The Ministry of Finance, Government of India, in its latest economic review, has talked about the goal of making India a $7 trillion economy by 2030. In the next three years, India is expected to become the world’s third largest economy (around $5 trillion).
With such great aspirations of the government and the masses, it is imperative to promote livelihood opportunities at the grassroot level. One of the interventions that can boost such activities is entrepreneurship development (nano-entrepreneurship) in every corner of the country.
Sandeep Lanjewar, Director, Palladium India, in conversation with ETGovernment, sheds light on the steps that are being taken to promote nano-entrepreneurship.
Edited excerpts:
What is nano-entrepreneurship? Why do you think it is important?
As per Government policy and classification in India, the MSME sector includes Micro, Small, and Medium Enterprises, and over 24 million of them are registered with the Ministry of MSME. The Micro enterprises, representing 97% of all registered MSMEs, play a pivotal role in India’s economy, contributing 30% to GDP and 45% to exports. While we celebrate their contributions, we often overlook the fact that not all may have an annual turnover of ₹5 crore. There are still smaller businesses, about 11 million strong forces with an annual turnover of less than ₹1 crore–they are local shops, home-based businesses and independent service providers. This category of micro enterprises is referred to as nano-enterprises.
These nano-enterprises wield significant economic influence, and serve as major job creators, with estimates suggesting a range from 2 to 15 employees per enterprise, resulting in millions of jobs nationwide. Their hyperlocal focus enables them to cater to the specific needs of their immediate communities, bridging crucial gaps in last mile delivery essential services and goods. This localized approach not only strengthens the social fabric but also fosters a sense of community cohesion. The full potential of nano-entrepreneurship remains largely untapped, as many operate informally, hindering their access to credit and resources.How is Palladium working to foster these nano entrepreneurs in Swakalpa?Swakalpa is an entrepreneurship development program promoted by the Odisha Skill Development Authority (OSDA) and World Skill Centre (WSC) and funded by the Asian Development Bank (ADB), with Palladium serving as the lead implementation partner.
Palladium is implementing this program in 27 districts right now by providing a 104-hour training in self-employment and entrepreneurship development to 10,000 youth, women and other candidates aged between 15 and 45 years.
What sets this program apart is its unique post-training phase, which involves a six-month mentorship program for 1,000 shortlisted candidates. Through this mentorship, we assist participants in setting up their businesses, navigating legal compliances, establishing market linkages, accessing credit facilities, and scaling up their enterprises. Initially, we took time to prepare a comprehensive approach and develop framework and processes to ensure all outcomes of the program are met. We kept adapting throughout the program and hence have been able to achieve the results. We do not believe in working in silos and one of our success factors has been to involve diverse partners to build a comprehensive ecosystem for entrepreneurs to thrive.
To facilitate extensive training, especially in remote districts, Palladium has partnered with training partners such as Learnet, HBD, Trouville, NRDC, People’s Forum, and others. These collaborations not only enable us to offer a diverse array of comprehensive training programs, but also help us reach out to clusters for creating businesses in even difficult and aspirational districts, addressing multifaceted aspects of entrepreneurship.
How much has Swakalpa been able to achieve and what were the challenges?
When we started the program, the National Skill Development Corporation (NSDC) that drives the skilling programs in India, didn’t have a specific training module and program on entrepreneurship development. We developed our own content and got it approved by MEPSC, a sector skill council for entrepreneurship under NSDC. The Swakalpa program stands out because not many government initiatives offer both training and long term dedicated mentorship. While a couple of states might have similar programs, we had to craft our own frameworks tailored to our context and goals. These frameworks evolved through numerous revisions based on our practical experiences, highlighting what works and what doesn’t.
Mentorship is pivotal in helping these enterprises thrive and endure. It provides entrepreneurs with crucial guidance across various business aspects. Identifying suitable candidates was a major hurdle, addressed through meticulous screening, resulting in a high conversion rate. This also tackled the challenge of candidates being self driven, as our program lacks financial incentives, attracting only the most committed individuals. Access to finance, particularly without credit history, poses another significant challenge. Unlike startups with planned funding and innovative solutions, our focus is on nano-entrepreneurs who often start from home, converting their skills into businesses.
Despite facing numerous challenges, one year into the program, we have successfully enrolled over 10,000 candidates for training, and certified more than 8,500 with an impressive 70% representation of women. About 330 businesses have been set up across 40+ trades, along with enablement of market or credit linkages, with 75% of them being spearheaded by women. What’s truly uplifting is witnessing the emergence of these nano-entrepreneurs who are not only creating opportunities for themselves but also generating employment within their communities, thus fostering a ripple effect of positive impact.
One of the major challenges you mentioned was access to credit, so have you been able to address that in Swakalpa?
Entrepreneurs without credit history face challenges in securing business loans. To counter this, we’ve devised alternative credit mechanisms and assisted in their business plan preparation. By linking them to government schemes like Mudra, PMeGP, and PMFME, and collaborating with banks such as SBI and PNB, we’ve expanded their access to credit. Additionally, partnerships with non-banking institutions and digital payment providers facilitate access to innovative financial products. Our efforts have yielded over 300 loan applications so far totaling INR 4.3 Cr. in the last 2-3 months, with approximately 20% already sanctioned, ensuring these nano entrepreneurs receive the necessary financial support to thrive.
How crucial do you consider digital technologies in fostering entrepreneurial success?
I would argue that in today’s landscape, entrepreneurs can’t afford to overlook technology. Digital literacy, financial literacy, and understanding fintech are fundamental to business growth. Utilizing tools like UPI and digital marketplaces enables businesses to scale without heavy capital investments. As I mentioned earlier, digital payment providers offer incredible solutions such as loans based on online transactions, without requirement of credit history. Additionally, we’re championing technologies like Kosha. AI for traceability in the handloom and handicraft sectors, ensuring fair prices for artisans. Partnering with e-commerce platforms like MEESHO expands market access for entrepreneurs, eliminating GST, delivery charges, and commissions. The government’s Digital Public Infrastructure initiative has triggered a radical behavioural change, which has significantly boosted technology adoption, particularly UPI.
Swakalpa is a blueprint for skilling and entrepreneurship programs. What are your plans for this initiative?
We have built a unique solution which many industry leaders, government officials, and other practitioners told us is one of its kind in the country. We are looking to help other state governments, foundations, and donors to leverage the learnings and adopt this approach, in order to fast-track the growth of nano-entrepreneurs in their target states. It’s crucial to unlock the hidden potential of India’s nano-entrepreneurs and propel them towards scaling up to micro and macro levels, thereby contributing significantly to the nation’s economic development.
