THE GIST of Editorial for UPSC Exams : 23 FEBRUARY 2019 (How a nation of startups can ease India’s job crisis (Live Mint)

How a nation of startups can ease India’s job crisis (Live Mint)

Mains Paper 5: Economy
Prelims level: Venture capitalist
Mains level: Indian economy growth and development

Context

•  The year 2018 has been a watershed for Indian startups and the venture capital industry.
•  With landmark deals led by the Walmart-Flipkart acquisition, increased investments by the likes of SoftBank and Alibaba and a surge in young professionals wanting to become entrepreneurs, India continues to consolidate its position as the world’s third-largest startup ecosystem.
•  Now there is no looking back.
•  We should now strive to become the world’s largest and the best startup ecosystem.
•  These are not just lofty, feel-good goals but ones that can transform our country at multiple levels.

Role and responsibilities of VC

•  It considers the conventional role and responsibilities of a venture capitalist (VC).
•  At present, the VC sits at the centre of a universe that has investors at one end and founders at another, managing the funds of the former and guiding the latter to scale so that there are handsome returns for everyone who has skin in the game.
•  While this remains the primary reason for a VC’s existence, there are two more stakeholders in this domain the government and the average citizen.
•  As part of a larger ecosystem, VCs have a significant responsibility to facilitate dialogue and cooperation with the government so that policymaking is realistic, enabling, and also creates a conducive framework to encourage the spirit of entrepreneurship in India. We need to ensure that progress is not derailed by sudden jolts such as the “angel tax" and the new e-commerce policy. We need continuity and stability at both the planning and execution stages at the policy level, combined with a robust involvement of the stakeholders in the entire decision-making process.

VC is a solution

•  At another level, VCs owe it to every Indian to show her (or him) a solution to both job creation and wealth generation. Jobs (or the lack of them) are at the top of the minds of our youth.
•  The public sector is a major employer of youth, but its share as a job provider has been shrinking despite government jobs being the preferred option for 80% of rural and urban youth.
•  Several reports indicate that unemployment is almost becoming endemic in this country at 6.1%, as per the officially unannounced National Sample Survey Office (NSSO) data.
•  The Centre for Monitoring Indian Economy (CMIE), a private think tank, has calculated India’s unemployment rate at 7.38%. Both the NSSO and CMIE have found the jobless rate among the youth is significantly higher.

Conclusion

•  So, with inadequate government jobs and a slow uptick in private sector jobs, it is time entrepreneurship is seen as a serious alternative.
•  A whole new chain of startups will develop, from manufacturing to agriculture to agri-tech and many more.
•  Domain experts will find it easier to get funded and India will see thousands of startup enterprises across sectors funded by millions of citizens.
•  Nothing will boost employment more than this one move.
•  Every household will contribute to job creation and wealth generation and India will become a benchmark for other economies to emulate.
•  We will be a nation that sources funds from within, for deployment to our own startups of which many will, in time, grow to a global scale.

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Prelims Questions:

Q.1) Queen Hur Hwang-ok was recently in the news, in the context of which of the following countries?
a) Libya
b) South Korea
c) Jordan
d) Egypt

Answer: B

Mains Questions:
Q.1) If every journey begins with a single step, isn’t it time for the VC industry and our policymakers to step-up and reset our goals?