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By: Dr Arun Bhadauria Assistant Professor, Amity University Uttar Pradesh, Lucknow Campus
Agripreneurship
In the first five years of millennium term Agripreneurship was introduced with lot of emphasis on the participation of rural folk leading to the perfect solution of unemployment and shaky performance of agriculture. Agripreneurship is evolving in India as a result of a renewed emphasis on agriculture by central and state governments. It is noteworthy to mention that Government announced several schemes in order to motivate youth from villages, small towns and cities to come forward and establish their own enterprise. However, very sluggish progress has been observed so far. Before youth could have harness the opportunities of establishing an enterprise in the rural areas tapping rural demand, top entrepreneurs such as reliance, TATA, ITC entered into the field. Farmers markets developed by state governments in India represent a good opportunity for Agripreneurship through food retailing. Though, the developmental opportunities are not so meager to enter into market still very few small units are being established.
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Allocation of Loan
For instance MFIs working in Indian States from last 20 years witnessed the trend of taking loan just to finance wedding and some rituals. Although trading and production are the most common activities in the initial loan cycles, clients diversify and tend to increase spending in animal husbandry, purchase (or lease) of agricultural land and even consumption. Over time, this may be due to the limited scalability of production and trading activities. Once these activities have reached maximum capacity, considering the availability of labor or physical capital, clients choose to allocate additional loans to other activities, rather than hire outside labor or rent more physical space. Such behavior can result either from a desire to diversify risk, a lack of know how, limited ambitions or lifestyle choices.
Budding Agripreneur
Each budding agripreneur has to face underlying issues: High interest rates Repayment hassles No availability of funds as per the requirements of business. Lack of financial Inclusion Lack of awareness or Financial Illiteracy Restrictions on Horizontal and vertical integration Route through SHG is not clearly laid upon among the villagers
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MFIs: Myths
These issues when encounters with real world situation, create a very negative picture and finally this emerges in withdrawal of the project. Nevertheless, several myths crept deeper in the society regarding role of MFIs and its utility to agribusiness enterprise are firstly, poor should be self-employed rather than work for wages. That is contrary to the whole history of successful economic development. Second is the idea that loans are the main financial services needed by the poor, whereas they really need savings and insurance. Third is the notion that credit is what builds enterprise, whereas the truth is that entrepreneurship and management are critical and indispensible.
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Myths
Fourth is the vague thought that the non-poor dont need credit, whereas the truth is revealed in market-based banking: higher incomes can handle higher debt. Fifth is the derived thought that micro credit institutions can become self-sustaining, whereas all experience shows that new enterprises in poor areas that are built on credit alone rarely emerge from dependency (Mahajan, Vijay, 2011). Being the follower and dependent upon the peer group individual step back believing on the incapability to face challenges and finding solutions to the problems. While, Youth perhaps guided by several myths, would not be coming forward to start enterprise of their own, MFIs are declared failure again following some self-conceived social belief. It is evident from the experiences in other countries of similar socio-economic profile that MFIs are successful only when they are implemented for business purpose along with support of other logistics (see Notes).
Role of Financial Inclusion in uplifting common individual to become agripreneur The role of MFIs in the development of rural areas is revealed through various studies however, it could not be materialize in the absence of proper application, implementation and execution of policies. DRISHTEE is doing considerably required act through establishment of a technologically enabled and integrated network of Financial Services Entrepreneurs to provide underserved populations access to customized financial products (Pasricha, 08). In fact this effort is not promising anybody any type of credit without product, rather this network provide each individual to be a part of business activity where aspirants are shown the way to get start enterprise initially and running smoothly in later stages. Tuesday, August 02, 9
2011
DRISHTEE
The network seldom offers any fund, loan or any type of financial support. This ensures sacred, organized financial inclusion using the available resources and government led financial inclusion sops. It follows all the aspects of financial inclusion such as the first major aspect of financial inclusion i.e. accessibility of the Financially Excluded People such as Marginal farmers, Landless labourers, Oral lessees, Self employed and unorganised sector enterprises, Urban slum dwellers, Migrants, Ethnic minorities and socially excluded groups, Senior citizens, Women, to financial & credit markets, Savings facility, Credit and debit cards access, Electronic fund transfer, All kinds of commercial loans, Overdraft facility, Cheque facility, Payment and remittance services, Low cost financial services, Insurance (Medical insurance), Financial advice, Pension for old age and investment schemes, Micro credit during emergency, Entrepreneurial credit.
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3 Aspects
1. Accessibility
Accessibility
Complicated procedures (due to lack of financial literacy and basic education, it is very difficult for those people who lack both to read terms and conditions and account filling forms), Psychological and cultural barriers (many people voluntarily excluded themselves due to psychological barriers and they think that they are excluded from accessing financial services), Place of living (as the name suggests that commercial banks operate only in commercially profitable areas and they set up branches and main offices only in that areas. People who lived in under developed areas find it very difficult to go to areas in which banks are generally reside), Lack of awareness (finally, people who lack basic education do not know the importance of the financial products like Insurance, Finance, Bank Accounts, cheque facility, etc).
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Third aspect is to provide financial inclusion to do away with their constraints and restrictions such as
Seasonal Inflow of Income from agricultural operations, Migration from one place to another, Seasonal and irregular work availability and income; the existing financial system needs to be designed to suit their requirements, Security and safety of deposits, Low transaction cost, Convenient operating time, Minimum paper work, Frequent deposits, Quick and easy access, Product suitable to income and consumption (see Notes).
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Forward and backward linkages of Agriculture gives wonderful opportunity to industry to grow, manufacture and consume thereby boosting its export and import trade statistics, which in turn, required giving global economy a big push. However, this incidentally advocates the need to harness potential of diversification in agriculture which may provide missing link between the success of Agripreneurship on the one hand and microfinance on the other hand.
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Contnd
The business opportunities though created through diversification definitely requires support for from integrated supply chain and financial inclusion. Pertaining to the pre-requisite of human capital, banking infrastructure, financial literacy, urbanization and connectivity, financial inclusion and its correlation with all these parameters are desirable.
Human development and financial inclusion are found positively correlated. Income measured through per capita National Income is also found to be an important factor in explaining the level of financial inclusion in a country. Further, physical and electronic connectivity and information availability, indicated by road network, telephone and internet usage, also play positive role in enhancing financial inclusion. Higher levels of income inequality, low rates of literacy, low urbanization and poor connectivity seem to be less financially inclusive. From among the banking sector variables, we find that the proportion of nonperforming assets is inversely associated with financial inclusion, indicating that attempts by different countries towards greater financial inclusion have not contributed in any way to the non-performing assets of the banking system. The capital asset ratio (CAR) is seen to be negatively associated with financial inclusion. (Mandira, 11).
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Conclusion
Financial Inclusion through MFIs may play a pivotal role in Agripreneurship Development as it raise the confidence level of budding agripreneurs to take the plunge of being successful in their venture. Moreover, financial inclusion opens up the floodgates of information, connectivity, opportunities of vertical and horizontal integration for the growth of business. The fear of LDCs such as income inequality, low literacy rate, low urbanization and poor connectivity has very limited inclusion in financial activities. These fears can be overcome by activity and development. Tuesday, August 02, 19
2011
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