by Harish Gupta, National Editor, Lokmat Group
Living in India and being
exposed to the Indian media, it is difficult to win over the cynicism that has
become an integral part of the Indian psyche. The country has improved beyond
recognition in the last two decades or so. The share of people living below
$1.25 a day was nearly a half (49.4%) in 1994; it is about a quarter (24.7%) in
2011 and is supposedly around 23% now. Between 2005 and 2014, the prevalence of
underweight children under the age of five fell from 43.5% to 30.7%. The
trend-line is therefore towards optimism, but the urban middle class, from
where opinions filter down, is not much swayed by statistics. It is the poor
growth of jobs since 2011 that turned Narendra Modi's election into a tornado,
running the Congress ship aground. But 20 months in power, Modi and his NDA
government is still battling with poor industrial production, steeply falling
labour-intensity of farming and negligible job growth. No wonder, therefore,
that the Congress' new boss, vice president Rahul Gandhi, is out on the road in
style, as he did last week in Mumbai. As he marched from Bandra to Dharavi,
many young men and women disappointed with Modi government walked with him.
As some of the figures of
poverty alleviation cited above will show, India hasn't done badly in the
recent years. But a few epochal changes have taken place in global economy that
have turned some old Indian notions on their head, one of these being that industry
still has the potential to employ many workers. Both industry and agriculture
need much fewer hands these days. But one million workers are joining the work
force each month. It is an existential problem. Traditional industry cannot
expand (and thus pick up new jobseekers) because firms are hugely debt-laden,
with total corporate debt being seven times the companies' net profit. It is
clear that the conventional narrative of industrial growth and job creation
must change.
Interestingly, Modi is the first
to begin scouting for a solution out of the box, in promoting start-ups. In his
Independence Day speech last year, he promised to launch Start-Up India, a
campaign to remove all obstructions for entrepreneurship to blossom. Last
Saturday, he presided over a day-long programme at Delhi's Vigyan Bhavan for
which the motto was 'start up India, stand up India' and the guests included,
apart from many Indian entrepreneurs, about 50 of their counterparts from
Silicon Valley. Modi shared the dais with Uber founder Travis Kalanick and CEO
of Japan's Softbank Masayoshi Son. Modi was at his sarcastic best when he
declared the state's arms-length policy to start-ups. " We have done a lot
(of controlling industry) for 70 years. Where have we reached?"
Start-ups were visible for a
decade but it is picking up speed now, the number going up from a mere 501 in
2010 to 4,500 last year. Start-ups like Flipkart, Snapdeal, Paytm or OLX employ
thousands of workers who work not only on their computer desks but are engaged in
delivery and other logistic functions. Softbank is going big on solar and wind
power. Modi spoke of new start-ups that he'd like to see in education and
health sectors. At present, about 90 per cent of start-up finance comes from
abroad. The government has now laid before the young dreamers a Rs.
10,000-crore 'fund of funds' (last resort financier) and Rs 2,500 crore credit
guarantee fund. Son has in an interview spoken about $10 billion funding of
Indian start-ups.
As records go, about 90 per
cent of start-ups nearing success invariably migrate to the US or other Western
countries because of India's multiple problems, notably high taxation. Modi has
announced a three-year tax exemption for start-ups and other benefits. It is
good news for scions of the owners of thousands of failed industries who want
to move on. He said there would be easier exit with the proposed new bankruptcy
laws and, impishly, suggested that the entrepreneurs lobby with India's
opposition leaders to facilitate early passage of these laws.
The Modi administration has
often been criticised for betraying a lack of original thinking. In December,
the Prime Minister headed a meeting of 80 senior bureaucrats and sought to pick
their brain for new ideas. The exercise was mostly one-sided. 'Digital India',
which too has Modi's imprimatur, is still iffy because of low availability of
wireless frequency which pushed up the cost of wi-fi which, in its turn, has
kept fully loaded smart-phones beyond ordinary people's reach. Swachh Bharat,
the cleanliness mission, had the potential to be a magnet for unskilled and
semi-skilled jobs, but its employment success calls for state governments'
cooperation which Modi hasn't been fortunate to get. The Ganga Action mission
too is lost in sand.
Modi's start-up experiment is
a bright spot on India's political
terrain which is unfortunately greying up
all too soon with
leaders who have reduced their objective to winning elections
at any rate.
Shifting gear to Start-Up,
Modi is clearly moving to a safe zone without political opposition.
Interestingly, Rahul Gandhi is twenty years younger than Modi but his politics
so far is focused on bitter opposition to Modi, as if he is a usurper, but he
has shown no vision of where the country’s young adults will be employed. “ To
have start-ups”, he said in his speech in Mumbai on the day Modi was spending
with entrepreneurs, “one needs a society without intolerance”. The observation
is particularly jejune in the context of India’s critical employment crisis and
the jobless growth that began when Rahul’s own party was in power.
Modi’s start-up experiment is
a bright spot on India’s political terrain which is unfortunately graying up
all too soon with leaders who have reduced their objective to winning elections
at any rate. Thinking of larger issues is alien to them. Delhi Chief Minister
Arvind Kejriwal of AAP has nursed a “thinker” image, his masterstroke being the
plan to reduce cars on Delhi roads by allowing odd numbers in one day and even
numbers the next day. But the plan was only for 15 days, so the problem will be
back soon though it did not go in the first 15 days either. As Kejriwal’s ambitious
start-up, it is not sustainable 24x7. But Modi is seeking a lasting solution to
the problem of unemployment.
