The Rise of Indian Entrepreneurs: A Reality Check

Why in News?

• Atmanirbhar Bharat, or a self-reliant India, is among the most prominent stated goals of the present government.
• Recently a report was released by Capital Group which highlighted nine factors that made “India appealing compared with other emerging markets.”
• Amidst all these reports and government’s policies it is imperative to understand the correct employment picture. 

 

The Vision of Atmanirbhar Bharat (Self-Reliant India)

• The idea is that the country will achieve self-reliance in a whole host of economic activities.
• An associated idea, pushed forward by the government, has been to convince people that they should not look towards the government for an official job.
• The Indian government has long sought to boost domestic entrepreneurship.
• The current dispensation has consistently pushed for the private sector to take the lead in creating jobs.
• A necessary corollary of such growth would be the rise of entrepreneurship in India.

 

Select Government Schemes to Support Entrepreneurship in India

• Startup India Scheme
  • This scheme was launched to promote and support startups in India by providing them with funding, tax benefits, and other incentives.
  • It also provides legal and regulatory support and helps startups to network and collaborate with investors, mentors, and other entrepreneurs.
• Mudra Yojana Scheme
  • This scheme provides financial assistance to small and micro enterprises, including startups, through loans of up to INR 10 lakhs.
  • The scheme has been designed to cater to the financial requirements of startups and small businesses in the country.
• Stand-Up India Scheme
  • This scheme was launched to promote entrepreneurship among women and SC/ST entrepreneurs.
  • Under this scheme, loans of up to INR 1 crore are provided to eligible entrepreneurs to start or expand their businesses.
• Atal Innovation Mission (AIM)
  • AIM is a government initiative that aims to promote innovation and entrepreneurship in the country.
  • The mission provides funding, mentorship, and other support to startups and entrepreneurs working on innovative ideas.
• Electronic Development Fund (EDF)
  • The EDF is a fund set up by the government to provide financial assistance to startups and small businesses working in the electronics and IT sectors.
  • The fund provides equity, debt, and other forms of funding to eligible companies.

 

Current Employment Picture

• The government has argued that due to key reforms, India is witnessing a surge in domestic entrepreneurs.
• However, reports suggests that India’s labour market experiences considerable joblessness and a general lack of employment opportunities despite a significant GDP growth rate.
• The Centre for Monitoring Indian Economy (CMIE) released data that suggests most of the new jobs created in the form of self-employment.

 

Where and How Indians Work?

• According to CMIE, the total employment in India in January-April 2023 stood at 412.9 million.
• This is 8.6 million more than what it was before the pandemic (that is, during January-April 2019).
• The total employed people can be further categorised into several other categories.
• However, there are four main categories; business; salaried; small traders & wage labourers; and farmers.
• The bulk of Indians work either as farmers or as wage labourers or small traders. The third biggest category is the salaried class. The fourth-biggest category is the so-called “business” class or “entrepreneurs”.
• Moreover, there is only one category that has actually recovered to the pre-pandemic level. That is those employed in “business” of some kind.
• All other types of employment are still below the pre-pandemic number.
• The number of people categorised under “business” grew by 8.4 million between the last four years.

 

Is the Entrepreneurship on the Rise?

• At one level, the fact that employment is soaring within the “business” category can be seen as heartening news.
• It can give a sense that India’s economy is creating the right kind of incentives for the private sector to come out and reach for their dreams — that India is the new land of opportunities for entrepreneurs.
• However, a detailed examination of the data within the “business” category is necessary to present the correct picture. 

 

Detailed Examination of the Data Within the Business Category

• Businessmen
  • This includes those people who set up large businesses that leverage capital and humans to run them.
  • They manage some fixed premises such as an office, shop, workshop, factory, etc.
• Qualified self-employed professionals: This category includes people who run their own professional enterprises and leverage their own expertise, such as doctors, lawyers, consultants, professional chartered accountants, etc.
• Self-employed
• This category refers to those “entrepreneurs” who run their own business enterprises but these enterprises do not leverage much financial capital, human capital, or even professional skills.
• For example, taxi drivers, barbers, beauticians, estate agents, brokers, insurance agents, models, astrologers, etc.

 

Reality of the Rise in Entrepreneurship

• Self-employed entrepreneurs accounted for the largest share, at around 70-80 per cent of all the entrepreneurs in India.
• The second largest share was that of businessmen, comprising around 15-20 per cent of the total business persons in the country.
• Qualified self-employed professionals accounted for a mere 1-2 per cent.
• According to CMIE, this composition has changed considerably since 2016, from when CMIE started releasing its employment data.
• The share of businessmen fell substantially and was offset by an equal rise in the share of self-employed entrepreneurs.
• Data shows that at the macro level, what is often considered to be the business class — the well-to-do entrepreneur — has seen a decline.
• More importantly, the actual rise of Indian entrepreneurs is happening in the self-employment category, which reflects poorly on the economic conditions.

 

Conclusion

• It is likely that this shift in the composition of employment in India does not indicate an increase in real entrepreneurship but is merely a reflection of poor employment opportunities in the economy.
• Reforms and policies brought in by the government has set the stage for the growth. But as of now, the reality appears to be different from expectations and various reports.

 

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Q1) What is the Start-Up India scheme?

Launched on 16th January, 2016, the Startup India Initiative has rolled out several programs to support building a robust startup ecosystem and transforming India into a country of job creators instead of job seekers. These programs are managed by a dedicated Startup India Team, which reports to the Department for Industrial Policy and Promotion (DPIIT).

 

Q2) How does the Startup India Seed Fund Scheme aim to help entrepreneurs?

 Startup India Seed Fund Scheme (SISFS) aims to provide financial assistance to startups for proof of concept, prototype development, product trials, market entry and commercialisation. This would enable these startups to graduate to a level where they will be able to raise investments from angel investors or venture capitalists or seek loans from commercial banks or financial institutions.

 

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Source: The Indian Express