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Create rural markets to empower rural India: Seshasayee

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CIOL Bureau
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CHENNAI: "Creation of rural markets and rural consumers should be the corporate way of empowering rural India," R Seshasayee, President, Confederation of Indian Industry (CII) and Managing Director, Ashok Leyland Limited said. 

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"Thanks to the influence of media, the aspirations of the consumers of backward districts are not any different from that of the people in urban markets. Hence, the corporate India should focus on creating the rural market and purchasing power, in its own interest," he added.

Delivering the keynote address at the seminar on Rural Empowerment - Entrepreneurial Skills Development, organised by CII, Seshasayee said "There are over 3.6 million retail outlets in rural areas that are being operated at a sub-optimal level without the active participation of corporates. Though the government is introducing several initiatives such as rural credit delivery scheme to empower rural India, most of the projects are expenditure-driven in nature and hence they do not go beyond achieving targets in terms of disbursements. Hence, the answer is rural credit to the micro enterprises that is made commercially viable through forward linkages with organised sector. There is a huge scope for SHGs to create a reliable supplier base for the organised sector."

On the rural credit methodologies, Seshasayee said that funding made on the basis of assets and land holdings, rather than on knowledge or idea, has been a gross failure across the globe. Hence, banks should look for ideas before making any decision on funding to make rural lending commercially viable on an internally consistent way. He also pointed out that traditionally several entrepreneurial communities in India have emerged from the regions such as Rajasthan and Punjab that were exposed to external risks such as natural disadvantages or invasions. Therefore, entrepreneurship is very resident and is driven by necessity and adversity.

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Delivering his special address, Dr Nachiket Mor, Deputy Managing Director, ICICI Bank said that the banking infrastructure in India is inadequate compared to the size of the population. In the US, there are 8000 banks for the population of 300 million whereas in India there are only around 66 banks with national reach. As a result a vast portion of the population is untouched by the banks.

In this context, there is a need to create at least 1,00,000 touch points across the country, especially in the rural India, which will be enabled to appraise loans, evaluate the credibility of the SME customers.

However, when it comes to expanding the bank branches in urban and rural areas, the banks are currently faced with certain regulatory limitations. Besides, the cost of running the branches, even in rural areas, has been increasing, making it unviable for the commercial banks to subsidize or bring down the interest rate for the small and medium enterprises and micro-enterprises.

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Dr Mor said that apart from providing credit to the small and micro entrepreneurs, providing market linkages to the enterprises has been one of the key challenges in making micro-credit business viable. He said that ICICI Bank has recently formed a trust to create network companies, which would act as intermediaries to provide the missing market link. Dr Mor added that the Trust would act as a holding company and facilitate the supply of SHG products targeted at lower-income consumers.

Addressing the seminar, Y S Rajan, Principal Advisor, CII, said that the contribution of the organised sector to employment generation has been coming down gradually. In 1980s, the organised sector provided employment to over 14% of the work force, whereas it has come down to just 6% today. Over 85% of the work force represents self employed professionals and micro entrepreneurs. And roughly 65% of the total workforce depends almost entirely on agriculture. However, the challenge for the policy makers is to create alternative business and job opportunities for the rural workforce around agro-based and food processing industries to provide stable income and social security.

Ms Lakshmi V Venkatesan, Founding Trustee, Bharatiya Yuva Shakti Trust (BYST) said that to create micro-entrepreneurs successfully, the role and commitment of mentors has to be nurtured in the context of one-on-one relationship, following the Guru-Shisya tradition. She said that BYST has created 3000 mentors who guide over 1000 entrepreneurs, currently doing business worth $10 million. The aim is to create 30,000 mentors across the country who would guide over one lakh entrepreneurs generating business worth US$ 1 billion in the next five years.

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In his welcome address, T T Ashok, Chairman, Corporate Social Responsibility Subcommittee, CII (SR) and Managing Director, Taylor Rubber Private Limited said that CII has been advocating the Triple Bottomline approach which is based on the concept that Corporate Social Responsibility is not a charity but a strategic business tool for risk management and for sustainable business growth.

Earlier, Seshasayee released a Manual for Micro Entrepreneurs, which will act as a channel for the first time entrepreneurs in carrying forward their business ventures. He exchanged the MoU with Dr Kalpana Sankar, Chief Executive Officer and Managing Trustee, Hand-in-Hand (a NGO based in Kancheepuram). According to the MoU, CII will work with HIH in training 1500 entrepreneurs on entrepreneurship skills and hand hold few bigger enterprises with the support of CII members. CII aims to create 10,000 entrepreneurs in 3 years' time.

The Micro Entrepreneurs Manual, prepared by the CII, will be used as a guide for entrepreneurs training by the Government of South Africa and Afghanistan.

Over 300 delegates representing NGOs and Financial Institutions participated in the Seminar.

© CIOL Bureau