The rise of Indian entrepreneurs: A reality check
Context- Atmanirbhar Bharat, or a self-reliant India, is among the most prominent stated goals of the incumbent government. Of course, the idea is that the country will achieve self-reliance in a whole host of economic activities. An associated idea, pushed forward by the government, has been to convince people that they should not look towards the government for an official job.
Five years later, data from the Centre for Monitoring Indian Economy suggests that Indians are increasingly doing just that — engaging in self-employment.
Where and how Indians work?
Chart 1 maps the total number of employed people in India.
(Credits- Indian Express)
- According to CMIE, the total employment in India in January-April 2023 stood at 412.9 million.The total employed people can be further categorised into several other categories.
- These are: business; salaried; small traders & wage labourers; and farmers.
- First is the order of how Indians are employed. The bulk of Indians work either as farmers or as wage labourers or small traders. The third biggest category is the salaried class. The fourth-biggest category is the so-called “business” class or “entrepreneurs”.
- The second thing to note is that there is only one category that has actually recovered to the pre-pandemic level. That is those employed in “business” of some kind. All other types of employment are still below the pre-pandemic number. The number of people categorised under “business” grew by 8.4 million between the last four years.
Rise of entrepreneurship?
- At one level, the fact that employment is soaring within the “business” category can be seen as heartening news. It can give a sense that India’s economy is creating the right kind of incentives for the private sector to come out and reach for their dreams — that India is the new land of opportunities for entrepreneurs.
- But a detailed examination of the data within the “business” category throws up a very different picture.There are three sub-categories for those within the “business” class.
- Businessmen: This includes those people who set up large businesses that leverage capital and humans to run them. They manage some fixed premises such as an office, shop, workshop, factory, etc.
- Qualified self-employed professionals: The bit about being “qualified” and being “professional” is crucial here. This category includes people who run their own professional enterprises and leverage their own expertise, such as doctors, lawyers, consultants, professional chartered accountants, and so on.
- Self-employed: This category refers to those “entrepreneurs” who run their own business enterprises but these enterprises do not leverage much financial capital, human capital or even professional skills. Think of taxi drivers, barbers, beauticians, estate agents, brokers, insurance agents, models, astrologers, etc.
(Credits- Indian Express)
- Self-employed entrepreneurs accounted for the largest share, at around 70-80 per cent of all the entrepreneurs in India.
- Qualified self-employed professionals accounted for a mere 1-2 per cent.
- According to CMIE, this composition has changed considerably since 2016, from when CMIE started releasing its employment data. The share of businessmen fell substantially and was offset by an equal rise in the share of self-employed entrepreneurs
What is the upshot?
- The key takeaway from these charts and data is to understand the nature of employment that Indians are increasingly engaged in.
- Data shows that at the macro level, what is often considered to be the business class — the well-to-do entrepreneur — is seeing a secular decline. In other words, there are fewer and fewer Indians belonging to that category despite a rise in population. This means a decline in both absolute numbers as well as a proportion.
- More importantly, the actual rise of Indian entrepreneurs is happening in the self-employment category, which reflects poorly on the economic conditions.
Syllabus- Prelims; Current Affairs
Source- Indian Express
