There is much buzz around the Central Government’s ‘StartUp India’ initiative aimed at promoting tech driven innovation. All the Union Ministers at a conference I attended recently saw start-ups as harbingers of the Digital Revolution round the corner and the resultant e-commerce cascade set to inundate the nation. All very lofty and laudable indeed.
But bright sides apart, the bytes bite too. The Government has not just bitten the tech bait but swallowed it in great haste. The political fad is now so infectious that fossilised netas who chose Dalai Lama and the like for credibility, now chase dons of the e-world for selfies. Add to this hype, the fancy media ads that feature hep young ‘nerds’, clad in shorts or sundry casuals, working from garages and security bunkers, and yes, sipping colas or coffee (black, no sugar pls) and crunching burgers. Starting up a business is depicted as a fashionable, fun thing, no longer a serious, hard grind. And clearly, the reigning dictum is, if it is not digital, it is not deemed a start-up.
Now, that’s quite unfair for brick and mortar entrepreneurs who too are ‘driven by technology and intellectual property and want to innovate and commercialise’. Then there are those launching non-tech businesses who are also very much start-ups. A Dhirubai Ambani was a start-up though no one called him one then. In fact, he was dubbed an upstart by the entrenched scions. Agriculture and SMEs in manufacturing, the sectors that generate maximum jobs and contribute most to the GDP are off the Start-up ‘ecosystem’. But after all, this is still a physical world where we have to eat food and wear clothes, not just see and swipe screen images of them.
And we are told the tax-payers would be ‘investing’ over Rs 10,000 crs in these novel albeit novice start-up e-ventures many of which could well turn out to be mere adventures and possibly mis-adventures. That precious money could save lakhs of businesses already started but temporarily struggling to survive for lack of support or ‘incubation’, to put it in stylish jargon. Also, it is a mockery of the slogan, ‘less Government, more Governance’. The only industry that was insulated from the ugly public sector tag and the associated red tape is all set to get entangled. And when the Govt should be talking divestment and be a cautious catalyst for business, it is instead fuelling a potential financial bubble risking public funds over fads. Here’s why.
For starters, the start-up scenario in India is not that rosy. According to Bloomberg, private funding for start-ups has fallen by over 50% in the last four quarters, while the catalogue of bankrupt ones, called the deadpool list, is expanding. The average life of a start-up is now less than a year, say several studies. Starting up is easy; staying put is not. Forbes quotes a retail magnate: ‘90% of start-ups have no meaning, are nonsense, lacking long term vision, just created to sell themselves off to larger companies’. The head of an IT giant declared at an ‘Innovation’ summit that about 70% of start-ups will fail. With private players saying so, one is aghast at the odds the Govt is betting on.
But worse is its sin of leading impressionable, unsuspecting young minds down the garden path to indulge in kite flying in the name of innovation. Financial impact apart, the social implications of such failures are dire in a field that is a cyanosure for both right and wrong reasons. If innovation is the aim, the Govt should be investing in R&D in healthcare or infrastructure that benefit public, not gambling in e-commerce which is only a platform occupied by practised global squatters ready to burn as much cash as it takes for as long.
The specious logic is that competition will flourish and consumers will relish, no matter if manufacturers perish by being forced to sell below cost. Well, the consumer will love even poison for free. Should we be a nation of producers creating real wealth or a country of consumers ogling at virtual assets? Again, claims of employment generation are dubious as start-ups are not mass hirers but often a bunch of working entrepreneurs. Jobs will actually shrink as tech disrupts and downsizes processes and businesses, diminishing the buying power of, or rather, the so-called consumer class itself. Cab aggregators armed with algorithms claimed to empower drivers, only to push them out now through driver-less cars.
As for fostering competition, well, e-coms-MNCs as well as desi – don’t sell cheap without a reason. The idea is to kill competition by destroying traditional trades or causing implosions in IT industry itself. and then monopolise. That is as bad as it can get for consumers. Already, deep discounts are off the grid in countries like China. Premium pricing is not far off.
Digital revolution – I will dub it Digital Dictatorship – will come anyway, but the players are not permanent. Instead of getting dazzled and drawn by this ephemeral show, the Govt should focus on and strengthen the core sectors behind the changing facades.
‘Make in India’ should not be stalled as just ‘Start-up India’.
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