LWL | The Impact of Recent Government Policies on the Growth and Sustainability of Small Businesses in India

By Atharv Uppal

 

Abstract 

This research paper examines the influence of recent government policies on the growth and sustainability of small businesses in India. Through a comprehensive analysis of policy changes, business performance metrics, and qualitative interviews with local business owners, this study aims to elucidate the effectiveness of these policies in fostering a conducive environment for small business development. The findings are expected to provide valuable insights for policymakers, business owners, and stakeholders, highlighting both the positive and negative aspects of current governmental strategies. 

Introduction 

Background 

Small businesses are the backbone of the economy, contributing significantly to job creation, innovation, and economic diversity. In India, small businesses represent [percentage]% of all businesses and employ [percentage]% of the workforce. Over recent years, various government policies have been implemented to support the growth and sustainability of these enterprises. These policies range from financial incentives and tax relief to regulatory reforms and support programs. 

Thesis 

"The Socio-Economic Impact of Rashtriya Krishi Vikas Yojana on Rural Communities: Employment, Income, and Livelihoods" 

Objectives 

The research could focus on several key objectives to explore the Rashtriya Krishi Vikas Yojana (RKVY) and its impact on small businesses in the agricultural sector in India. Firstly, it could analyse the specific government policies implemented over the past five years under RKVY. Secondly, it could assess the impact of these policies on the growth of small businesses in terms of revenue, employment, and market presence. Lastly, the research could provide evidence for policymakers to develop future policies that may further benefit small businesses, ensuring their growth and sustainability in the agricultural sector.

Significance of the Study 

This study signifies understanding the impact of government policies on small businesses is crucial for informing future policy decisions. This study aims to provide empirical evidence and practical insights that can help enhance policy frameworks to better support small business growth and sustainability. 

Literature Review 

Overview of Small Business Contributions 

Small businesses are the backbone of economies around the world, providing jobs, innovation and resilience.Because of their dynamic and agile character, they can easily adjust to shifting market conditions. Small and medium-sized businesses (SMEs) play a critical role in boosting industrial development, exports, and overall economic growth in developing nations like India. They also provide a significant contribution to the country's GDP, accounting for 33% of Indian GDP and 50% of employment. 

Government Policies and Small Business Growth 

This is one of the many government policies that were implemented by the Indian government in order to achieve Small business growth. 

The Rashtriya Krishi Vikas Yojana (RKVY) was launched in 2007 to promote comprehensive development in agriculture and related sectors. On November 1, 2017, it was restructured as Rashtriya Krishi Vikas Yojana - Remunerative Approaches for Agriculture and Allied Sector Rejuvenation (RKVY - RAFTAAR) with the goal of promoting agribusiness and agripreneurship. This initiative provides financial support and fosters an incubation ecosystem to enhance agricultural activities and innovations. For the 2020–21 fiscal year, the Ministry of Agriculture has provided startup funding under the RKVY innovation and entrepreneurship component. The program targets businesses from diverse sectors such as artificial intelligence, digital agriculture, agricultural machinery, fisheries, and dairy. It includes Entrepreneurship Orientation, RKVY - RAFTAAR Agri-Business Incubator Seed-Stage Funding, and Idea/Pre-Seed Stage Funding for Entrepreneurs. RKVY - RAFTAAR plays a significant role in boosting the agricultural sector by supporting agripreneurs and fostering innovation. By providing financial support and a robust incubation ecosystem, it aims to rejuvenate agriculture and allied sectors, ensuring sustainable growth and development.

Methodology 

Research Design 

This research uses a mixed-methods approach, combining qualitative interviews with quantitative data analysis. 

Data Collection 

Quantitative Data 

By conducting analysis of secondary data sources such as government reports, business performance statistics, and economic indicators I was able to present my findings in the form of 5 graphs which are shown below. 

The budget allocation and disbursement have consistently increased each year, indicating a growing investment in agricultural development.

There is a steady increase in both the number of agri-business MSMEs and employment generated, reflecting the positive impact of RKVY on business growth and job creation.

The number of loans sanctioned and the average loan size have gradually increased, while the default rate has decreased, suggesting improved financial health and creditworthiness of agri-business MSMEs. 

Both yield per hectare and total agricultural output have shown a consistent upward trend, indicating enhanced productivity and efficiency in agriculture.

The number of new market linkages and infrastructure projects has steadily grown, demonstrating improved market access and infrastructure development for agri-businesses. 

Qualitative Data 

I have interviewed an owner of a small Agri - business on the impact of the scheme on his business. 

Interviewer: Thank you for speaking with us today. Can you introduce yourself and your business? 

*Owner:My name is Rajesh Kumar. I own a small dairy farm in Maharashtra. Interviewer:How did the Rashtriya Krishi Vikas Yojana (RKVY) help your business? 

Owner:RKVY provided us with funds to upgrade our dairy infrastructure. We installed a new cold storage unit and improved our milk processing facilities. 

Interviewer: What impact did these upgrades have on your business? 

Owner: The upgrades significantly reduced milk spoilage and increased our production capacity. We now supply to more markets and have seen a 30% increase in profits. 

Interviewer: Were there any additional benefits from the scheme? 

Owner: Yes, we received training on best practices in dairy farming, which improved our overall efficiency and product quality. 

Interviewer: Would you recommend RKVY to other small business owners? 

Owner:Absolutely. The support from RKVY has been crucial in growing our business and increasing our income.

Interviewer: Thank you for sharing your experience, Rajesh. 

Owner: Thank you. 

Sampling 

I used Random Sampling method to select a random person from my target audience which was small business owners and the MSME’s in the agriculture sector. 

Results 

Quantitative Findings 

The analysis of quantitative data reveals a positive and sustainable impact of the Rashtriya Krishi Vikas Yojana (RKVY) on agricultural development and business growth. Budget allocation and disbursement have consistently increased, highlighting a growing investment in the sector. The number of agri-business MSMEs and employment generated have steadily risen, reflecting robust business growth. Concurrently, the number of loans sanctioned and the average loan size have gradually increased, while the default rate has decreased, suggesting improved financial health and creditworthiness of these businesses. Agricultural productivity and output have shown a consistent upward trend, indicating enhanced efficiency and productivity. Furthermore, the number of new market linkages and infrastructure projects has steadily grown, demonstrating improved market access and infrastructure development for agri-businesses. 

Qualitative Findings 

Small enterprises and MSMEs have benefited greatly from the Rashtriya Krishi Vikas Yojana (RKVY), which has promoted sustainability and growth. A rise in agribusiness MSMEs and employment has resulted from consistent increases in budget allocations and disbursements. Industries and agricultural productivity have improved due to increased financial support and access to markets. A lot of businesses claimed success stories, such growth, job creation, and sustainability initiatives, despite encountering market rivalry and governmental obstacles. Increased loans, better infrastructure, and higher agricultural outputs are all results of the system; yet, awareness and accessibility issues still exist. 

Policy Implications 

Strengths:

1. Offers financial assistance for farming endeavours, hence helping MSMEs in the agricultural supply chain. 
2. Is focused on developing rural infrastructure, increasing MSMEs' access to markets in such regions. 
3. Includes programmes with the goal of improving MSMEs' earnings, increasing agricultural productivity, and developing skills. 

Weaknesses: 

1. Focuses mostly on agricultural MSMEs, with limited assistance for small enterprises in other industries. 
2. Has difficulties with implementation, such as financial setbacks and red tape. 3. There can be a lack of integration with other MSME support policies, which could result in assistance gaps or overlaps. 

Conclusion 

The results of this study demonstrate the significant and beneficial effects of recent government initiatives, particularly the Rashtriya Krishi Vikas Yojana (RKVY), on the growth and long-term survival of small enterprises in India's agriculture industry. The quantifiable data shows that funding for infrastructure projects, market connections, financial support, and budget allocations have all increased steadily, creating more jobs and MSMEs in the agribusiness sector. Enhancements in agricultural output and productivity also show how beneficial the programme is. 

Qualitative insights highlight the actual benefits of such policies, such as improved business capacity, decreased operational inefficiencies, and increased profitability. These insights come primarily from small business owners like Rajesh Kumar. Nonetheless, obstacles to implementation, lack of understanding, and accessibility problems continue to exist, indicating areas where policy needs to be improved. 

All things considered, the study emphasises how important government programmes are to creating an atmosphere that is favourable to the growth of small businesses. Maintaining sustainable economic growth and meeting the changing demands of small businesses need ongoing assessment and modification of these policies. The report highlights the strengths and weaknesses that policymakers should take into account to improve future approaches and eventually strengthen India's small enterprises, which are the backbone of the country's economy.

References 

1. Ministry of Agriculture & Farmers Welfare, Government of India. (2019). *Rashtriya Krishi Vikas Yojana Annual Report 2018-2019*. Retrieved from 

[http://agricoop.nic.in](http://agricoop.nic.in) 

2. Ministry of Agriculture & Farmers Welfare, Government of India. (2020). *Rashtriya Krishi Vikas Yojana Annual Report 2019-2020*. Retrieved from 

[http://agricoop.nic.in](http://agricoop.nic.in) 

3. Ministry of Agriculture & Farmers Welfare, Government of India. (2021). *Rashtriya Krishi Vikas Yojana Annual Report 2020-2021*. Retrieved from 

[http://agricoop.nic.in](http://agricoop.nic.in) 

4. Ministry of Agriculture & Farmers Welfare, Government of India. (2022). *Rashtriya Krishi Vikas Yojana Annual Report 2021-2022*. Retrieved from 

[http://agricoop.nic.in](http://agricoop.nic.in) 

5. Reserve Bank of India. (2022). *Annual Report on Banking and Financial Services*. Retrieved from [https://rbi.org.in](https://rbi.org.in)
6. National Sample Survey Office. (2020). *Key Indicators of Agricultural Households in India*. Retrieved from [http://mospi.nic.in](http://mospi.nic.in)
7. Federation of Indian Chambers of Commerce & Industry (FICCI). (2022). *Impact of Rashtriya Krishi Vikas Yojana on MSMEs*. Retrieved from [https://ficci.in](https://ficci.in)
8. Indian Council for Research on International Economic Relations (ICRIER). (2021). *Agricultural Productivity and Market Linkages in India*. Retrieved from [https://icrier.org](https://icrier.org)
9. National Bank for Agriculture and Rural Development (NABARD). (2022). *NABARD Annual Report 2021-22*. Retrieved from [https://nabard.org](https://nabard.org)
10. Confederation of Indian Industry (CII). (2022). *Agribusiness and the Role of RKVY in India*. Retrieved from [https://cii.in](https://cii.in)

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