7 Role of Small Business in Rural India

Small Business Meaning

Small businesses are small in size are owned & controlled by limited people. These are privately owned business. These may be sole proprietorship, corporation or partnership firm. There are a small number of people involved & working in these businesses.

Small businesses enjoy several rights from the government in terms of financial aid & tax exemptions. These businesses require less amount of capital to start. Even a single person can start & run these businesses. Small businesses work on low-profit margins & have low annual turnover.

There exists to provide profits to its owners & to serve the local community where it exists. These are generally situated & operated in rural parts of the country. It helps in providing employment to large peoples & removes poverty from the rural economy.

Role of Small Business in Rural India

Role of Small Business in Rural India
Role of Small Business in Rural India

Generates Employment

Small businesses employ large people in small rural areas. These businesses are basically labour intensive in nature. They employs a large number of unskilled labours in their operations.

This helps in earning income for many peoples in rural areas. These businesses play an effective role in reducing poverty & improving the economy of rural areas.

Reduce rural to urban migration

Small businesses operating in rural areas have an effective role in reducing the migration of peoples from rural areas to urban areas. People basically migrate from rural to urban in search of employment opportunities & a better standard of living.

These businesses provide employment opportunities for large people. These also have a role in rural development. This way it helps in the migration of peoples from rural to urban areas.

Best utilisation of local resources

 Rural areas in our country are enriched with different resources. These resources are sufficient & cheap raw materials, barren land & cheap labours. Industries when are situated here make the best utilisation of all these resources.

These resources otherwise would be lying idle & remain unused. This helps in improving the economy of the rural sector & removing poverty.

Promotes rural development & growth

Rural development is one of the important role played by industries located there. These businesses help in removing poverty from rural areas.

It helps in improving the rural economy by promoting several development programs there. A large number of people gets employment because of these industries & are earning their livelihood.

Equitable distribution of income

Small businesses require a small amount of capital to establish & operate. This encourages many individuals to start their own businesses in rural areas. Therefore, there are a large number of small businesses operating all over the country.

These help in reducing the concentration of wealth with just some rich persons. It is equally distributed among a large number of small rural industrialists. This way it helps in removing the inequalities of income among peoples.

Improves standards of living

Industries in rural areas aimed at improving the standards of peoples living there. It caters all needs & demand of the rural population. These industries provide better quality products at cheap costs to rural population.

Also, these provide an income source to a large number of rural people. This way these play an efficient role in increasing the standards of living of peoples living there.

Increase tax revenue

There is a large number of industries operating in rural areas all over the country. These are efficiently working & generating sufficient revenue. These industries are required to pay tax to the government on their incomes.

When there will be more industries operating, revenue of government will definitely increase. This revenue generated by the government is used for various rural development programmes.


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