Giving Compass' Take:
- Arjun Shekhar draws attentions to the reasons why more youth in India are not becoming entrepreneurs and how to encourage entrepreneurship.
- Why do youth in India need to be given a seat at tables where decisions are being made? How might this increase rates of youth entrepreneurship?
- Read about impact investment trends in India.
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India is facing a job crisis. In November 2022, the unemployment rate in the country rose to 8 percent—the highest in three months. According to a statistical profile on unemployment in India from May–August 2022, unemployment among 20–24-year-olds is at a staggering 43.36 percent—the highest ever in 45 years. Given the saturation of traditional job markets, the focus of policy-makers has shifted from skilling to building entrepreneurs. This is evident from the launch of several government schemes such as the Pradhan Mantri MUDRA Yojana (PMMY), the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), and the credit support scheme by the National Small Industries Corporation (NSIC) to provide access to capital and encourage entrepreneurship. Corporates, on their part, have been providing seed money, skills, market linkages, and incubation ecosystems through their CSR arms.
On the surface, the conditions for entrepreneurship are ripe. Yet, there are very few entrepreneurs in India.
The Global Entrepreneurship Monitor (GEM) Report 2020-21 highlighted the abundance of entrepreneurial talent in India, with approximately 81 percent of youth reporting having the skills and knowledge needed to start a business. However, many lacked a risk-taking attitude—a critical aspect of entrepreneurship—with 56 percent of young people stating that they feared failure. This, coupled with familial concerns about the financial uncertainties around starting one’s business and societal expectations about what steady careers look like, have contributed to greater hesitation among the youth and pushed them to opt for jobs. In 2020–21, the anxieties caused by the pandemic only worsened the situation, with only 20 percent of young people stating that they intended to take up entrepreneurship—a sharp decline from the 33 percent in 2019–20.
This is probably why, despite the media narrative around India having a large number of start-ups, only 5 percent of the Indian population are entrepreneurs—a number that is among the lowest in the world. In comparison, 23 percent of the population in the US, 17 percent in Brazil, and 8 percent in China are entrepreneurs.
Read the full article about entrepreneurship in India by Arjun Shekhar at India Development Review.