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This
is in response to Professor Shamika Ravi’s article, “No
monkey business” (Indian Express, May 3, 2014), wherein she says that the
“general improvements in physical and financial infrastructure have contributed
significantly more to the growth of entrepreneurship in India than specific
targeted policies of the government”. The Congress Party promised in its 2014 Lok
Sabha elections manifesto a “Right to Entrepreneurship that will protect and
assist all those who seek to become entrepreneurs”. There seems to be some
serious confusion in dealing with the idea of the right to entrepreneurship. The
right to entrepreneurship essentially mean the broad term of institutional
framework rather than taking one of its sub-sets like the “physical and
financial infrastructure” which the writer seems to be taking by underestimating
a whole lot of other factors in a “Business Environment” or business
eco-system. Moreover, there is a fundamental difference which the writer seems
to miss notoriously. The difference is the policy perspectives of distinction
between fostering new entrepreneurship opportunities and supporting existing enterprises.
At
present, the aspiring Indian entrepreneurs are facing acute challenges related
to structural issues such as finance (credit), legal and taxation,
operational/functional, infrastructure and technology diffusion. The
institutional perspective of a “right” to claim a defined service from a public
authority would essentially deal with its totality. In the case of promoting
entrepreneurship through a rights based approach, the aspiring entrepreneurs are
entitled to demand services dealing namely from starting a business to closing
a business by a law which facilitates services within a specified timeframe. In
other words, the aspiring entrepreneurs should be guaranteed with a legal right
to claim a service from a public authority within a timeframe as immunity.
According
to the World Bank’s Easy of Doing Business Report (2014), in India, to start a
business it takes 27 days vis-à-vis 16 days in South Asia and 11 days in OECD
countries. In terms of number of procedures, India has 12 procedures as
compared to 7 in South Asia and 5 in OECD countries. In case of India, the 12
procedures have to be approved by both Union and State governments. Significant
amount of delay in processing of each of the 12 procedures would be possible
and are indeed in common practices. There are also considerable costs involved
in each of the procedures processing in the government. In India, the cost of
per capita income for starting a business is also high at 47.3% as compared to
19.8% in South Asia and 3.6% in OECD countries.
Further,
the World Bank Report (2014) shows the exact number of procedures involved in
each stage and how many days takes to complete official process: for starting a
new business (12 procedures and takes 27 days), dealing with various construction
permits (35 procedures and takes 168 days), getting electricity connection (7
procedures and takes 67 days), registering property (5 procedures and takes 44
days), getting institutional credit (8 procedures), paying taxes (33 times in a
year), enforcing contracts (46 procedures and takes 1,420 days), resolving
insolvency (minimum 4 years to close a business), etc. All of these are seriously
hurting especially the poor aspiring entrepreneurs much more than others
because the poor entrepreneurs lack either capital or skill or both. Particularly,
getting institutional credit in right time to start a business is really a
daunting task for poor entrepreneurs.
All
over the world, the micro, small and medium enterprises are promoted vibrantly
by the government interventions by the approach of institutional framework. Therefore,
by guaranteeing a legal right to aspiring entrepreneurs in a structured institutional
framework would inevitably enable them to demand not only clearing of all the
processes and procedures within a timeframe from both Union and State
governments but also go beyond and facilitate legal framework to reduce huge costs
involved in the starting of a business to closing a business.
According
to Dr.Pronab Sen
(2014), “The Economic Censuses demonstrate the huge size and growth of
entrepreneurial activity in India... the net increase in the number of
non-agricultural establishments in the country is about 8 million every ten
years. While admittedly many of these enterprises reflect basic survival
strategies, many do not. The past decade has shown the dynamism that is
possible in this sector under the right circumstances and with the proper policies.
Many of the leading corporate houses existing today belonged to the SME
category at the turn of the century.” The specific targeted policies of the
government had its role helping of the once tiny SMEs become big corporate
houses now! The UPA’s initiatives like MSMEs Development Act, 2006 has also
played a major role.
In
a recent research paper by Bandiera et.al (2012)
found that the “very poor can be transformed from labourers into basic
entrepreneurs and that this occupational transformation is associated with
dramatic improvements in their economic lives, bringing them closer to the
middle classes in their communities on measures such as wages and
spending.” Further, the study shows that the “entrepreneurship programme
in Bangladesh – the Ultra Poor programme, operated by the Bangladeshi NGO BRAC.
The Ultra Poor programme provides asset transfers and skills training to the
poorest women in rural communities. The programme aims to move these typically
asset-less and unskilled women from low-wage and seasonal jobs to the more
secure, self-employment based occupations, which are the choice of middle class
women in these communities.”
The
structural reforms in the informal sector are yet to be embarked in a major way
to create an enabling environment for even the poorest of the poor in the
country. Two-thirds of Indians, nearly 82 crore people are below 35 year of
age. The time has come for the idea of right to entrepreneurship in India to
really re-look its entire apparatus of the regulatory environment from the
perspectives of the rights based approach to unleash the potentials of
entrepreneurs of all sections of the society.
B.Chandrasekaran
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