A recent survey report on the situation of entrepreneurship & business in India has put a question mark on the ground-level impact of PM Modi’s ambitious Start-up India initiative. The survey found that, 11% of adult population in India is engaged in “early-stage entrepreneurial activities”, and only 5% of the country’s people go on to establish their own business or startup-ed, which is among the lowest rates in the world.
Moreover, business discontinuation in India is among the highest in the world at 26.4%, says the report.
The Global Entrepreneurship Monitor (GEM) India Report 2016-17 by Ahmedabad-based Entrepreneurship Development Institute of India (EDII) was conducted among 3,400 respondents aged between 18 and 64 years to assess the level of entrepreneurial activity in the country.
The report said that just 4% of the total population accounts for nascent entrepreneurs, who are actively engaged in setting up a business they will own and co-own. Ony 7% are the entrepreneurs who are owner-managers of business which are running for less than 3.5 years. Among the BRICS economies, Brazil has performed well in this survey. The South-American country has the highest rate of established business at 7% and South Africa has the lowest at 3%. Even China has the higher rate of 8%, while it is 5% in both Russia and India, says report.
On total early-stage entrepreneurship (TEA), the report says the early stage ventures are expected to hire 1-5 employees over the next 5 years and only 5% plan to hire more than 5 employees.
Bureaucratic and administrative hurdles lead to business discontinuation in 1.3% of cases. 7% of businesses fail due to financial issues, 6.5% due to personal reasons, 16.9% because of the business turning unprofitable and 58.4% due to other reasons.
All this despite of the fact that exactly a year back industry body FICCI, in its report, suggested that startups in India need government support to lesson the number of failures and revealed that startups success rate is not up to the mark in the country. Perhaps, the government didn’t take FICCI seriously.
Going forward with the EDII report, of those engaged in TEA, an enormous 70.9% are in wholesale and retail trade, 12.1% in agriculture, mining, manufacturing and transportation, 9.3% in health, education, government and social service, 4.5% in ICT and finance, and 3.3% in other sectors.
Notably, the above figures show a sharp decrease in early stage entrepreneurial activity in agriculture, which used to be strong in the previous year at 42%.
The Start-Up India campaign has recently completed 2 years of its launch on January 16, 2018. According to the latest report, till date, some 5,350 startups have been recognised in the country with over 40,000 employees working in these startups. Surprisingly, the worst is that the agency that was designated by the Centre to disburse funds to startups has released only Rs 337 crore out of Rs 600 crore to only 75 start-ups in 2 years.
The statistics available on the Startup India official website says that about 99 startups have been funded since the start of this initiative.The official report says that about 8182 startups have got recognition till yet.
Also, few days back we reported that in this year’s Asia’s startup-friendly countries list, India stands at 8th rank behind China and even Malaysia because of the very fact that it is still the poorest country in Asia with GDP per capita of $1,710, in 2017 and a high unemployment rate.
To recall, in 2016’s G20 digital entrepreneurship survey too India was ranked in bottom 10 in group of 20.
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