E for Entrepreneurship - The panacea for Economic Independence ?

Boilal Gangte *

The best answer in my CAT interview which gave me the home run was on -how can the insurgency problems in my home state be solved?...My answer was "Education - If people are educated they have better chance of getting job, which inturn will make them wealthier and busier and also education would instill more moral science in their head resulting in people finding less beneficial to join extremist group"... E stands for Education was my code word to IIM Bangalore... Will give the same seemingly successful answer for the same question now? Most likely not!!!

The harsh reality

For any economy to advance or progress there are two fundamental's - "sustenance" and "incremental". Let's decode with a simple analogy - If a bucket has a hole and the level of the water needs to be sustained or maintained at the same level than the quantity of water flowing into it (inflow) has to be equal to the quantity of water flowing out (outflow) from the hole, else it will get empty sooner or later.

That is why sustenance is important. What do we do if we are to increase the level of water in that bucket? We need to ensure that the inflow has to be more than the outflow to get that incremental water level. If you think of that bucket as our economy, then I believe you get what I mean by "Sustenance" and "Incremental".

Let's do a little bit of dissecting on our current economy. At a very broad level our economy is dependent on 3 main economic activities -

1. Government jobs
2. Sustenance Farming (Field produce just suffice the family need like Jhooming cultivation)
3. Unorganized retailing (The small mom and pops store or shops in our market area)
4. Others Miscellaneous (Private employment, NGOs, carpentry, constructions, etc)

The fact that the economy continues suggest we may have scored on the sustenance front. However do all those activities help in the increment economy? Let's face some hard reality of life. There is something call time value of money. A Rs 10 today may not be worth A Rs 10 say few years from now for the simple reasons of-

1. Inflation is hitting almost double digit at the national level. If we were to calculate the actual price rise then the reality is that the real inflation is still higher. Just recollect the cost of a KG of rice few years back and compare it with now?
2. There is a continuous increase in the need of a family because of new addition of family member; the child has graduated from a primary school to secondary or to colleges and with every graduation the money out flow getting higher and bigger.
3. Because the society is moving up the value chain, hence the aspiration has gone high. While owning a TV was a luxury till recently, today computers and cell phones have become a necessity.

Can we now call ourselves a sustained economy leave aside the incremental part? Let's throw some more questions.

1. With our present economic activities as mentioned above, do we actually progress economically as an Individual or as a society?
2. Are we wealthier than yesterday?
3. Is our current economic activity giving us the needed surpluses which make us more economically sound?
4. In simple terms is our income growth able to cover up the depreciation of money value?

If the answers are NO (which it should be) than it means there is some discrepancies in our economic model if we want to be economically progressive which is meeting the SUSTENANCE and INCREMNTEAL criteria.

E for ENTREPRENEURSHIP

If you look around the various richer or more progressive state in the country, how many of them do you find have reached that level of progression because of abundance of government (Central + State) jobs or because of sustenance farming or because of the unorganized retailing?

• Put it the other way, if abundance of government jobs catapults an economy into progression then why is Bihar or UP known just for Lalu and Mayawati and not for economic development?
• And if literacy rate were the solutions to economic progression than I think Kerala and Mizoram would be the model state for the country but which unfortunately is not.

Then what makes a successful economy?

Look at richer states like Gujarat, Punjab, Chennai, Haryana or Rajesthan. One of the main reason they are richer state is because they have more economic activities which enable them to commercialize goods through either manufacturing or processing or commercial cultivation or trading which leads to more commercial transactions and more money inflows into their economy and hence making them a richer economy.

Are these commercialized activities because of their strong government or because they are more intelligent lots or because they have more stamina and work double the time in their farm lands?...I don't think so and I think you too would agree to my view.

While there is government support but these activities are carried out by the normal citizens of the state, people like you and me but the only difference is that they deviates from the normal generation route of government jobs or plough the inherited lands. These are whom we called ENTREPRENUERES who thinks bigger and who does things at a larger scale then just limit their economic activities to feeding their family. They do things for commercialization and not just for subsistence.

If walk through the various towns of these states, you will find small scale business units mushrooming side by side, run by semi skilled people producing goods in not so swanky enclosure with indigenous machines, or farm lands which cultivate mass production crops and they export their produce to other state/country thereby infusing more money in their economy unlike ours where we just out fuse the little money which is generated within our economy.

• * Do you know that Surat is one of the largest Diamond processing hub in the world? though Gujarat doesn't produce Diamond.
• Do you know that the Levis Denims or Nike apparels are manufactured by those small scale units I've just mentioned? though they may not necessarily be a cotton producing state.
• Do you know that Wal Mart has sourcing contracts with many small manufactures in North India?

I'm sure you would have heard of it before, but do you ever think that we can become one of them? The answer is YES...The beauty of this globalised and competitive era is the limitless and boundary less connectivity. If we can produce competitive goods at reasonable price, there is no boundary nor is there any place where we cannot sell. We don't need to own big factory nor do we need to have big brand to be able to start and run a successful business.

Even with small office in Chiengkonpang we can reach any part of the world, the only thing we require is to be able to do business transaction which is more competitive than the market. This can be achieved only through commercialization our economic activities and not subsistence economic activities.

I'm sure if we can produce competitive products, Big Bazaar or Reliance Fresh will never have any issue selling them at their swanky super markets or for that matter a Hindustan Unilever or Coke would not mind sourcing raw material which are produce from our land.

Think of it - those pineapple pulp tin stocked up in one of the Big Bazaar Shelf or the pineapple used for manufacturing Kissan Jams coming straight from our Bunglon or Khousabung pineapple farms?... This are not mere rhetoric but a very possible reality.

Hence, to bring progression and developmental changes in our society at a larger scale we need something more than EDUCATION or HARD WORK. We need to adopt and embrace the spirit of ENTREPRENEURSHIP whereby we indulge in commercial production and be able to compete anyone from anywhere. Hence, E for ENTREPRENEURSHIP from today.

Then, how do we build ENTREPRENEURSHIP in us?

If I say our state is still a rural economy and which is mostly agrarian, I don't think I'll be too far away. However, entrepreneurship is universal; it doesn't differentiate whether it is from Urban or Rural as long as we produce goods commercially at a competitive price and quality.

Sure, then how do we start treading the path of ENTREPRENEURSHIP in a rural agrarian base economy like us which doesn't have much precedence of commercial activity?

At the outset, for an entrepreneurial orientation to our rural economy we need to first agreed and accept that entrepreneurship is the central force of economic growth and development. Entrepreneurship should be ingrained in our society and it should be accepted right from the family level.

Today anything non academic seems to be stigmatized by the family and the society at large. Hence entrepreneurship is synonymous to the last resort for individuals who failed every opportunity in life. The ramification being, entrepreneurship not taken as a serious career option or it is not taken as a serious economic activity which can create wealth and self esteem. The first step is to kill this dogma and reorient ourselves. Therefore we need to level Successful entrepreneur in the same esteems as any UPSC victor or any high Pofessional degree.

Secondly, we need to heavily promote entrepreneurship in our society. Without much history of entrepreneurship in our society there is lack of awareness and understanding of the concept. If we want this to be our vehicle of reformation, there is a dire need of promoting and instilling the spirit of entrepreneurship in every individual's mind, especially the younger generation who are our future. To be able to do this we need to first understand the concept, the process, the different models, different success stories and also the flipside of it so that there is a holistic understanding of this economic model.

Thirdly, we need to build a conducive environment which will enable entrepreneurship to flourish. The task of building this environment will require a huge participation from the government.

The support system: Infrastructure for entrepreneurship framework

Because rural entrepreneurship is smaller in nature with the incumbents being mostly the rural mass with limited knowledge, minimal know how and meager capital in hand, hence there is strong need for government support in creating a conducive environment. The following are areas which need strong government participation if rural entrepreneurship has to flourish.

Infrastructure

Supply chain or distribution system plays one of the most important roles in any commercial activities. Goods need to move from the buyer hand to the seller hand; hence it is important to enable the seller to deliver the product or the buyer to be able to bring back home. One of the major stumbling blocks in India's rural economy is the inability of producers (farmers) to bring their produce to the final market place and sell their goods at the price they deserve.

Hence, for a rural entrepreneur good connectivity (road, railways, etc) is of paramount and which is totally in the hands of the government.

Secondly, a rural entrepreneur requires a stable market place which allows him or her to sell at a fair price and not at the whims and fancies of middlemen. There needs to be a stable market which can provide consistent and strong pricing mechanism. Government can stepped in here through various regulations or as a facilitator.

Capital or Fund

For any entrepreneur accessibility of fund at the right time and place is paramount. With limited sources of fund and minimal savings in hand, there is a bigger need of capital for a rural person to start the entrepreneur road.

Due to limited economies of scale, it might not be feasible to have nationalized banks situated at rural location; however there is an alternative in the form of co-operative banks or smaller financial house (micro-finance). The state government in conjunction with the central government needs to step in here to provide such facility to ensure that a rural entrepreneur has easy accessibility of finance when needed.

Insurance

While RISK cannot be taken away from entrepreneurship, however taking additional risk of natural calamities or unfortunes is unnecessary. In today's world insurance covers almost all aspect of any business. But sadly the presence of such insurance facility might be limited due to non presence of insurance companies in the rural area.

Government needs to facilitate the presence of insurance house in these locations providing various types of business related insurance -Theft, Fire, Equipment, Crop, Office premise, etc.

Insurance while mitigating the risk of calamities and misfortunes also builds certain level of security in the minds of the small entrepreneur.

Know-how or skills

Knowledge and skills improves efficiency and efficacy. Hence there is a need for regular knowledge/skills update for an entrepreneur for running his/her business, which can be both technical know-how and management know-how. The Government needs to play a big role in this transmission of knowledge, through various mechanisms such as:

• Seminars
  • Workshops
• Study Materials (Books, tape, CDs, Banners, etc)
  • Training

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* Boilal Gangte wrote this article as part of the Souvenir for "4th state level-Manipur Pineapple festival 2011"
The writer is Deputy General Manager Marketing at Aditya Birla Idea Cellular Ltd. based in Ahmedabad
This article was webcasted on September 06, 2011.

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