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How Socio-Economic and Natural Resource Inequality Impedes Entrepreneurial Ventures of Farmers in Rural India

  • Ram RanjanEmail author
Original Article
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Abstract

Entrepreneurial ventures potentially offer a way out for farmers facing stagnant livelihoods in drought-ridden farming. We develop a model where entrepreneurial success of marginal farmers is linked to their ability to overcome the challenges posed by the existent socio-economic and environmental inequalities. Farmers with lower socio-economic status receive an unequal share of irrigation water from common reservoirs, which impedes their ability to accumulate financial capital and start an enterprise. Findings suggest that less endowed farmers could end up inefficiently dedicating resources towards reducing social inequality through a process of social friction, which adversely affects their livelihood prospects. When both farming and entrepreneurial ventures are prone to failure, farmers may stay within farming for longer despite higher failure risk. When agricultural exit risk is higher and enterprise failure risk lower, farmers are forced to invest more time in farming and mitigating such risks, which, in turn, delays their success in business.

Keywords

Rural entrepreneurship Social inequality Environmental injustice Non-farm enterprise Caste-based conflicts Water scarcity 

Résumé

Les initiatives entrepreneuriales offrent une solution potentielle de sortie pour les agriculteurs confrontés à des moyens de subsistance stagnants dans l’agriculture ravagée par la sécheresse. Nous développons un modèle où le succès entrepreneurial des agriculteurs marginaux est lié à leur capacité à surmonter les défis posés par les inégalités socio-économiques et environnementales existantes. Les agriculteurs ayant un statut socioéconomique inférieur reçoivent une part inégale de l’eau d’irrigation provenant de réservoirs communs, ce qui entrave leur capacité d’accumuler du capital financier et de démarrer une entreprise. Les résultats suggèrent que les agriculteurs moins aisés financièrement pourraient finir par consacrer inefficacement des ressources à la réduction des inégalités sociales par le biais d’un processus de friction sociale, qui affecte négativement leurs perspectives de subsistance. Lorsque les initiatives agricoles et entrepreneuriales sont toutes deux sujettes à l’échec, les agriculteurs ont tendance à rester dans l’agriculture plus longtemps malgré un risque d’échec plus élevé. Lorsque le risque de sortie de l’agriculture est plus élevé et le risque d’échec de l’entreprise plus faible, les agriculteurs sont obligés d’investir plus de temps dans l’agriculture pour atténuer ces risques, ce qui, à son tour, retarde leur succès dans les affaires.

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Copyright information

© European Association of Development Research and Training Institutes (EADI) 2018

Authors and Affiliations

  1. 1.Department of Environmental Sciences, Faculty of Science and EngineeringMacquarie UniversitySydneyAustralia

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