A step forward: Rural transformation through enterprise promotion

The project promotes rural enterprises in the farm, off-farm and non-farm sectors

Updated - March 04, 2022 11:35 am IST

Published - March 04, 2022 11:18 am IST - CHENNAI

The Tamil Nadu government has undertaken a rural transformation project in partnership with the World Bank to promote rural enterprises in the farm, off-farm and non-farm sectors. While the World Bank provides 70% of the funding, the rest is borne by the State.

The Tamil Nadu Rural Transformation Project (TNRTP) now has an official brand name, Vazhndhu Kattuvom (We shall live and show), and looks beyond poverty alleviation to develop a business ecosystem that nurtures skills and fosters entrepreneurial capabilities among self-help groups (SHGs) and their households.

The project is operational in 3,994 village panchayats in 120 blocks across 31 districts. “The project is a paradigm shift from focusing on poverty alleviation to enlisting entrepreneurs, and those wanting to move beyond livelihoods to visualise entrepreneurship, creating more job opportunities in rural areas and also support migrants who have returned to their villages during the COVID-19 period,” said a senior government official.

To realise Chief Minister M.K. Stalin’s vision of making Tamil Nadu a trillion-dollar economy by 2030 would require expansion of enterprise groups along with a business-driven ecosystem at various levels. The project looks at turning women into a critical partner in the development and growth trajectory, the official added. It focuses on enterprise promotion under various subsets at the individual and collective levels.

One subset is the Enterprise Group (EG) — a group having joint ownership of and control over business activities, with a shared profit and loss and with the aim of reducing production costs, improving quality and increasing revenues. Each EG will have 10-30 members at the village level and registered under the Micro Small Medium Enterprise (MSME) Registration/Partnership Firm/Limited Liability Firm.

In the Producer Group (PG) model, producers of a particular commodity in a village come together for aggregation, productivity enhancement and collective actions to increase income. About 30-150 members are mobilised to form a PG. Each PG is provided a start-up grant of up to ₹75,000, based on their business plans.

Another entrepreneurship model is the Producer Collective (PC). Under it, a large number of producers come together for aggregation, value addition, marketing and service provisioning for economies of scale, and membership is usually between 300 and 3,000 producers.

For certain commodities and in sparsely populated tribal areas, the size of a PC can be in the range of 150-300 producers with an entitlement to a start-up grant of up to ₹30 lakh for addressing the challenges in initiating business activities and meeting operational expenses. Another component is the Matching Grant Programme to address the demand-supply gap in access to financial credit to rural enterprises such as producer companies, first- time entrepreneurs and women-led business, which are perceived to be a high-risk category. Under this, 70% or more of the approved loan would be disbursed by the partnering financial institutions, while the remaining 30% would be through bank subsidy.

There is also Mahalir Vazhvaadhara Sevai Maiyam, a one-stop small business facilitation-cum-incubation centre at the block level. It provides business development support services to individual and collective enterprises, besides channelising the Matching Grant Programme (MGP).

Under the programme, community skill schools provide training through locally available master craftsmen/expert practitioners on traditional arts and crafts and highly remunerative trades to build competence. This can help in finding livelihood.

Besides, community farm schools are aimed at bringing in learnings and knowledge from lab to land and vice-versa. It seeks to develop a cadre of technical service providers, called Skilful Personal Ability Attitude Resourceful and Knowledgeable (SPARKs), in agriculture and allied sub-sectors to build skills within the community.

Likewise, the Migrant Support Centre (MSC), a collaborative effort between TNRTP and Deen Dayal Upadhyaya Grameen Kaushalya Yojana (DDUGKY), is aimed at providing services to migrants within the State. The MSC service works in collaboration with industries to utilise the skilled workforce to contribute to the State’s GDP, besides helping migrants access better services, providing information on health, education, financial literacy and social security skills.

Until February, the project has covered 3,77,367 beneficiaries, including 53% women. The enterprise project is a step forward from a previous initiative which focused more on women empowerment and poverty alleviation in rural areas through the community-driven development approach.

The previous Vazhndhu Kattuvom Project was implemented from 2005 to 2017 in 4,174 village panchayats covering 120 Backward Blocks in 26 districts at a cost of ₹1,871.85 crore, benefiting 9.8 lakh rural families.

One of the key successes of the previous project was empowering women through creating strong community institutions such as village poverty reduction committees and panchayat level federations and ensuring employment for rural women. Some of the women were employed by Intimate Fashions, which has a factory near Chennai and makes garments for internationally renowned lingerie brand Victoria’s Secret.

The official said the current enterprise project builds from the key learnings from the earlier project such as participatory identification of the target group, decentralising the training to the habitation level for mobilising the members, ensuring participation of women in decision-making and enhancement of women participation in gram sabha meetings.

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