India Rural Business Summit
October 8-9, 2007, New Delhi

Key Note Address by Shri Kamal Nath, Hon'ble Union Minister of Commerce & Industry, Government of India

The India Rural Business Summit is an important initiative and I would like to congratulate FICCI for having taken the lead in putting together this programme with the support of seven ministries of the government, the Department of Post and the Planning Commission.

What we have today is a unique congregation. There are representatives of the industrial and financial sectors, members of the academia, public policy experts, representatives of the development sector and most importantly representatives of our grassroots democratic institutions, the Panchayats.

The Indian growth story is here to stay. With an average annual growth rate of 8.7% during the last three years and an even more impressive 9.3% growth in the first quarter of the present fiscal, the Indian economy has moved on to a new growth trajectory while this is indicative of the dynamism in our economy, growth per se cannot be an end in itself. It is important for this growth to translate into a better quality of life for the people. We must ensure that the growth impulses are felt in all parts of the country, particularly in the rural areas.

Today, nearly 70% of the country's population resides in the rural areas and nearly two - third of the population is still dependent on the agriculture sector for sustenance. If we are to ensure that growth is both inclusive and equitable then we will have to align and integrate our rural areas with the economic processes that are transforming our country at a rapid pace. The rural-urban divide that exists in our country must be bridged.

In this background today's programme is particularly relevant. The central theme is how to promote entrepreneurship and employment generation in the rural areas. How to provide rural poor with avenues of employment; how to empower rural women; how to analyze state wise rural development policies; how to evolve convergence of rural development policies; how to leverage technology and financial services for serving the needs of entrepreneurs in the rural areas are just some of the questions which would be taken up during the various sessions that have been lined up.

The lack of adequate and remunerative employment opportunities in the rural areas has led to large-scale migration from rural areas to urban areas. The elasticity of employment in the agricultural sector has almost fallen to zero, thereby creating the need to look at other sectors for employment generation with in the rural sector.

Also at present while the employment options abound for the skilled professionals, the periphery of the unskilled and semi-skilled is worsening. There is therefore an imperative need for developing creative strategies for mass semi-skilled employment generation in the near future. This calls for an integrated approach involving the government, the private sector and the intended beneficiaries i.e. the local rural population.

Agriculture and rural development is one of the key objectives of public policy of the present government. And towards this end, we have initiated several programmes. As part of our promise to offer a `new deal' to rural India, we have significantly increased investments in the critical areas of healthcare, education and infrastructure such as power, roads and housing.

Our government's flagship programme, `Bharat Nirman', envisages altering the landscape of rural India. The additional impetus given to the programme for self-employment, the Swarnajayanti Gram Swarojgar Yojana (SGSY) is also showing good results in several states. This programme has been instrumental in mobilizing a vast number of self-help groups for economic activity. Further, the National Rural Employment Guarantee (NREG) programme, whose aim is to provide an effective safety net to the poor especially in the rural areas, is also showing encouraging results.

What is equally important is the role private sector can play in enhancing employment opportunities and promoting farm and non-farm enterprises in the rural areas.

Enterprises in the rural areas require advice on technology related aspects, they require information on globally benchmarked production methods, they also require information on the changing consumer needs and how to diversify product portfolios.

A second issue relates to the financing of business activities. Obtaining the initial funding for starting any venture is the most difficult activity for any entrepreneur. This is more so in the case of small entrepreneurs as banks find them un-bankable and are generally averse to taking on the risks associated with such ventures.

However, as the `Grameen Bank' model shows, extending financial support to the poor people and encouraging entrepreneurial activity among them need not be a risky proposition. The recovery rate in the case of the `Grameen Bank' is much higher when compared to the recovery rate of other banks engaged in lending resources to select business segments. I would therefore urge you to consider micro financing models of using credit as a cost effective weapon to fight poverty and to promote income-generating activities amongst the poorest of the poor people in the country.

Another way in which the corporates can link up with the rural enterprises is through the development of the tourist spots and heritage sites. While private sector involvement in developing and maintaining tourist places is in itself important, the backward linkages that can result from such engagement, linkages in the form of development of works of art and craft of local artisans is no less valuable.

The energy sector too offers tremendous opportunities for a `private-panchayat-partnership'. The areas of solar energy, biogas and bio-fuel from Jatropha plantations offer tremendous scope. What is needed however is the dissemination of technologies because once you introduce technology you introduce enterprise.

Industry can also partner with the panchayats to assess and meet local requirements of agricultural inputs, to meet storage and post harvest needs, to engage in contract farming, to encourage direct procurement, to market agri-produce and to promote agro processing. Each of these linkages has the potential to spur rural businesses, in a major way.

Promoting agro-industry, particularly rural industry, can bring about a real transformation in the rural economy. Animal husbandry, fishery, poultry, horticulture, floriculture, aquaculture, handlooms, handicrafts and several other such occupations offer an array of opportunities waiting to be tapped.

We have before us successful examples of rural enterprise and rural business development in the form of NDDB, SEWA, Amul to name a few. Work being done by companies like ITC, Mahindra and Mahindra, Tata Chemicals, Hindustan Unilever, Microsoft, PepsiCo etc is also exemplary. What we however need is a multifold increase in the level of such engagement and proliferation of such models across the country.

I am sure that the India Rural Business Summit through its intense and wide ranging deliberations, through knowledge sharing and through showcasing of success stories would provide impetus to spreading of innovative business models and technologies to the country's remotest of rural areas.

I wish the summit all the success.

Thank you.