Lets ‘Start-up and Stand-up’
Lets ‘Start-up and
Stand-up’
On Jan 16th 2016, the Prime Minister of India launched the much
awaited ‘rock star’ event ‘Start Up India, Stand Up India’ with the objective
of strengthening the entrepreneurial ecosystem in India. According to media
reports, before the event itself the Government was faced with a much difficult
task- how do you assign 1500 passes to around 100,000 prospecting pass seekers?
But the larger question is, should the government try to influence or even
dictate the start-up ecosystem? Can entrepreneurs be created? Can start-ups really
create jobs for millions of India’s youth as envisaged by the Government? Is
being ‘number one in start-ups’ as the PM spelt out on Republic Day speech, more of an aspiration for the country than a practical
goal?
The basic idea of ‘Start up India-Stand Up India’ is to
encourage entrepreneurship in India. In the last few years India has seen a
dramatic change in the start-up scenario since Sanjeev Bhikchandani launched
Naukri.com, our own home grown start-up. Much like the telecom entrepreneurs
who took advantage of a liberalised economy with minimum government
intervention, the start-up boom in India has followed a similar path. Actually it’s
not a smooth ride. When Ola launched its operations in Mumbai way back in 2008,
it has to shut it down within a few months and move to Bengaluru due to
regulatory hurdle of not having a permit to run a taxi service. Similarly
everyone is aware of the regulatory issues that Flipkart is still facing
without clarity from the authorities as to how to define marketplace models.
Speaking in San Jose, California during his much publicised
visit to the Silicon Valley, Modi spelt out his vision of a nation with where
each of its 600,000 villages produces six small businesses regularly. This
according to him will create a large number of jobs in the country. A very
noble idea, but the challenge is that how do we go ahead doing this? If we look
at Silicon Valley which is the global benchmark for the ‘start-up’ ecosystem,
the valley attracted entrepreneurs not because of any government intervention
but as a result of an existing network of well funded universities, government
research centres and commercial scientific labs. This attracted a large
population of educated and skilled individuals with a risk taking,
entrepreneurial culture. Similar efforts to replicate Silicon Valley across the
globe have mixed success. Our own Silicon Valley, Bengaluru similarly provides an
ecosystem quite like the original one.
At present, majority of the start-ups in India are replicas of
successful business models that have evolved out of the valley and being
replicated here. It targets a growing urban middle class with a product or
service- majority in the service domain with support from Venture Funds based
out of the Silicon Valley. The idea is to quickly implement a tried and tested
model, scale it up fast and provide an opportunity for existing investors to
exit at higher valuations.
India’s tryst with the services sector as a creator of jobs has
been a big no-show. Although share of services sector as a percentage of GDP
has increased to around 52% and has a higher share in income at around 60%, but
the same contributes only 28% towards employment creation. That’s why India’s
GDP growth has been seen as ‘jobless’.
Let’s take a look at some of the ‘unicorns’ of India’s start
up scenario and their impact on job creation. With huge disruption in the
traditional ‘brick and mortar’ models that these start-ups forced retail chains
to relook at their expansion plans and also scale back their investment in new
stores. As a result a lot of young semi-skilled individuals who found opportunities
as sales staff in these physical stores lost their jobs. The new wave of
start-ups did create jobs- but they are either for high skilled individuals or
low paid low-skilled like delivery boys. Semi-skilled young girls who were
displaced as a result of closure of the physical stores were not able to find
opportunities with this huge online marketplace boom. With a young population
of around 250 million with almost 70% living in rural areas, unless start-ups
bring in disruptions to the rural economy, India will remain a country with
‘jobless’ GDP growth.
Imbibing a culture of entrepreneurship to create jobs in
rural India is definitely the need of the hour. But promoting and showcasing
existing start-ups as the ‘Start-up India. Stand Up India’ launch did, might
not be the right way forward. For jobs to be created we need to create policies
that focus on promoting rural enterprises targeted at both farm and non-farm
sector. Even the present ‘Skill India’
program needs to be tweaked to focus more on skilling India’s youth in rural
and peri-urban areas. Entrepreneurship can’t be thought or created. As we have
seen from Silicon Valley and Bengaluru success, it needs an enabling ecosystem
to flourish so that the youth take up risk knowing that the ecosystem can
support them in their endeavours. For this the Government needs to deliver on its promise of ‘Less Government and More
Governance’ by weaving decentralization, locality, size, and scale to
livelihood, which means that the materials, energy, and knowledge that one
needs to live should come from areas around us. When food is exported,
when technology is centralized, when shelter depends on some remote housing
policy, we lose our freedom as a community and this hampers innovations at the
community level. And both the Government and Industry have a common
responsibility towards this, because an innovative rural India not only helps
the Government in its promise of job creation but opens a huge market for the
Industries. So lets ‘Start-up and Stand-up’ but for the other halves also.
Rahul Barkataky
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