Rural Entrepreneurship through Micro Finance, Bank Lending and Subsidy in Karnataka

Women from the weaker sections of the society organized in to Self Help Groups (SHG) are running enterprises in various regions in both urban and rural India. These enterprises belong to sectors like agriculture, manufacturing and services. The initial capital required for the micro venture may come through micro credit which in many cases is supplemented by bigger loans through linkage of the SHG with some nationalized bank in the area, and in some cases may also receive bank end subsidy support. These micro ventures have been initiated with the objective of providing a means of livelihood to the members and some have been successful as they have provided a decent income to the members while some others have not. The reason may be many and the study tries to identify some of the enabling performance factors. The research looks at the performance of 125 micro enterprises that have been facilitated by a government run programme in Karnataka. Majority of these enterprises had received training and subsidy support from the government, under various subsidy and employment promotion programmes. The study is cross sectional and compares group run enterprises engaged in different entrepreneurial activity. A number of factors may have resulted in better performance, which is measured primarily in terms of turnover growth and growth in per capita income from the enterprise for those engaged in the group run entrepreneurial activity. The study suggests that choice of the activity, forward or market linkages, hand holding support for an extended period of time maybe more vital than subsidy for successful micro entrepreneurship promotion and only then there would be sustainable income generation from the entrepreneurial activity, which would ensure inclusive growth.