Role Of Government In Developing Entrepreneurs

Role Of Government In Developing Entrepreneurs				- Promoters contribution
				- Capacity to repay loan
ENTREPRENEUR				- Collateral securities/guarantee
An Entrepreneur is an individual who efficiently and
effectively combines the four factors of production.				THE ROLE OF GOVERNMENT IN SUPPORTING
Those factors are land (natural resources), labor				ENTREPRENEURSHIP
(human input into production using available resources),				Small and Medium-sized Enterprises (SMEs) in market
capital (any type of equipment used in production i.e.				economies are the engine of economic development.
machinery) and Enterprise (intelligence, knowledge, and				Owing to their private ownership, entrepreneurial spirit,
creativity.)				their flexibility and adaptability as well as their potential
Entrepreneurship is often difficult and tricky, as many				to react to challenges and changing environments,
new ventures fail. is often . Most commonly, the term				SMEs contribute to sustainable growth and
entrepreneur applies to someone who creates value				employment generation in a significant manner.
by offering a product or service. Entrepreneurs often				SMEs have strategic importance for each national
have strong beliefs about a market opportunity and				economy due a wide range of reasons. Logically, the
organize their resources effectively to accomplish an				government shows such an interest in supporting
outcome that changes existing interactions.				entrepreneurship and SMEs. There is no simpler way
Business entrepreneurs are viewed as fundamentally				to create new job positions, increasing GDP and rising
important in the capitalistic society. Some distinguish				standard of population than supporting
business entrepreneurs as either "political				entrepreneurship and encouraging and supporting
entrepreneurs" or "market entrepreneurs," while social				people who dare to start their own business. Every
entrepreneurs' principal objectives include the creation				surviving and successful business means new jobs
of a social and/or environmental benefit.				and growth of GDP.
The Enterprise can be set up in a designated industrial
areas, where infrastructure facilities are available and is				Therefore, designing a comprehensive, coherent and
near to the market identified. It can also be set up in				consistent approach of Council of Ministers and entity
any other area depending upon nature of activity and				governments to entrepreneurship and SMEs in the
local municipal rules.				form of government support strategy to
				entrepreneurship and SMEs is an absolute priority. A
Entrepreneurship is the practice of starting new				comprehensive government approach to
organizations or revitalizing mature organizations,				entrepreneurship and SMEs would provide for a full
particularly new businesses generally in response to				coordination of activities of numerous governmental
identified opportunities. Entrepreneurship is often a				institutions (chambers of commerce, employment
difficult undertaking, as a vast majority of new				bureaus, etc.) and NGOs dealing with entrepreneurship
businesses fail. Entrepreneurial activities are				and SMEs. With no pretension of defining the role of
substantially different depending on the type of				government in supporting entrepreneurship and SMEs,
organization that is being started. Entrepreneurship				we believe that apart from designing a comprehensive
ranges in scale from solo projects (even involving the				entrepreneurship and SMEs strategy, the development
entrepreneur only part-time) to major undertakings				of national SME support institutions and networks is
creating many job opportunities. Many "high-profile"				one of key condition for success. There are no doubts
entrepreneurial ventures seek venture capital or angel				that governments should create different types of
funding in order to raise capital to build the business.				support institutions:
Angel investors generally seek returns of 20-30% and				i) To provide
more extensive involvement in the business. Many				information on regulations, standards, taxation, customs
kinds of organizations now exist to support would-be				duties, marketing
entrepreneurs, including specialized government				issues;ii) To advise on
agencies, business incubators, science parks, and				business planning, marketing and accountancy, quality
some NGOs.				control and assurance;iii)
CHARACTERISTICS OF AN ENTREPRENEUR				To create incubator units providing the space and
Entrepreneurs have many of the same character				infrastructure for business beginners and innovative
traits as leaders, similar to the early great man theories				companies, and helping them to solve technological
of leadership; Entrepreneurs are often contrasted with				problems, and to search for know-how and promote
managers and administrators who are said to be more				innovation; andiv) To help
methodical and less prone to risk-taking. Such				in looking for partners. In order to stimulate
person-centric models of entrepreneurship have				entrepreneurship and improve the business
shown to be of questionable validity, not least as many				environment for small enterprises.
real-life entrepreneurs operate in teams rather than as
single individuals				Training
- The Entrepreneur has an enthusiastic vision.				Basic training differs from product to product but will
- The Entrepreneur's vision is an interlocked collection				necessary involve sharpening of entrepreneurial skills.
of specific ideas.				Need based technical training is provided by the Govt.
- The overall blueprint to realize the vision is clear.				& State Govt. technical Institutions.
- The Entrepreneur promotes the vision with
enthusiastic passion.				There are a number of Government organisations as
- The Entrepreneur develops strategies to change the				well as NGOs who conduct EDPs and MDPs. These
vision into reality.				EDPs and MDPs and are conducted by MSME's,
- The Entrepreneur takes the initial responsibility to				NIESBUD, NSIC, IIE, NISIET, Entrepreneurship
cause a vision to become a success.				Development Institutes and other state government
- Entrepreneurs take prudent risks.				developmental agencies.
- An Entrepreneur is usually a positive thinker and a
decision maker.				Marketing Assistance
ADVANTAGES OF ENTREPRENEURSHIP
Every successful entrepreneur brings about benefits				There are Governmental and non-governmental
not only for himself/ herself but for the municipality,				specialised agencies which provide marketing
region or country as a whole. The benefits that can be				assistance. Besides promotion of MSME products
derived from entrepreneurial activities are as follows:				through exhibitions, NSIC directly market the MSME
1. Enormous personal financial gain.				produce in the domestic and overseas market. NSIC
2. Self-employment, offering more job satisfaction and				also manages a single point registration scheme for
flexibility of the work force.				manufacturers for Govt. purchase. Units registered
3. Development of more industries, especially in rural				under this scheme get the benefits of free tender
areas or regions disadvantaged by economic changes,				documents and exemption from earnest money
for example due to globalization effects.				deposit and performance guarantee.
4. Encouragement of the processing of local materials				Promotional Schemes
into finished goods for domestic consumption as well				Government accords the highest preference to
as for export.				development of MSME by framing and implementing
5. Income generation and increased economic growth.				suitable policies and promotional schemes. Besides
6. Promotion of the use of modern technology in				providing developed land and sheds to the
small-scale manufacturing to enhance higher				entrepreneurs on actual cost basis with appropriate
productivity.				infrastructure, special schemes have been designed
7. Encouragement of more researches/ studies and				for specific purposes like quality upgradation, common
development of modern machines and equipment for				facilities, entrepreneurship development and
domestic consumption.				consultancy services at nominal charges.
8. Development of entrepreneurial qualities and
attitudes among potential entrepreneurs to bring about				Government of India has been executing the incentive
significant changes in the rural areas.				scheme for providing reimbursement of charges for
9. Freedom from the dependency on the jobs offered				acquiring ISO 9000 certification to the extent of 75%
by others.				of the cost subject to a maximum of Rs. 75,000/- in
10. The ability to have great accomplishments.				each case. ISO 9000 is a mechanism to facilitate
CONTRIBUTIONS OF ENTREPRENEURS				adoption of consistent management practices and
1) Develop new markets.				production technique as decided by the entrepreneur
Under the modern concept of marketing, markets are				himself. This facilitates achievement of desired level of
people who are willing and able to satisfy their needs.				quality while keeping check on production process and
In Economics, this is called effective demand.				management of the enterprise.
Entrepreneurs are resourceful and creative. They can
create customers or buyers. This makes				Concession on Excise Duty
entrepreneurs different from ordinary businessmen
who only perform traditional functions of management				MSME units with a turnover of Rs. 1 crore or less per
like planning, organization, and coordination.				year have been exempted from payment of Excise
2) Discover New Sources Of Materials.				Duty. Moreover there is a general scheme of excise
Entrepreneurs are never satisfied with traditional or				exemption for MSME brought out by the Ministry of
existing sources of materials. Due to their innovative				Finance which covers most of the items. Under this,
nature, they persist on discovering new sources of				units having turnover of less than Rs. 3 crores are
materials to improve their enterprises. In business, those				eligible for concessional rate of Excise Duty. Moreover,
who can develop new sources of materials enjoy a				there is an exemption from Excise Duty for MSME
comparative advantage in terms of supply, cost and				units producing branded goods in rural areas
quality.				Credit Facility To MSME
3) Mobilize Capital Resources.
Entrepreneurs are the organizers and coordinators of				Credit to micro, small and medium scale sector has
the major factors of production, such as land labor and				been covered under priority sector lending by banks.
capital. They properly mix these factors of production				Small Industries Development Bank of India (SIDBI) has
to create goods and service. Capital resources, from a				been established as the apex institution for financing
layman's view, refer to money. However, in economics,				the MSME. Specific schemes have been designed for
capital resources represent machines, buildings, and				implementation through SIDBI, SFCs, Scheduled Banks,
other physical productive resources. Entrepreneurs				SIDCs and NSIC etc. Loans upto Rs. 5 lakhs are made
have initiative and self-confidence in accumulating and				available by the banks without insisting on collaterals.
mobilizing capital resources for new business or				Further Credit Guarantee Fund for micro, small and
business expansion.				medium enterprises has been set up to provide
				guarantee for loans to MSME up to Rs. 25 lakhs
4) Introduce new technologies.				extended by Commercial Banks and some Regional
Aside from being innovators and reasonable				Rural Bank.
risk-takers, entrepreneurs take advantage of business
opportunities, and transform these into profits. So, they				Policies And Schemes For Promotion Of MSME
introduce something new or something different. Such				Implemented By State Governments
entrepreneurial spirit has greatly contributed to the
modernization of economies. Every year, there are				All the State Governments provide technical and other
new technologies and new products. All of these are				support services to small units through their
intended to satisfy human needs in a more convenient				Directorates of Industries, and District Industries
and pleasant way.				Centres. Although the details of the scheme vary from
5) Create Employment.				state to state, the following are the common areas of
The biggest employer is the private business sector.				support.
Millions of jobs are provided by the factories, service
industries, agricultural enterprises, and the numerous				1. Development and management of industrial estates
small-scale businesses.				2. Suspension/deferment of Sales Tax
PROMOTION OF ENTREPRENEURSHIP				3. Power subsidies
Entrepreneurship was potential to support economic				4. Capital investment subsidies for new units set up in
growth and social cohesion, it is the policy goal of				a particular district
many governments to develop a culture of				5. Seed Capital/Margin Money Assistance Scheme
entrepreneurial thinking. This can be done in a number				6. Priority in allotment of power connection, water
of ways: by integrating entrepreneurship into education				connection.
systems, legislating to encourage risk-taking, and				7. Consultancy and technical support
national campaigns				Government of India runs a scheme for giving National
Many of these initiatives have been brought together				Awards to micro, small and medium scale
under the umbrella of Global Entrepreneurship Week, a				entrepreneurs providing quality products in 11 selected
worldwide celebration and promotion of youth				industry groups of consumer interest. The winners are
entrepreneurship, which started in 2008.				given trophy, certificate and a cash price of Rs. 25000
FINANCIAL ASSISTANCE				- each.
Financial assistance is available from institutions such
as Nationalised Banks, Small Industries Development
Bank of India, Regional Rural Banks, National Small
Industries Corporation, State Financial Corporations etc.				CONCLUSION
depending upon the project requirement and
promoters background. Financial assistance has two				Government accords the highest preference to
components. Loan for fixed capital is used to acquire				development of MSME by framing and implementing
Plant and Machinery, land and building. Working capital				suitable policies and promotional schemes like policies
loan is used to meet day to day operational cost of				and promotional schemes, providing incentives for
the production. State Financial Corporation and National				quality upgradation, concession on excise duty and
Small Industries Corporation generally provide working				provides technical supportive services. Thus
capital. However under a package assistance, State				Government play supportive role in developing
Financial Corporations also provide a composite loan				entrepreneurs.
covering plant and machinery and working capital.

The general conditions for getting financial assistance
are:				R.Yuvarani
				M.Phil Scholar
- Eligibility criteria				Department of Commerce,
- Technical /Economic viability				Periyar University, Salem-11.

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Role Of Government In Developing Entrepreneurs