For Growth, Revive the Spirit of Entrepreneurship

Context: India should explore ways that enable everyone to grow rather than continuing with the mean povertarian existence of the past and punish those who are creating wealth.

Entrepreneurial spirit during British Raj: CR Kesavan Vaidyar, in the early 1940s started producing a vegetable oil-based soap as an adjunct to his practice as a vaidya curing people of skin ailments.

Factors responsible for low economic growth/low income in India

• Declining ethics of raising income: Celebration of Harshad Mehta’s success undermines the ethics and promotes cheating when placed against the prevalent poverty in the nation.
• Family businesses dominate unorganized sector: Such businesses have no hired labour, have captive markets determined by location. Thus, incomes in unorganized retail are always low.
  • E.g. 73rd National Sample Survey Office (NSSO) survey in 2015-16 estimated that the annual income per trading enterprise in India was Rs.1,94,877. 
• Adoption of the socialist planned economy after independence: It destroyed whatever little entrepreneurial spirit had survived the shackling of Indians by the British Raj due to the socialist economy itself and the corruption that it engendered.
  • For E.g., Ashok Leyland had to hide and justify the overproduction and escape being punished by the socialist bureaucrats. 
• Limitation of efficiency: Not all jobs are open to an increase in income merely by improving efficiency.
  • While the income can be increased by increasing the cost of service, but it runs the risk of customers opting for fewer services.

Way forward: Revive the spirit of entrepreneurship to increase growth/income.

• Improve efficiency and productivity: Increase in productivity rarely happens without making efforts to improve abilities.
  • There are millions of jobs where an increase in productivity — and of income — is possible. The neighbourhood Kirana store is a good example.
  • According to a recent Accenture report, there is an increase in the turnover for modernized Kirana stores from 20 % to 300 %, with the average increase being 135 %.
• Ensure the ethical aspect: It is in the nature of human beings to appreciate success achieved through means that are fair according to popular mores.
  • But ethics that admire cheats are best abandoned, and circumstances that create such ethics should be changed.