Small businesses are key to India’s growth
If you want the larger population in India to be involved in the economy in a big way, small and medium enterprises (SMEs) are the key
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Just two decades ago, in the 1990s, 85% of the Indian population was self-employed. Maybe they were just selling twenty rupees worth of vegetables a day, but that’s not the point — you still need to know how to brand your product, what to say and where to position yourself. In the most rudimentary way, there is entrepreneurship in the Indian mind because they have had to survive by themselves without any organized jobs for a long time. Entrepreneurship is not something Indians are afraid of.
Surveys keep coming out claiming that most young Indians are looking for jobs —they don’t want to get into business. That is not true. Almost everyone who has a job wants to do something on the side. It is very common in Tamil Nadu. Many employed do a little bit of business in their spare time, so that there is some additional income. And if it becomes reasonably successful, they go into it full-time. It is just that entrepreneurs have not had the necessary support. One major aspect holding down the small and medium enterprise (SME) sector in this country is that there is no easy finance. The other is access to technology. If these two are managed, SMEs will burst forth.
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In India, there’s a cruel financial situation when it comes to the SMEs. They have to prove that they’re successful before they start! It’s unfortunate but true that this is what financial institutions expect of them. Many SMEs have closed down, mainly because there is no healthy, active financial support for them. When small things go wrong, the entire business goes under, simply because there is no place to fall back. Financial elbow room is missing for them to recover from even minor setbacks. I think easing this situation will go a long way in nurturing and sustaining SMEs.
Why SMEs? We always tend to think of the economy in terms of huge corporations that have gone for initial public offerings (IPOs). We look at the stock market and see where they are going. Yes, that is also important, but if you want the larger population in India to be involved in the economy in a big way, SMEs are key. If you only build big corporations, rural India will move to urban centres, and we know that this means chaos. We have not built our cities to accommodate so many people. People will just move in and get into a horrible state of life. In the village, a person may at least live a dignified life even with two acres of land. But when he becomes a slum dweller in the city, what he is put through is quite terrible. The only solution for us is to urbanize rural India. SMEs are absolutely key to this.
Urbanization of rural India needs to happen. That can only be done by the success of the businesses. Expecting the rural population to develop businesses and grow is a long shot. I feel urban and semi-urban people should develop businesses that will reach down to the village. The business can either be located in the village or it can be a mobile platform, but if you do this, people wanting to move to the city will definitely come down.
Right now, we write off 65% of India’s population as belonging to the agricultural sector. But there is enormous business there both in terms of agricultural produce and in terms of people’s lives. If you are willing to understand what is happening there, there are many ways to do business so that it benefits both the parties. In villages, the problem is lack of money, lack of technology and lack of market access. SMEs can take this up very easily, if only they know the local situation well.
Wherever I go in the world today, industry leaders, social leaders and political leaders tell me, “India is on a great path. Never before have we seen such dynamic leadership.” But within the country, there is a campaign that is trying to prove how it is not working. Anyone who thinks large-scale government policies like ‘Make in India’ can become successful in a year or two, obviously does not know how a nation runs or how an industry and business is built. A nation as diverse and as large as India cannot be fixed overnight. We should stop such fanciful ideas. In 18 months, you cannot make everything in India. You can make a policy. It is for the people to take it up and make it a success. I would say you must give eight to 10 years before you make a judgment. I feel that if the necessary policy facilitation happens, the people of India will make it a success. I am hundred percent sure of that.
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Sadhguru Jaggi Vasudev is founder of Isha Foundation.