Facilitate millions of entrepreneurs
to bloom
India has the second highest population in the world.
It is expected that we will overtake China in a few decades. India has remained
one of the largely populated countries since the earlier times, due to the positive
atmosphere for sustaining higher numbers.
Evidences show that India remained an entrepreneurial nation since the ancient periods.
As a result, India was pioneer in
business and trade, both domestic and international. Agarwala notes that
Indians were very active enabling the nation to function as a powerful business
centre during the times of Indus Saraswathy civilization.
The systematic interference of the Europeans in the
economic and social systems of India from about the nineteenth century, began
to affect the native entrepreneurial
activities. India was made a very poor and underdeveloped country, with the
industrial and business sectors getting very weak. As a result around eighty per cent of the
population were dependent on agriculture and rural activities at the time of
independence.
Unfortunately the policy makers after independence adopted
the socialistic ideology that hindered the development of the native entrepreneurship.
The globalization ideology that was followed by the state later, did not help
the local entrepreneurship to grow a wider scale.
It is another matter that in spite of all the
difficulties, the local societies took the lead on their own and millions of
entrepreneurs emerged over the decades. But it is entirely due to the native
genius of the common citizens, with the state not even aware of the actual developments
taking place in many distant centres.
India has enormous capabilities to emerge as a
powerful entrepreneurial nation in the world. Close-knit family and social
systems, higher saving rates, the capacity to mobilize funds at the local
levels, availability of social capital,
prevalence of higher values, the native talents, skills and innate wisdom available
across the country and the higher levels of enterprise are our critical assets
to produce large scale entrepreneurship.
But we fail
to understand them, as we look at India through the text books written by
western authors. The realities in each country is different, and certainly
India is a unique nation with a different set of functioning systems.
Indian
economy is dominated by the non-corporate sector contributing to around half of
the national GDP. It provides more than 92 per cent of the total employment in
the country. Besides, its contribution
to the critical sectors such as services and manufacturing are very significant.
Non- corporate
sector has been playing a major role in the growth story of India since the earlier
decades. Vaidyanathan shows that between
2004-05 and 2011-12, the segments forming part of the non-corporate sector such
as trade, transport, construction, restaurants and other business services have been growing at more than eight per cent
of the compounded annual growth rate ( CAGR). It is the higher growth rates of
this sector that is mainly helping India to move forward.
National
Sample Survey figures for 2011-12 show that 51 per cent of the Indian workers
are self-employed, with the share of the rural areas being 54.2 per cent. The
western economies are more corporate and wage- employment oriented, with a very
large share of population depending on salaries and wages. The self-employment rates are very low, as
shown in the table below.
Self-employment rates in OECD
countries
( in
percentages, 2011)
|
France
|
9.5
|
|
Germany
|
11.7
|
|
UK
|
14
|
|
US
|
6.8
|
|
OECD
countries
|
15.8
|
Source: OECD
Fact book, 2014
A large
section of the population in India is involved in entrepreneurial pursuits. It
is important to note that entrepreneurship is taking place at different levels.
This is the reason as to why we have more than two thousand major industrial
and business clusters housing millions of small and medium enterprises. Besides
there are 9, 52,433 companies functioning in the country during Mar.2014, one
of the highest numbers in the world.
But what is
important is the smaller enterprises, as they play the most crucial role in the
economy. The promoters of these enterprises are perhaps the most efficient,
most productive, generate higher employment, use lesser resources and depend the
least on the state for support.
The Fourth
All India Census of Micro, Small and Medium Enterprises 2006-07 notes that more
than 60 per cent of them, mostly the micro enterprises, are in the rural areas.
For every one lakh rupees of fixed investment, they generate employment for 1.7
persons and each unit provides employment to 2.06 persons on an average.
These enterprises
are spread across the country. 62.43 per
cent of them are owned by people belonging to the Scheduled Castes, Scheduled
Tribes and Other Backward Communities. More than nine per cent of the units are
managed by women.
The promoters
of these units do not have much education, with a good number of them being
illiterates. They promote enterprises with funds mobilized through their own efforts
as they do not have access to institutional sources. Economic Census 2005
revealed that more than 95 per cent of the unorganized enterprises are
self-funded, with only less than two per cent of them getting institutional and
state support.
It is through
the family savings and support from the relatives, friends and other
connections they mobilize funds. Besides they borrow from the local financiers
at high rates of interest. As a result, their cost of capital is very high. They face many other difficulties, due to lack of recognition at
different levels.
Reserve Bank
of India figures between 1990 and 2011 show that the outstanding bank credit to
the household non-corporate sector has been declining over the years. It has
come down from 58.3 per cent to 36.2 per cent, while the share of corporate
sector has increased from 31.3 per cent to 44.1 per cent.
The latest
details show that there are 58 million small enterprises in the country,
providing employment to 12.8 million persons. But still the banks provide only
four per cent of their financial requirements, thereby stifling the
opportunities for further growth.
Field studies
reveal that there are millions of people from ordinary backgrounds with higher
levels of talents and entrepreneurship. They hard working and possess the
capacity to take and bear the risks. Besides, there are many sections in our
country with traditional skills and
wisdom that could be used to promote businesses.
India has the
highest number of youth population in the world. We have to provide them enough
opportunities to grow and prosper. The share of the organized sector in total
employment is less than eight per cent. While all the possible steps should be
taken to increase the employment potential in the organized sector, it might
not be possible to provide opportunities to all of them. Moreover it is always
better to make people employers, rather than employees.
Helping the existing
entrepreneurs at the local levels and facilitating more number of people to
become entrepreneurs would be the best solution for the country. This is
possible as India has the strengths and the foundations.
In this
connection the recent announcement of MUDRA bank by the central Government is a
pioneering initiative which is expected fulfil the long felt financial needs
of the small business segment. There have also been a few other innovative steps
taken by the Government to promote entrepreneurship.
It is time to
encourage more number of persons with the required qualities and skills to enter
into entrepreneurship, even while trying to solve the problems faced by the
existing entrepreneurs. Let millions of entrepreneurs
bloom in the country in the next few years.
References:
1. Agarwala, P.N. , A Comprehensive History of Business in India, Tata McGraw Hill, New
Delhi, 2001
2. Annual Report 2013-14, Ministry of Corporate
Affairs, Govt. of India
3. Economic Census 2005, Govt. of India
4. Fourth All India Census of Micro, Small and
Medium Enterprises 2006-07, Govt. of India
5. National
Sample Survey 2011-12, Ministry of Statistics and Programme Implementation,
Govt. of India
6. Vaidhyanathan,
R., India UnInc., Westland Ltd., New
Delhi, 2014
( Yuva Bharati, Vol.42, No.9, April 2015)
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