Click here and search 28th December 2015, Spotlight/News Analysis for audio
The focus of the government is “job creation”. It is also the target of our economic growth and activity.
Instead of training and educating people to seek jobs, creating an environment where people can create jobs is the idea behind the program “Start up India and Stand up India”. The govt is trying to motivate the young educated citizen, one who is not traditionally a businessman, to take up entrepreneurship.
As a first step towards motivation, the govt is trying to reduce the plethora regulatory procedures that are involved in creating start-ups, so that it would be easy for the first generation/new entrepreneurs to start a business.
In the second step, the innovative ideas of the entrepreneur should be converted into “profitable ventures”. For this purpose “incubation centres” are being set up. These centres will:
- Be connected to academic institutions
- Help prepare a business plan
- Find ways to be profitable from the innovative ideas
- Help in recruiting the right persons
- Help in developing the right connect
- Help in bringing initial seed funding
The govt has taken few measures in this year’s budget to encourage start-ups:
- India Aspiration Fund
- Atal Innovation Mission
There is a huge risk of failure in taking up entrepreneurship. Hence, banks are not the right institutions to fund start-ups, particularly innovation and technology based ones. Banks fund those businesses which have assured revenues and profits. This generally excludes new ideas and new technologies. However, the incubation centres can encourage the banks by enhancing the odds of success of new start-ups. Globally, it is the angel investors and venture capitalists that support initial equity for innovative start-ups.
What can be done to encourage start-ups?
- Bankruptcy laws should provide a safe and easy exit to the failed start-ups.
- In the long run, for start-ups, funding has to come from markets.
- Ease of doing business – process of starting and exiting business, investing and taking out profits from the business.
- Some kind of subsidy or tax incentives for start-ups.
- Promoting the SMEs in start-ups.
- Promoting manufacturing sector in start-ups through Make in India campaign.