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Contribution of SME in Rural Areas Of The Developing Countries

Updated on February 5, 2014

Though the dependence of the economy of Bangladesh on agriculture has been reduced to a considerable extent from 65.2 per cent in 1949-50 to 54.16 per dent in 1981-82, still the lion’s share of GDP comes from this sector. Around 90 per cent of the population lives in the rural areas and they are directly or indirectly dependent on agriculture for their living. Agriculture is carried on in a most backward and primitive method and production per acre is one of the lowest in the world. In 1969-70, only 4 per cent of cultivable lands were under irrigation in Bangladesh. Hence, agriculture needs to be modernized and its development will continue to dominate the planning process of the country this will call for provision of service facilities to the farmers for their agricultural tools and implements. Locally designed machines and implements will be essential for increased output without causing much damaged to employment. For irrigation purposes there are already more than 44000 low lift pumps in operation. Many of these pumps are locally manufactured and service facility for their maintenance. These will a large number of repair shop and manufacturer for manufacture of spare parts and components through out the country. Since the capacity of pumps vary and the area of usage dispersed, SME repair shops and spare parts manufacturing factories have come up in large numbers in the various parts of the country. This development is the natural outcome of the requirement of the market. Large scale industries can not profitably operate in such cases and deliver goods within a short time. Recognizing the importance of SME in the process of modernization of the agricultural sector, the government has decided to encourage the development of such industries.

If the surplus agricultural workers, landless rural workers, and unemployed millions in the villagers in Bangladesh are to be engaged in some productive occupation, the employment creation must be through the promotion of SME in rural areas of Bangladesh. Promotion of large industries in urban areas and creating employment will intensify the common urban problems already existing there. It is important that in a pre-dominantly agricultural country like Bangladesh, the pattern of industrial development should be in close support of the agricultural development and vice versa. Due to an inadequate and inefficient transport network in the country and the small size of the country, this objective can best be served by the SME and especially for agro-implements and spare parts. The seasonal character of the agriculture of Bangladesh leaves the cultivators without works for a considerable period of the year. The SME can provide them job opportunities during the slack periods. Thus considering the nature of the rural Bangladesh, the promotion and development of SME is the only way out for solving the typical rural related problems of Bangladesh. This is also applicable to other countries similar to Bangladesh. Industrial project reports are prepared by CBECL.


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