Starting up India

In his ‘Gujarat model’ of development, Prime Minister rendra Modi has long espoused entrepreneurship and self-employment. Returning to his favourite theme in his second Independence Day speech, the PM announced a tionwide campaign to give young enterprises a boost through bank fincing and other incentives. Called ‘Start up India, Stand up India’, this initiative aims to make India the leading country in the number of start-ups. The country already has the fourth largest base for young businesses in the world, with more than 3,000 technology start-ups by 2014. A joint study by SSCOM and Zinnov early this year had projected the start-up base to increase to 11,500 tech start-ups by 2020, employing about 2.5 lakh people, and taking India to the second position behind the US and ahead of Britain and Israel. Prime Minister Modi now wants to accelerate this process, calling for spreading the spirit of entrepreneurship across the lowest levels of the development pyramid, so that no block or district in the country is left without a start-up. A part of this vision will involve each of 1.25 lakh bank branches in the country to advance loans to at least one Dalit or Adivasi entrepreneur and at least one woman entrepreneur. This is in line with the Prime Minister’s first I-Day speech promises last year of ‘fincial inclusion’, pushing the banking sector to get accounts opened for economically weaker sections and advancing them the benefits of pension and insurance schemes.

A section of experts have questioned whether the PM’s dream to create 1.25 lakh new entrepreneurs will put more stress on the country’s banks. RBI Governor Raghuram Rajan had publicly aired his misgivings last year whether banks will be able to carry the burden of the ‘fincial inclusion’ programme. Will banks now be pressurised to meet the new target, pushed to fince unviable projects and thereby take on additiol burden of non-performing assets? Of course, it remains a fact that big business too have taken banks for a ride when it comes to getting bad projects finced, so strict and adequate banking safeguards will have to be in place. But big or small entrepreneurs have two common problems — multiplicity of regulations and poor infrastructure. As far as regulatory hurdles to starting a business are concerned, many of these bite in at state and local levels, which the Central government is in no position to change on its own. Considering the logjam in Parliament which has badly hurt law-making, the rendra Modi government will have to join forces with as many state governments as it can — so as to cut down on regressive legislations and red-tape hurting businesses. As for infrastructure built by the NDA government in its first year, the Prime Minister’s review meeting in May last threw up a mixed picture with satisfactory progress noted in several projects including rural roads, power and broadband network, but target shortfall in highways, railways and ports. After critical inputs from the NITI-Aayog, the government had to scale up targets by 15-20 per cent for the infrastructure ministries, as well as give a greater push on public-private partnership (PPP) projects.

So is the ‘Start up India’ initiative a conscious move by the rendra Modi government to shed its pro-industry image? Or is this another way for the Prime Minister to reiterate his call to the youth to hanker less for a job than to create employment opportunities for themselves and others? Releasing ‘Team India’s productive energies will require a fundamental shift in mindset, and an all-out war against corruption. Nothing dampens an entrepreneur’s drive more than the crimil greed of the lowliest factotums to top officials in the maze of government offices — all demanding their pounds of flesh, their commissions. The problem is acute in a state like Assam, with its 22 lakh jobless youths looking desperately for opportunities. Many of them would like to go into business on their own, but will the extortiote administration and anti-social elements allow them to operate without paying regular ‘hafta’s? Poor infrastructure and connectivity along with business-unfriendly policies and environment has led to private investment in total investments fall from 30 to 11 per cent in Assam, as pointed out by an ASSOCHAM study last July. This dismal picture stands in stark contrast to what is happening in Bengaluru and tiol Capital Region (NCR) around New Delhi, where the maximum number of young businesses are flourishing. Mumbai, Pune, Hyderabad and Cheni too are booming with young entrepreneurs in a climate encouraging venture capital funding, technological innovation and skills base. According to SSCOM — expanding digitalization, faster innovation cycles and the rise of young, ambitious talent will make at least 10 thousand start-ups  successful in the next few years. With Prime Minister Modi now shifting the focus onto small firms and Fince Minister Arun Jaitley having last year set up a Rs 10,000 crore fund to help start-up companies, the onus is on the state governments to facilitate their small, local entrepreneurs more.