Role Of Government In Developing Entrepreneurs

8/7/2019 Role Of Government In Developing Entrepreneurs

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Role Of Government In Developing Entrepreneurs

ENTREPRENEUR

An Entrepreneur is an individual who efficiently and effectivelycombines the four factors of production. Those factors are land(natural resources), labor (human input into production using availableresources), capital (any type of equipment used in production i.e.

machinery) and Enterprise (intelligence, knowledge, and creativity.)

Entrepreneurship is often difficult and tricky, as many new venturesfail. is often . Most commonly, the term entrepreneur applies tosomeone who creates value by offering a product or service.Entrepreneurs often have strong beliefs about a market opportunityand organize their resources effectively to accomplish an outcome that

changes existing interactions.

Business entrepreneurs are viewed as fundamentally important in thecapitalistic society. Some distinguish business entrepreneurs as either"political entrepreneurs" or "market entrepreneurs," while socialentrepreneurs' principal objectives include the creation of a socialand/or environmental benefit.

The Enterprise can be set up in a designated industrial areas, whereinfrastructure facilities are available and is near to the marketidentified. It can also be set up in any other area depending upon

nature of activity and local municipal rules.

Entrepreneurship is the practice of starting new organizations orrevitalizing mature organizations, particularly new businesses generallyin response to identified opportunities. Entrepreneurship is often adifficult undertaking, as a vast majority of new businesses fail.Entrepreneurial activities are substantially different depending on thetype of organization that is being started. Entrepreneurship ranges inscale from solo projects (even involving the entrepreneur only part-time) to major undertakings creating many job opportunities. Many

"high-profile" entrepreneurial ventures seek venture capital or angelfunding in order to raise capital to build the business. Angel investorsgenerally seek returns of 20-30% and more extensive involvement inthe business. Many kinds of organizations now exist to support would-be entrepreneurs, including specialized government agencies, businessincubators, science parks, and some NGOs.

CHARACTERISTICS OF AN ENTREPRENEUR


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Entrepreneurs have many of the same character traits as leaders,similar to the early great man theories of leadership; Entrepreneursare often contrasted with managers and administrators who are said tobe more methodical and less prone to risk-taking. Such person-centricmodels of entrepreneurship have shown to be of questionable validity,not least as many real-life entrepreneurs operate in teams rather than

as single individuals

y The Entrepreneur has an enthusiastic vision.y The Entrepreneur's vision is an interlocked collection of specific

ideas.y The overall blueprint to realize the vision is clear.y The Entrepreneur promotes the vision with enthusiastic passion.y The Entrepreneur develops strategies to change the vision into

reality.y The Entrepreneur takes the initial responsibility to cause a vision

to become a success.

y Entrepreneurs take prudent risks.y An Entrepreneur is usually a positive thinker and a decision

maker.

ADVANTAGES OF ENTREPRENEURSHIP

Every successful entrepreneur brings about benefits not only forhimself/ herself but for the municipality, region or country as a whole.The benefits that can be derived from entrepreneurial activities are asfollows:

1.Enormous personal financial gain.2. Self-employment, offering more job satisfaction and flexibility ofthe work force.

3. Development of more industries, especially in rural areas orregions disadvantaged by economic changes, for example due toglobalization effects.

4. Encouragement of the processing of local materials into finishedgoods for domestic consumption as well as for export.

5. Income generation and increased economic growth.6. Promotion of the use of modern technology in small-scale

manufacturing to enhance higher productivity.7. Encouragement of more researches/ studies and development of

modern machines and equipment for domestic consumption.8. Development of entrepreneurial qualities and attitudes among

potential entrepreneurs to bring about significant changes in therural areas.

9. Freedom from the dependency on the jobs offered by others.10. The ability to have great accomplishments.

CONTRIBUTIONS OF ENTREPRENEURS


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1) Develop new markets.

Under the modern concept of marketing, markets are people who arewilling and able to satisfy their needs. In Economics, this is calledeffective demand. Entrepreneurs are resourceful and creative. Theycan create customers or buyers. This makes entrepreneurs different

from ordinary businessmen who only perform traditional functions ofmanagement like planning, organization, and coordination.

2) Discover New Sources Of Materials.

Entrepreneurs are never satisfied with traditional or existing sources ofmaterials. Due to their innovative nature, they persist on discoveringnew sources of materials to improve their enterprises. In business,those who can develop new sources of materials enjoy a comparative

advantage in terms of supply, cost and quality.

3) Mobilize Capital Resources.

Entrepreneurs are the organizers and coordinators of the major factorsof production, such as land labor and capital. They properly mix thesefactors of production to create goods and service. Capital resources,from a layman's view, refer to money. However, in economics, capitalresources represent machines, buildings, and other physical productiveresources. Entrepreneurs have initiative and self-confidence inaccumulating and mobilizing capital resources for new business orbusiness expansion.

4) Introduce new technologies.

Aside from being innovators and reasonable risk-takers, entrepreneurstake advantage of business opportunities, and transform these intoprofits. So, they introduce something new or something different. Suchentrepreneurial spirit has greatly contributed to the modernization ofeconomies. Every year, there are new technologies and new products.All of these are intended to satisfy human needs in a more convenientand pleasant way.

5) Create Employment.

The biggest employer is the private business sector. Millions of jobs areprovided by the factories, service industries, agricultural enterprises,and the numerous small-scale businesses.

PROMOTION OF ENTREPRENEURSHIP


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Entrepreneurship was potential to support economic growth and socialcohesion, it is the policy goal of many governments to develop aculture of entrepreneurial thinking. This can be done in a number ofways: by integrating entrepreneurship into education systems,legislating to encourage risk-taking, and national campaigns

Many of these initiatives have been brought together under theumbrella of Global Entrepreneurship Week, a worldwide celebrationand promotion of youth entrepreneurship, which started in 2008.

FINANCIAL ASSISTANCE

Financial assistance is available from institutions such as NationalisedBanks, Small Industries Development Bank of India, Regional RuralBanks, National Small Industries Corporation, State FinancialCorporations etc. depending upon the project requirement andpromoters background. Financial assistance has two components. Loan

for fixed capital is used to acquire Plant and Machinery, land andbuilding. Working capital loan is used to meet day to day operationalcost of the production. State Financial Corporation and National SmallIndustries Corporation generally provide working capital. Howeverunder a package assistance, State Financial Corporations also providea composite loan covering plant and machinery and working capital.

The general conditions for getting financial assistance are:

y Eligibility criteriay Technical /Economic viabilityy Promoters contributiony Capacity to repay loany Collateral securities/guarantee

THE ROLE OF GOVERNMENT IN SUPPORTING

ENTREPRENEURSHIP

Small and Medium-sized Enterprises (SMEs) in market economies arethe engine of economic development. Owing to their privateownership, entrepreneurial spirit, their flexibility and adaptability aswell as their potential to react to challenges and changingenvironments, SMEs contribute to sustainable growth and employmentgeneration in a significant manner.


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SMEs have strategic importance for each national economy due a widerange of reasons. Logically, the government shows such an interest insupporting entrepreneurship and SMEs. There is no simpler way tocreate new job positions, increasing GDP and rising standard ofpopulation than supporting entrepreneurship and encouraging andsupporting people who dare to start their own business. Every

surviving and successful business means new jobs and growth of GDP.

Therefore, designing a comprehensive, coherent and consistentapproach of Council of Ministers and entity governments toentrepreneurship and SMEs in the form of government supportstrategy to entrepreneurship and SMEs is an absolute priority. Acomprehensive government approach to entrepreneurship and SMEswould provide for a full coordination of activities of numerousgovernmental institutions (chambers of commerce, employment

bureaus, etc.) and NGOs dealing with entrepreneurship and SMEs.With no pretension of defining the role of government in supportingentrepreneurship and SMEs, we believe that apart from designing acomprehensive entrepreneurship and SMEs strategy, the developmentof national SME support institutions and networks is one of keycondition for success. There are no doubts that governments shouldcreate different types of support institutions:

i) To provide information on regulations, standards,

taxation, customs duties, marketing issues;

ii) To advise on business planning, marketing andaccountancy, quality control and assurance;

iii) To create incubator unitsproviding the space andinfrastructure for business beginnersand innovative companies, andhelping them to solve technological problems, and to search for know-how and promote innovation; and

iv) To help in looking for partners. In order to stimulateentrepreneurship and improve the business environment for small

enterprises.

Training


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Basic training differs from product to product but will necessary involvesharpening of entrepreneurial skills. Need based technical training isprovided by the Govt. & State Govt. technical Institutions.

There are a number of Government organisations as well as NGOs whoconduct EDPs and MDPs. These EDPs and MDPs and are conducted byMSME's, NIESBUD, NSIC, IIE, NISIET, Entrepreneurship DevelopmentInstitutes and other state government developmental agencies.

Marketing Assistance

There are Governmental and non-governmental specialised agencieswhich provide marketing assistance. Besides promotion of MSMEproducts through exhibitions, NSIC directly market the MSME producein the domestic and overseas market. NSIC also manages a singlepoint registration scheme for manufacturers for Govt. purchase. Unitsregistered under this scheme get the benefits of free tender documentsand exemption from earnest money deposit and performanceguarantee.

Promotional Schemes

Government accords the highest preference to development of MSMEby framing and implementing suitable policies and promotionalschemes. Besides providing developed land and sheds to theentrepreneurs on actual cost basis with appropriate infrastructure,special schemes have been designed for specif ic purposes like qualityupgradation, common facilities, entrepreneurship development andconsultancy services at nominal charges.

Government of India has been executing the incentive scheme forproviding reimbursement of charges for acquiring ISO 9000

certification to the extent of 75% of the cost subject to a maximum ofRs. 75,000/- in each case. ISO 9000 is a mechanism to facilitateadoption of consistent management practices and production techniqueas decided by the entrepreneur himself. This facilitates achievement ofdesired level of quality while keeping check on production process and

management of the enterprise.


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Concession on Excise Duty

MSME units with a turnover of Rs. 1 crore or less per year have beenexempted from payment of Excise Duty. Moreover there is a general

scheme of excise exemption for MSME brought out by the Ministry ofFinance which covers most of the items. Under this, units havingturnover of less than Rs. 3 crores are eligible for concessional rate ofExcise Duty. Moreover, there is an exemption from Excise Duty forMSME units producing branded goods in rural areas

Credit Facility To MSME

Credit to micro, small and medium scale sector has been covered

under priority sector lending by banks. Small Industries DevelopmentBank of India (SIDBI) has been established as the apex institution forfinancing the MSME. Specific schemes have been designed forimplementation through SIDBI, SFCs, Scheduled Banks, SIDCs andNSIC etc. Loans upto Rs. 5 lakhs are made available by the bankswithout insisting on collaterals. Further Credit Guarantee Fund formicro, small and medium enterprises has been set up to provideguarantee for loans to MSME up to Rs. 25 lakhs extended byCommercial Banks and some Regional Rural Bank.

Policies And Schemes For Promotion Of MSME Implemented By

State Governments

All the State Governments provide technical and other support servicesto small units through their Directorates of Industries, and DistrictIndustries Centres. Although the details of the scheme vary from stateto state, the following are the common areas of support.

1. Development and management of industrial estates2. Suspension/deferment of Sales Tax3. Power subsidies4. Capital investment subsidies for new units set up in a particular

district5. Seed Capital/Margin Money Assistance Scheme6. Priority in allotment of power connection, water connection.


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7. Consultancy and technical supportGovernment of India runs a scheme for giving National Awards tomicro, small and medium scale entrepreneurs providing qualityproducts in 11 selected industry groups of consumer interest. Thewinners are given trophy, certificate and a cash price of Rs. 25000/-

each.

CONCLUSION

Government accords the highest preference to development of MSMEby framing and implementing suitable policies and promotionalschemes like policies and promotional schemes, providing incentivesfor quality upgradation, concession on excise duty and providestechnical supportive services. Thus Government play supportive role indeveloping entrepreneurs.

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Role Of Government In Developing Entrepreneurs