“Role of start-up in Indian Economy and Job Creation”

53rd webinar organised by ihub dated 24th may 2020

Speaker- Shri Aditya srinivas, Chief Operating officer & Chief Economist at Bombay stock exchange brokers 

Moderator –Shri M Nagarajan, IAS, Director higher education 

Objective-The objective of organizing the webinar is to know the role of start-up in Indian economy and how it can create more job opportunities. As due to covid-19 pandemic the Indian economy is facing crises in the field of employment. So that the webinar has organized to come to know about the suggestions which are helpful to create job opportunities which can enhance the employment in India.

The topics which have been discussed in the webinar are as below.

• Features of Indian Economy-

                  There are 3 unique features of Indian economy which make us feel that India can come out from the emerging crises of the pandemic.

• Demographic dividend-India has 70%of the population which are less than 35 years in age. Average age of an Indian is 25 years as compared to US 43 years, Japan 52 years and Europe 47 years. 

• Domestic consumption-Around 80% of the production is consumed by our own population and only 20% is exported. So that India will not face a huge loss in exports. India doesn’t depend on export in much proportion.

• High Saving Rate –Indian economy saving rate is 27% of the GDP while the world’s rate is 21%. 

• India and World economy –

• Indian GDP has grown at 7.5% which is the average rate of last 20 years, while the average rate of world was 2.5% to 3% in last 20 years.

• During covid-19 the IMF has predicted that Indian GDP will grow at 1.9% , while the entire world GDP will be less than 1%.

• Job creation challenge-

• Every year we need 1.5cr jobs to get the benefit of demographic dividend till next 20 years.

• Due to pandemic we are not able to create so many jobs, so that the need of start-ups becomes essential part of our economy. 

• Four best programs of our Govt.-

1. Make in India 

2. Skill India 

3. Digital India

4. Start up India 

• These four programs have the capacity to make India a SUPER ECONOMIC POWER in a next one decade.

• The essential thing which needs to get into consideration is that all the plans need to get implemented properly.

• The lead of startup is vital in India for job creation compare to other countries.

• Start up India –

• The main objective to create ENTERPRENEURS in our country is that we are not able to create more than 1Cr jobs every year.

• India has 10,000 start ups which is 3rd highest after US and UK.

• Entrepreneurship has multiplier effect as more jobs get created.

• It is calculated that one start up creates at least 3 jobs for the other persons. So the focus is always on startups.

• Every year it is assumed that more than 1cr students get passed out from different universities/institutions in India. We should motivate them to become an entrepreneur, so that they can create more jobs. 

• Clarification in Startups –

• One of the main reason behind the failure of a startup is that people take loan and later on they failed to repay and decide to wind up. Here, people need to understand that the first 3 year of a startup is very essential and critical. People need to stabilize the things and also have to gain some strength to survive.

• People should find the other persons with the same interest and motive as of them .so that burden can be reduced.

• People thinks that capital is constrain. But in reality the capital is not a constraint if u has an idea which is practical and scalable. 

• The concept of venture capital is also there, angel networks are there who are looking for good business ideas to invest.

• Effects of Startups-

• Startups can give jobs to lakhs of people. As we have discussed earlier a single entrepreneur can create at least 3 job opportunities for others.

• Persons will get salaries and can buy car, house and other luxurious things they want. Which ultimately help to enhance the standard of living.

• It creates demands as well as consumption in the economy and which results in a growth in the economy of a country.

• Sectors of startups-

• Education- In this sector the requirement of capital is less compare to other sectors and one can easily spread the knowledge he has by using different technology mediums.

• Insurance- As an example, Due to covid-19 pandemic people comes to know about the value of life. This creates a scope for the startups.   

• Financial Service- In this sector the thorough knowledge of different phases of finance is required. For example penetration of equity, mutual funds etc.

• Health Care- As everyone can see that in today’s situation the health care is on the top. Nevertheless in any situation the investment in health care never gets down.  

• Indian cabinet has approved to Indian companies to get listed on foreign jurisdiction.

• Startups also get opportunity to list themselves in foreign exchanges and get good valuation.

• Potentiality of agriculture in startups-

• As today onwards almost 49% of our total population is still depends on agriculture for their livelihood. Which itself is a great proportion.

• One must have the basic as well as the depth knowledge about the Indian agriculture system.

• With the help of technology if one has a suitable plan which can improve the current system, then there is a huge scope in agriculture startups.

• Avenues to raise the funds for startups-

• First step is to create a proper business plan along with an accurate calculation.

• Proper cost analysis is required.

• One should go to merchant banker so that he will be given a proper guidance that whether the business plan is investable or not?

• For more investments, one should find potential investors who are seeking for a practical business plan.  

• Management Control mechanism in India-

• The startups in India must be managed and controlled by Indian companies.

• The companies should give preference to provide SWEAT equity shares.

• Equity holding proportion of an Indian Co. should enhance.

• If the company follows the management and control mechanism in India, it is also good for national security purposes. 

• Avoid the common mistakes in startups-

• Working capital requirements must be planned and properly calculated.

• At least 3 years projection is needed along with a backup plan.

• For student startups it is advisable to get clear about the areas of interest, different phase wise study should be done and proper analysis of their startup plan field is essential.

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