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Cos must create markets for products in rural areas'
The Hindu Business Line, Oct. 27, 2006
Look at urban and rural India as unified mass: CII chief
Companies must look at urban and rural India as a unified mass (unlike the
present urban-rural divide) as this makes business sense, according to Mr R.
Seshasayee, President, Confederation of Indian Industry (CII), and Managing
Director of Ashok Leyland.
"We tend to think that rural aspirations are different from urban aspirations. But
this is not so," he said, speaking at a seminar on `Rural empowerment Entrepreneurial skills development' organised by CII - southern region.
"Growth will come only from rural markets. By creating a market for products in
rural areas, we can truly empower the rural masses," he said.
To nurture business in rural areas, credit-lending institutions should not limit
credit based on assets like land. Instead, credit must be given to a commercially
viable idea, he said.
Dr Nachiket Mor, Deputy Managing Director, ICICI Bank, said it was expensive to
serve the poor. "The transaction cost for loans ranging between Rs 10,000 and
Rs 25,000 is about 20 per cent of the loan value. This makes it difficult for banks
to set up rural branches," he said.
To help small and medium enterprises (SMEs) scale up business, ICICI Bank has
created a trust to fund intermediary companies which will in turn help in
developing markets for SMEs to sell their products.
SMEs lack new skills to scale up business, said Dr Mor. He cited the example of
how companies often did not understand equity sharing. They do not disclose
profits because they know that profits have to be shared, he said. He
emphasised on the need for a monitoring body to track the progress of SMEs.
CII and Hand-in - Hand, an NGO, jointly released a manual to help SMEs scale
up their business. The manual covers areas such as skill training and mentoring
besides providing business-related sections such as accounting and maintaining
records. Released in English and Tamil, the manual is priced at Rs 600 and Rs
750 respectively.