Don’t be prisoner of past . Avoid extrapolating the past when unlimited opportunities are emerging in the hinterlands of India !
A widely prevailing resistance among financial institutions and banking license aspirants to go Rural India (“Bharat”) , undertake Priority Sector lending and Focus on inclusion primarily seems to be on account of Lack of a business model that is viable, sustainable, robust and an create value to stakeholders.
Can we have business model which addresses the requirements of “Go Rural, Go Inclusive” and churns good returns for stakeholders? Yes, we surely have. Unfortunately we are restricting ourselves with limited options as we trying to extrapolate from the past when bright new opportunities are emerging on the horizon. It’s important to draw lessons but not to the extent we freeze the business model.
We need to recognize Rural Business, Agriculture Business, Food Security, Financial Inclusion are serious opportunities which are all intertwined and complimentary supports for developing a robust Rural Business model. These areas are “intertwined” with the “next phase of economic growth” of the India which we all aspire for, that which will be which lot more participative, broad based & inclusive and can be become real engine which will propel country into next growth trajectory. The basket of products that the Rural India needs will be far more wholesome than in Urban India. The various segments which are going to see the next big growth opportunity include Agribusiness, MSME, Housing, Vehicles, Services, Education, Infrastructure, Manufacturing, Energy and so on. The 30 Million MSMEs primarily in Rural, outskirts of Urban areas offer another big opportunity. The units most are unorganized and offer huge potential to grow and offer business opportunities.
We recognize India is an agrarian economy and there is an oft quoted fact that share of agriculture in GDP is < 14% and it’s diminishing. However it’s a bit misleading as we have missed the value addition which is happening to this segment and makes it much more critical. More important is the fact that we need highlight that contribution from Rural India to the GDP of country is 50% (with 70% population contributing) it is bound to go up significantly the way Rural India is seeing comparatively faster growth. It is expected that the scale will soon tilt in favor of Rural India.
A sound financial inclusion policy primarily needs to focus on increasing productivity, viability and bringing lasting improvement in the economic condition of the small, marginal, tenant farmers and sharecroppers, wagers, artisans, factory workers. The significant improvement in income levels and minimum support prices make them a huge bankable customer base.
While Rural India has thrown open a challenge to provide agri-banking services directly to large number of farmers spread across 600,000 villages, it also provides an opportunity to tap a huge retail, MSME, housing, education and agribusiness potential in rural areas. This is also an opportunity to plough in capital investment in agriculture and allied areas that remains key to growth of economy on a sustainable basis. This can be enabled by addressing the capital needs from Farm to Firm, Pre-harvest credit to Post harvest Management, Infusing capital for short term purpose and long term infrastructure.
“Go Rural” is the next big opportunity that can churn great value for stakeholders.
Just avoid extrapolating the past when unlimited opportunities are emerging on the horizon in the hinterlands.
Manoj Rawat | The Rural Banker
Views expressed here are purely personal .
About Manoj Rawat
An experienced and passionate Developmental Finance Specialist enabling Agro, MSME & Renewable energy Value Chains in Rural India