Demonetisation & Sustainable Entrepreneurship

Entrepreneurship in India has always been Self Sustainable and has traveled very interesting journey over the centuries. In the recent past not only it has been euphoric over the opening up of the economy in 1992 but witnessed couple of global recessions, stock market scams and at the same time embracing historical legislation’s such as VAT & GST with open arms. This journey has seen its share of ups and downs, despite Government not really in favour businessmen till they realized their mistake during liberalization.

Ancient Indian Entrepreneurship:

Entrepreneurs started getting their due recognition during the time of Kautilya as is evident in Arthashastra. With Division of labor (later on known as infamous caste system) they found themselves as the fulcrum for maintaining the peace and prosperity in society. During this time itself followers of Mahavira & Buddha were at the forefront of adopting entrepreneurship as one of the affirmations for non violence and forgiveness. Last but not least it was the entrepreneurs themselves who were also at the forefront of the innovations. It was only because of them that India for Long time was the only producer of the wrought iron in the world. Button, Calico, Carding devices, Charkha, Chintz, Muslin, Palampore, Prayer flags, Single roller cotton gin are just few of the other prominent Indian Innovations.

Growth of Entrepreneurship in India during Pre-Independence
demonetisation-entrepreneurship

Image credit: http://www.yourarticlelibrary.com/essay/entrepreneurship-essay/growth-of-entrepreneurship-in-india-during-pre-independence/40661/

Post Independence Entrepreneurship:

Such was the stigma around entrepreneurs post independence, that the learned and educated would always go for the government jobs and the illiterate, uneducated would start up their own business. Entrepreneurs were considered as the hoarders, greedy clan who can stoop to any level to make their living. However old habits die hard and so does the enterprising spirit that the country had. Despite the poorest of the infrastructure that the country had, despite banking been non existent, despite frugal help from the government the entrepreneurs were able to adapt, become stronger and then prosper.  The only reason was that the entrepreneurs never lost the faith in themselves. True entrepreneur kept on dreaming of a country’s prosperity and downtrodden been uplifted. However one thing that was lost post independence was the meaning of Innovation.

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India to dominate working-age populaton growth in Asia Pacific by 2050: UN / Source: indianexpress.com

We were able to innovate and strike a way around the government policies, we were able to innovate how to increase our own margins by not paying taxes, we were able to innovate to challenge laws and make it work as per own convenience, but the real innovation that India use to have was lost. Initially we were all frustrated by bribing and society in general attitude towards entrepreneurs. We already know by now that almost 95% of the MSME’s are in unorganized spectrum. Another horrifying fact is that  manufacturing is contributing to only 16% of the country’s GDP against a requirement of 30-35% for aspirational country like India. While the current level of manufacturing MSME are able to contribute only 7% of the total GDP of the country and the employment figure is just around 10 Million people for the entire MSME sector.

With the current level of manufacturing itself we were so frustrated with the level of bureaucracy (wheeling and dealing) that many of us considered importing from countries like China so that we face less hostility from government than what we face while manufacturing.  These stats are extremely scary and are in contrast with our aspiration of us been world super power.

Demonetization and Sustainability:

There is saying in business community, “If you commit a murder, then you have to face an Inspector. If you setup a factory, you have to face 36 of them”. Prior to 8/8, MSME’s were just a small fish in the bigger fishes of middle men, agents, liasoning people.

What was the real expertise acquired out of this scenario?

Just been a bigger negotiator than the competitor while dealing with municipal officer, labor officer, VAT officer, excise office, customs officer etc.

What was the real profit?

The money that was stolen by not paying taxes!

With the stats presented above, does any one really felt that the current scenario was actually sustainable for the entrepreneurs, particularly in MSME’s. Who were the actual customers? They for sure were not buying iPhones. They are among the bottom of the pyramid. When during MNREGA scheme,  they got that buying  power for short while, the economy was on steroids. Just imagine when this bottom of the pyramid would genuinely get an employment rather than fictitious one, where could India leap. In order to provide them employment, we have to double up our industrial manufacturing base by almost two times the current level. 

Nrega has been constantly held responsible for the downward turn in public finances, for it’s the only one that has been implemented for a substantial amount of time. Photo: Indranil Bhoumik/Mint

The macroeconomics of NREGA / Source: livemint.com

However currently manufacturing is only contributing to only 16% to the GDP, after 70 years of independence this is what we have been able to achieve. Now are we really in position to wait for even 10 years, leave alone 70. Do you really think that with the current state of affairs it was possible to increase the manufacturing contribution to country’s GDP to upto 20% even in next 10 years when applying for even basic clearances takes not less than 1-2 years and basic clearances means that even the foundation stone for the factory is not laid. The ground reality is that we all have become used to this entire pain over last 70 years. With demonetisation the government is stealing even the pleasure of pain of acting like middle men, agents and the so called experts in Liasioning. These 70 years have brainwashed us so much that we can’t even think of crating our own Apple, Microsoft, Tesla, Google. Why? Because we have forgotten this entrepreneurial innovation long time ago.

Source: vezden.com

So what can we do?

In this time of utmost discomfort we all should go to the government and apologise by saying  that the aspirations that we had while voting you to the power were all lip service. We were happy been in comfort zone. After all the worst thing could have been that we could not be the superpower but at least we were far better than Somalia and Syria. Over 70 years we have forgotten to be dynamic entrepreneurs, rather we’d have forgotten to be entrepreneurs itself. We are just the hoarders of opportunities which may arise out of luck. That luck could be taking birth in Ambani clan, or Mulayam Singh Yadav clan or atleast owner of some farming land where one day the intrinsic value of that land may jump manifold  because of speculation, again purely out of luck.

So let’s create a movement where all the entrepreneurs come together on a single platform and apologize to the government by saying the following:

“We made the biggest mistake of our life when we voted for you during May 2014. We didn’t realized that we never wanted a country where every one is treated at par, whether he is born with silver spoon or not. With your current actions you are destroying our hard earned belief that money alone can do everything. After 70 years we have concluded and known for sure that nothing would change in this country. So the very presumption of yours is wrong by believing that we are in any mood to work hard again and force us to be optimistic and aspirational. After so many years we are no more associated with the courage, dynamism &  innovation that usually  entrepreneur around the world is made up of. We are the bunch of naysayers who were born with silver spoon and you just don’t have that right to snatch it from us. So kindly stop acting like you are acting in our interest, cause if you do we would be forced to become true entrepreneur who can deal with any situation. We are sorry, we are not”.

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