupational background and mobility entrepreneurs are theindicator of further direction of activities. The studyobserved that majority of the respondents i.e. 75 (50%)furthers were agriculture laborers and 34% respondents hadfarmers as their fathers main occupation. This indicates thatmajority of the SC/ST respondents were dependents uponagriculture for livelihood. Out of 150 respondents, 15 (10%)
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respondents fathers were engaged in government services while9 entrepreneurs belonged to the families engaged intraditional activities i.e. balutedari.
Location of Entrepreneurial Activities
It was noticed that the birth place or native place was themain consideration for selecting the location forindustrial/business unit in case of48% (72) respondent out of150 respondents. Next to it was a government incentive as themost influential factor of the selecting location of theirenterprises in case of 20% respondents. Availability of marketan infrastructure facilities were important location factorsin case of 10% respondent each. Other important considerationdetermined location of 9 units was row material availability.
Nature of Entrepreneurial Activities
It is noteworthy that the respondents under study haddeliberately selected small enterprises because they did nothave any experience of manufacturing of trading activities.Naturally, being first generation small entrepreneurs, theywere found more conservative. Out of 150 respondents, 24(16%)had started readymade garments and 21(14%) respondents had setup Xerox/fax machines. Catering and manmade services andautomobile services were started by 15 respondents each whilebroom making got farming were the entrepreneurial activitiesof 12 respondents each. 9 women respondents had set up beautyparlors and another 9 had started dairy and shoe making. Sixrespondents each had started printing press and manufacturingof rolling shutters. It is noteworthy that all theentrepreneurs under study preferred to set up need based smallunits.
Motivational factors
The study disclosed the majority of the respondents i.e. 74%of the total 150 respondents were motivated to undertakeentrepreneurial activities because of governments supportive
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policies for SC/ST entrepreneurs in the form of differentfacilities. 99(66%) respondents had entered the field ofentrepreneurship as there was no availability of jobs.
The shrinkage of job opportunities in recent years even inreserved job category has responsible for enforcing jobseekers for SC/ST categories to undertake either manufacturingor trading activities. A sizeable no. of respondents i.e. 58%of the aggregate 150 respondents stated that they had beendeeply influenced by the thoughts of Dr. Babasaheb Ambedkarand in quest of gaining economical and social status they hadstarted their own business activities. It is very hearteningfact that a large segment of our society is gradually comingin the national main stream. The spread of education amongbackward communities, tribes and adivasis has been responsiblein creating skills, adoptability and innovative attitude inthem. Of the 150 respondents, 81 respondents started their ownunits for using acquired knowledge and skills. The package ofscheme of incentives attracted to 57(38%) respondents to setup small enterprises while 42(28%) respondents had to shiftnew ventures as their previous occupations were playing meagerreturns. Some 33(22%) respondents were found encouraged bytheir friends and relatives to start independent businessactivities.
Awareness regarding schemes assistance
The disclosure of the study is the there was lower degree ofawareness among SC/ST entrepreneurs regarding governmentpolicies and welfare schemes. The data analysis shows that themajority of the respondents under the study i.e. 58% of thetotal 150 respondents had a little information about thegovernment schemes. Only 20% (30 respondents) had fullinformation about different schemes of assistance to SC/STentrepreneurs. 33 respondents were found totally unaware ofthe schemes of assistance. The root cause of very low pace ofentrepreneur development among SC/ST lies in lack of knowledgeof government policies and scheme of assistance.
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Financial assistance, subsidies and concessions are effectiveincentives to new entrants in the field of entrepreneurship ingeneral and to those belonging poor families in particularnaturally, the entrepreneurship development process among thebackward communities such as, SC/STs has deep impact whetherthe beneficiaries are benefited adequately and timely or not.
Causes of Delays in Getting Assistance
Too much paper work and lengthy procedure were main hurdles incase of 90%(135) and 117(78%) respondents respectively.Indifferent attitude of the government officers was the mainhurdle in getting assistance in case 54% respondents while 10%respondents were found negligible in preparation andsubmission of the proposal to the assisting agencies. Majorityof the respondents catagericaly expressed that good schemeswere being implemented badly. However, some of the officerswere co-operative and always ready to help according to fewrespondents.
Facilities Availed from Promotional/Financial Agencies
To attract more and more youth from backward communitiestowards entrepreneurship, special efforts are being made bypromotional and financial agencies. Out of 150 respondents.135 (90%) respondents had availed the benefits of subsidywhich was very needful support to them in the initial periodof their venture. In view of more than 82% respondents, seedcapital was very much supportive contribution of specialinstitutions such as, MPBDC and LASDR for obtaining bankfinance. Loan assistance at soft interest is the mostimportant cushion for poor entrepreneurs belonging toscheduled castes and tribes as it reduces cost of capital. Outof 150 respondents under the study, 105 had availed loans atconcessional interest rates. Margin money assistance and salestax incentives were availed by40% and 20% respondentsrespectively. Some of the entrepreneurs also opined that the
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prevalent interest rates should be reduced. Under PMRY, 27(18%) respondents were benefited while 24 (16%) respondentsfrom SC/ST had obtained benefits of concession in stamp duty:15 respondents, concession in income tax: 12 respondents, andmarketing assistance by 9 respondents.
Exposure to Entrepreneurship Development Programme
EDPs have been instrumental in developing entrepreneurialqualities among youth. The data analysis shows that out of 150respondents, 57(38%) respondents had attended the EDPsorganized by the MCED while 75(50%) respondents had notattended the EDPs. Some of these respondents complained thatthey did not receive the information about the programme and afew stated that due to living in remote rural areas they couldnot arrange to attend the EDPs as they were organized eitherat district level or block level.
Sources of Finance
Existence of financial institutions attracts more and moreentrepreneurs to set up their units in particular place orregion. In case of SC/ST entrepreneurs the finance is madeavailable on priority basis on soft interest rates. It wasnoticed that out of 150 respondents under study, 117(78%)respondents have availed bank finance at concessional interestrates and 66(44%) had borrowed funds from MPBDC while 40respondents had availed funds from relatives. Annabhau SatheDevelopment Corporation provided finance to the eligible39(26%) entrepreneurs. 60(40%) respondents had raised initialfunds from their friends and relatives. Due to a lot ofpaperwork and undue delays in disbursement of loan, 33(22%)respondents had preferred borrowing from moneylenders while15(10 %) had availed funds from MSFC. It is noteworthy that 15respondents opined that the financial agencies should be moreresponsive and cooperative with SC/ST entrepreneurs because oftheir weak financial position.
Loan Security
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Poor people from backward classes do not have valuableproperty to pledge of mortgage with the financing agencies. Inaddition, they also find it difficult to arrange for personalguarantee. So, the proposal of weaker sections applicants areeither delayed of rejected. As far as loan security concerned,42% of the 150 respondents had got loan security from theirfamily members and 34% respondents had got loan security fromtheir friends and relatives. 27 respondents had mortgagedtheir own resources as loan security while 9 respondents hadmanaged the loan security from other sources. In this regardit may be suggested that any honest, enterprising entrepreneurfrom economically backward communities should not be deniedfinancial assistance on the ground of non provision ofsecurity.
Initial capital investment
The highest number of the respondents i.e. 39 (26%) hadinitial funds invested between Rs.50,000-1,00,000 in theirventures and the lowest number of the entrepreneurs under thestudy i.e.9(6%)had the initial investment of Rs.2,50,000 andabove. Some of the respondents stated that they had to start atiny unit because of inadequacy of funds. 66 respondents (44%)out of total 150 respondents had initial investment betweenRs.1, 00,000 and Rs 2, 50,000. The data regarding initialinvestment done by the SC/ST entrepreneurs indicate small sizeof their enterprises.
Use of Advertising Media
The data analysis shows that the highest number of therespondents i.e.48 (32%) respondents had preferred pamphletsas a cost saving medium for advertising their product. Thespread of cable network in small towns and even in villages;has facilitated advertising the products in local market veryeffectively. Of the 150 respondents, 36(24%) respondents hadbeen exploiting cable, 22% had been using local news – paperswhile 15 respondents had used hoardings installed at public
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places for the purpose of advertising. Six respondents hadtheir own show room. It is noteworthy that 12(8%) respondentshad preferred door – to –door selling.
Use of Distribution Channels
The data regarding use of distribution channels by therespondents under study shows that most of the respondentsi.e. 54% of total 150 respondents, used to sell their productsthrough personal selling. Accounting to them personal sellinggiven opportunity to pursue the customers and understand theiropinions regarding different aspects of the product 57 (38%)respondents had retails as distribution channels of theirproducts while 12 (8%) respondents wee distributing theirproducts through wholesale distributions.
Difficulties faced by the Entrepreneurs
As all the entrepreneurs under study belong to economicallybackward families, they had to face a number of difficulties.The responses collected cover a long list of problems faced bythe entrepreneurs under study. Majority of the respondentsi.e. 129 (86%) stated that economically poor positioninherited by them was the major difficulty as many a timestheir applications for financial assistance were eitherdelayed too long or rejected. In view of 111 (74%)respondents, lack of proper education (i.e. management,accountancy, marketing etc.) was main hurdle while 99 (66%)respondents stated that they had been facing stiff competitionfrom big units. They opined that they products should be givenpriority in government purchase programme and MSSIDC shouldalso come to the rescue of these units.
Social discrimination based on caste system was respondentsfor the slow growth of entrepreneurship in view of 81respondents. It was noticed that the respondents (i.e. 82 outof 150) under study had selected mostly low risk, involvedtraditional entrepreneurial activities wherein the rate ofreturn on their investment was much lower. They opined that
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the fear of loss and uncertainty did not allow them to expandthe entrepreneurial activities. Accounting to 63 (42%)respondents, inadequate financial assistance was majordifficulty, 66 (44%) respondents complained about too highrates of interest while 54 (36%) respondents had lack of self–confidence. In case of 48 (32%) respondents, delay insanction and disbursement of loan and subsidy was majorproblem. They criticized the indifferent attitude of theofficers and further opined that entrepreneurs should get allthe facilities and assistance under one roof. A good numbersof respondents i.e. 51 (34%) were unable to provide securityto the banks finance to meet the requirements of workingcapital and had to borrow from money lenders at exorbitantinterest rates. In this regard it may be suggested that thebanks should liberalize their lending norms in raw material(and inadequacy of marketing assistance were major hurdles for22%, 18% and 16% respondents respectively.
Suggestions
Marathwada is lagging behind in industrial development due toinfrastructure deficiencies and very low pace ofentrepreneurship development in general and among SC/STs inparticular.
In this regard it may be suggested that the MIDC should createrequired infrastructure such as, plots sheds, water,electricity, roads in the industrially backward districts ofMarathwada.
As far as exposure to entrepreneurship development programmersis concerned, the exposure to the EDPs was not found as perexpectation in case of SC/ST candidates due to one or otherreason. In order to train a large number of candidates fromSC/STs, the EDPs should be organized at village level with thehelp of gram panchayats. There should be a wide publicity tothe EDPs to be organized.
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The disclosure of the study is that inspite of promotionaland developmental agencies for development of entrepreneurshipamong backward class youth viz. National scheduled castesfinancial and development corporation and National scheduletribes financial and development corporation, Mahatma Phulebackward class development corporation and Lokshahir AnnabhauSathe development corporation to encourages and support theentrepreneurship belonging weaker sections, there helping handcould not make a significant contribution to entrepreneurshipdevelopment among SC/ STs in Marathwada.
With regard to this it may be suggested that these corporationshould provide all type of assistance i.e. guidance, trainingand financial assistance. These corporations should simplifytheir procedures, reduce complicated paper work and provideadequate financial assistance to the projects of SC/STentrepreneurship.
The study disclosed that SC/ST entrepreneurship are deficientin business management knowledge as majority of them did nothave either business background or got management/ commerceeducation. Business education should be made available tobackward class students in the region.
Attention is also needed to be given on providing properinformation to the applicants of the schemes of assistance sothat they are able to avail adequate assistance without anyhassles and start up their activities without further delays.
In order to give the benefits of the schemes to thebeneficiaries and develop entrepreneurship among them, theimplementing agencies should give wider publicity to theschemes and also prohibit strictly the middlemen.
Social discrimination has been a stimulating block in theprocess of entrepreneurship development among weaker sectionof our society. Any type of discrimination i.e. based oncaste, creed or religion must be rooted out. It may bestrongly recommended that the banks and financial institution
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should not stress on security in case of genuine weakersection entrepreneurship as they hardly posses any property tooffer it as security. Social banking still is needed forassisting poor artisans, craftsman and small entrepreneurs.Attention is also needed to be given on reduction of interestrates as they are too high in india in comparison of otherindustrialized countries.
The process of entrepreneurship development among SC/STs inMarathwada is very slow. Therefore, the scheme of incentivesin backward districts should be continued. Subsidiaries andconcessions should be given timely and adequately to SC/STentrepreneurship as they are solely depended on thisassistance.
It was noticed that the indifferent attitude of the governmentofficers towards SC/ST beneficiaries was discouraging. It isstrongly recommended that such type of attitude must be rootedout and beneficiaries should given respectable treatment sothey are motivated and encouraged.
One of the major problems before SC/ST entrepreneurs is themarketing problem. it may be suggested that the MSSIDC shouldprovide raw material to small enterprises run by SC/STentrepreneurs and also assist in marketing their finishedproducts. The government should give priority to theseenterprises in its purchase programme.
The government has been gradually reducing the list of theproducts specially reserved for tiny and small scaleindustries. It is to be noted that small entrepreneur’s stillneed protection as they are not enough sound to compete withbig units. It is strongly recommended that reservation ofcertain products exclusively for small industries must becontinued in future.
Self help group have been a grand success in the area of smallfunds mobilization and initiating small commercial activitiesthrough the group of 10-20 persons from which 50% are
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essentially belonging to backward classes. It may stronglyrecommend that in every village at least 2-3 self-help groupsmust be formed and poorest of the poor should be givenmembership. Through self-help groups rural EDPs should beorganized for scheduled castes and scheduled tribes in ruralareas. It is also needed to introduce a new education systembased on practical experiences and business orientation. Theneed of the hour is to bring the poorest of the poor in thenational stream and give them the fruits of economicaldevelopment by facilitating their participation in economicactivities i.e. entrepreneurial activities.
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