Relevance: GS-3: Indian Economy, mobilization of resources, growth, development and employment.

Key Phrases: ICT, Decentralised Programmes, Microenterprises, Rural Households, Digital Training, Access to Information, Digital Divide, Self-Confidence and Awareness, Inclusive Growth.

Why in News?

• ICT improves social linkages, empowering women in particular. Digital access and use can be a game changer in rural areas.

Context:

• Absorption of information and communication technologies (ICT) has become the key for micro enterprises to evolve into growing sustainable businesses. However, digital adoption among businesses has been uneven across sectors and the persisting digital divide poses a serious challenge for India’s rural population.
• It has also been documented that the gap in accessibility arises out of the differences in factors such as income, location, gender and age. These variations underscore the need to identify target groups more clearly and design tailor made decentralised programmes.
• Women in particular often have less access to digital technology than their male counterparts. Thus, there exists a need to increase access to information and communication technology among women in rural areas as the spread of ICT ushers gains only if people having access to technology also have the requisite skills for making optimal use of it.
• Adoption of ICT by micro and household enterprises managed by women will be significant in influencing livelihood outcomes in semi-urban and rural areas.
• Enhanced ICT access for women and increasing their participation in digital entrepreneurial ventures helps increase competitive power for the microenterprises and improve earnings of rural households. Further, an important dimension of empowerment that assumes relevance in a technology driven era is the role of ICT based entrepreneurial activity by the women.

Why Digital Training is Important?

• The digital training imparted to rural communities has created a number of tangible and intangible benefits. It has greatly influenced the way individuals socialise, create and exploit economic opportunities and knowledge resources thereby impacting empowerment of rural communities.
• Smartphones have eased the access to information, in addition to raising monthly family income, expanding occupation/business, finding potential clients, increased social status, created opportunities for learning and developed socialisation.
• Young participants benefited more than older members as the training helped them to use smartphones for educational purposes. In terms of the time spent, we found that smartphones were used more for social and entertainment purposes than for economic purposes.
• The use of smartphones as a way to connect with the online world is increasing along with the emphasis through various initiatives in technology to bridge the digital divide through “digital literacy learning”. The long-term goal of the training should be to enable the use of smartphones for personal and social emancipation. Three outcomes can be identified towards achieving this:
  • First, as a short-term outcome, these trainings lead to the use of features and Apps on the phone. This is the starting point of the causal linkage chain.
  • Second, the intermediate outcome is the enhanced self-confidence and awareness resulting from the use of the features on the phone.
  • Third, the long-term outcome as training results in the use of various Apps for three aspects:
    1. Educational purpose,
    2. Social aspects and
    3. Generating economic benefits.
  • In terms of the long-term outcomes at the micro level, the use of Apps lead to beneficial impacts on self-learning through videos and higher income from business and jobs, all of which could be termed as private/personal individual benefits.
• At the meso-level, the use of Apps leads to better family networks and bonding. This has been facilitated largely through video call facilities. At the macro-level there are larger social benefits such as access to various government schemes and e-governance initiatives, which in the long term would result in more demand and the use of public goods due to the awareness created by the use of smartphones. This in our view would lead to increased empowerment of citizens, especially of women.

Why Micro Firms is important for Indian Economy?

The further Importance of Micro Firms in India has been described below:

• It creates large-scale employment: Enterprises that are inclusive in this sector require low capital to start up new business. Moreover, it creates a vast opportunity for the unemployed people to avail. India produces about 1.2 million graduates per year out of which the total number of engineers are around 0.8 million.
• Economic stability in terms of Growth and leverage Exports: It is the most significant driver in India contributing to the tune of 8% to GDP. It is helpful in creating a linkage between MSME and big companies even after the implementation of the GST 40% MSME sector also applied GST Registration that plays an important role to increase the government revenue by 11%.
• Encourages Inclusive Growth: The inclusive growth is at the top of the agenda of Ministry for Micro, small and Medium-sized enterprises for several years.
• Cheap Labour and minimum overhead: In Micro Firms, the requirement of labour is less and it does not need a highly skilled labourer. Therefore, the indirect expenses incurred by the owner is also low.
• Simple Management Structure for Enterprises: Micro Firms can start with limited resources within the control of the owner. For a micro enterprise does not need to hire an external specialist for its management. The owner can manage himself. Hence, it could run single-handedly.

Way Forward:

• Given the demographic profile and labour market conditions prevailing, there exists a need to increase the scale and scope of digital training in India. We propose a three-pronged strategy for this.
  • First, as there exists variations in the benefits accrued across age, location of residence and income of the participants a more decentralised programme for training with community participation needs to be designed.
  • Second, there is a need to ascertain what specific barriers rural entrepreneurs experience before engaging in large scale ICT interventions and training for small businesses.
  • Third, in designing such interventions institutions need to take into account the medium-term nature of training programmes as a single one time training might not yield desired results. These could help in deriving benefits of the phrase ‘digital literacy’ in the broader sense of the term.
• The government should take the special care by addressing the importance of Micro Firms in terms of providing more and more Micro Firms Registration advantages by implementing better regulations and enable financial institutions to lend more credit at less interest rate for sustainability of this sector.

Source: The Hindu BL

Mains Question:

Q. “Absorption of information and communication technologies (ICT) has become the key for micro enterprises to evolve into growing sustainable businesses”. Critically Analyse the Statement.