Government of India believes that the twin objectives of ‘accelerating industrial growth and creating additional productive employment potential in rural and backward areas’ can be fulfilled with the help of MSME and rural industrialisation. One of the best examples of the above strategy in action is the Great Leap Forward (GLP) campaign in China started in year 1958. It aimed at industrializing the country on a massive scale by encouraging people to set up industries in their backyards. In fact in rural areas, the Commune system was applied, covering almost all the farm population, and these units were divided into production brigade and production units.
Policies were made to facilitate with rural development and growth of MSME in rural areas. Spread in Rural Crediting and institutional structures such as NABARD, regional banks and micro-crediting by SHGs provides better lending options and fill the gap due to lack of the formal credit system. Few acts, policies and scheme to help MSMEs in rural area are:
- The Micro, Small and Meduim Enterprises Development Act, 2006 (MSMED, Act 2006)
It is single comprehensive act for development and regulation of small enterprises act and provide for facilitating the promotion and development and enhancing the competitiveness of micro, small and medium enterprises.
- The State Agricultural Credit Corporations Act, 1968
It is an Act to provide for the establishment in the States and Union territories of Agricultural Credit Corporation. Here, the meaning of agriculture activities means not only growing crops, but also animal husbandry, horticulture, pisciculture etc.. It aims at granting of loans and advances, repayable within a period, not exceeding five years, to agriculturists, agricultural marketing societies, agricultural processing societies, Central Co- operative Banks, co- operative farming societies or primary agricultural credit societies for agricultural operations or for such other operations connected therewith.
- Pradhan Mantri Credit Scheme
This scheme for Powerloom Weavers provides financial assistance (Margin Money Subsidy) and interest reimbursement to the decentralized powerloom units / weavers. Margin Money Subsidy as against the credit facilities (Term Loan) availed under Stand-up India Scheme by the SC, ST and Women Entrepreneur of the decentralized powerloom units / weavers to meet their credit requirements such as for investment needs (Term Loan) and for working capital etc
- Rural India Skill
It is a scheme under the Skill India Campaign initiated in 2015 and is managed by the National Skills Development Corporation of India
- Pradhan Mantri Kaushal Vikas Yojana (2016 – 2020)
It is a Skill Training Scheme of the Ministry of Skill Development & Entrepreneurship (MSDE) which aims to train 10 million youths by 2020 pan India both in Rural and Urban areas.
- Start Up India
It is an initiative of the Government of India which was first announced by on 15 August 2015 and it focuses on three areas, i.e. Simplification and Handholding, Funding Support and Incentives, and Industry-Academia Partnership and Incubation.
To sum it up, we can see that MSME plays a very important role in the rural development. Government of India believes it to be a powerful instrument to facilitate rural development and employment. Small scale production units like Village Industries and Cottage industries can become the backbone of the process of financially and economically stabilizing rural areas.