ENTREPRENEURSHIP AND ECONOMIC GROWTH

Economic development of any region is an outcome of purposeful human activity.

Men assume various roles in the development process, namely, as organizer of
human capital, natural material resources, worker and consumer. He stands at the
centre of the whole process of economic development. According to Schumpeter,
economic development consists of “employing resources in a different way” in
doing a new combination of means of production.

Roles of Government in promoting Entrepreneurship: (GROWTH OF

ENTREPRENEURSHIP IN INDIA)

Government plays a very important role in developing entrepreneurship.

Government develop industries in rural and backward areas by giving various
facilities with the objective of balances regional development. The government set
programmes to help entrepreneurs in the field of technique, finance, market and
entrepreneurial development so that they help to accelerate and adopt the changes
in industrial development. Various institutions were set up by the central and state
governments in order to fulfill this objective.

A. Institutions set up by Central Government

1. Small industries development organization (SIDO)

SIDO was established in October 1973 now under Ministry of Trade, Industry and
Marketing. SIDO is an apex body at Central level for formulating policy for the
development of Small Scale Industries in the country, headed by the Additional
Secretary & Development Commissioner (Small Scale Industries) under Ministry of
Small Scale Industries Govt. of India. SIDO is playing a very constructive role for
strengthening this vital sector, which has proved to be one of the strong pillars of
the economy of the country. SIDO also provides extended support through
Comprehensive plan for promotion of rural entrepreneurship.

2. Management development Institute (MDI)

MDI is located at Gurgaon (Haryana).It was established in 1973 and is sponsored by

Industrial Finance Corporation Of India, with objectives of improving managerial
effectiveness in the industry. It conducts management development programs in
various fields. In also includes the programmes for the officers of IAS,IES,
BHEL,ONGC and many other leading PSU’s.

3. Entrepreneurship development institute of India (EDI)

Entrepreneurship Development Institute of India (EDI), an autonomous and not-for-

profit institute, set up in 1983, is sponsored by apex financial institutions – the IDBI
Bank Ltd., IFCI Ltd., ICICI Bank Ltd. and the State Bank of India (SBI). EDI has helped
set up twelve statelevel exclusive entrepreneurship development centres and
institutes. One of the satisfying achievements, however, was taking
entrepreneurship to a large number of schools, colleges, science and technology
institutions and management schools in several states by including
entrepreneurship inputs in their curricula. In the international arena, efforts to
develop

entrepreneurship by way of sharing resources and organizing training programmes,

have helped EDI earn accolades and support from the World Bank, Commonwealth
Secretariat, UNIDO, ILO, British Council, Ford Foundation, European Union, ASEAN
Secretariat and several other renowned agencies. EDI has also set up
Entrepreneurship Development Centre at Cambodia, Lao PDR, Myanmar and
Vietnam and is in the process of setting up such centres at Uzbekistan and five
African countries.

4. All India Small Scale Industries Board (AISSIB)

The Small Scale Industries Board (SSI Board) is the apex advisory body constituted
to render advise to the Government on all issues pertaining to the small scale
sector. It determines the policies and programmes for the development of small
industries with a Central Government Minister as its president and the
representatives of various organization i.e. Central Government, State Government,
National Small Industries Corporations, State Financial Corporation, Reserve Bank
of India, State Bank of India, Indian Small Industries Board, on government
members such as Public Service Commission, Trade and Industries Members.

5. National Institution of Entrepreneurship and Small Business

Development (NIESBUD),

New Delhi

It was established in 1983 by the Government of India. It is an apex body to

supervise the activities of various agencies in the entrepreneurial development
programmes.It is a society under Government of India Society Act of 1860.The
major activities of institute are:

i) To make effective strategies and methods

ii) To standardize model syllabus for training

iii) To develop training aids, tools and manuals

iv) To conduct workshops, seminars and conferences.

v) To evaluate the benefits of EDPs and promote the process of Entrepreneurial

Development.
vi) To help support government and other agencies in executing entrepreneur
development

programmes.

vii) To undertake research and development in the field of EDPs.

6. National Institute of Small Industries Extension Training

It was established in 1960 with its headquarters at Hyderabad. The main objectives
of national Institute of Small Industries Extension Training are:

i) Directing and Coordinating syllabi for training of small entrepreneurs.

ii) Advising managerial and technical aspects.

iii) Organizing seminars for small entrepreneurs and managers.

iv) Providing services regarding research and documentation.

7. National Small Industries Corporation Ltd. (NSIC)

The NSIC was established in 1995 by the Central Government with the objective of
assisting the small industries in the Government purchase programmes. The
corporation provides a vastmarket for the products of small industries through its
marketing network. It also assists the small units in exporting their products in
foreign countries.

8. Risk Capital and Technology Finance Corporation Ltd.(RCTFC)

RCTFC was established in 1988 with an authorized capital of 15 crores rupees. The
main objectives of RCTFC are provision of risk capital for the extension and
expansion of entrepreneurial development and venture capital for the projects with
high techniques for technology development and transfer.

9. National Research and development corporation (NRDC)

NRDC was established in 1953 under Department of Science and Industrial

Research under Government of India. Its main objectives are:

i) Providing assistance in technology transfer

ii) Transfer of technology

iii) Establishing relations with various technology institutions and collecting various
indigenous techniques developed by them.

10. Centre for Entrepreneurial Development (CED) Ahmedabad

It was sponsored by the Government of Gujrat and public financial institutions
operating in the State. It conducts entrepreneurial development programmes at
various centres.The important features of training programme are:

i) Training programmes were conducted after survey for opportunities was made.

ii) Appropriate linkage was established with supporting agencies supplying finance,
factory

sheds, raw materials, etc.

iii) Behavioural tests were conducted to select the entrepreneurs.

iv) Training programmes covered theoretical and practical aspects.

v) Full time project leader took follow up action after the training was over.

11. Institute for Entrepreneurial Development (IED)

It was set up by the IDBI in association with other financial institutions, public
sector banks and the State Governments. The IEDs was set up to fulfil the
entrepreneurial development needs of the industrially backward States in the
country.

Economic and Non Economic Factors Affecting Growth of Entrepreneurship

Economic Factors

These factors are important in influencing the economic stability and growth of a
country. They are the factors that are crucial in ensuring your company sees its
expected progress and attains its objectives.

 Capital

To start your entrepreneurial journey, you would need capital for many reasons.
First off, you would need land, a place where you can start your company. You
would need raw materials to create the product or service. You would also need
machines to process those raw materials. If you have funds readily available to use
as capital that would be a bonus for you. But if you have to seek funds so you can
start your company you can start pitching to investors. Present your business idea
to investors and find out if they would be interested in investing in your business. In
some countries, entrepreneurs are given the financial capital they need in their
initial stages by the government. Events are organised where entrepreneurs can
pitch their ideas and judges select the company based on the criteria.
  Infrastructure

The infrastructure available in your city, village or town will go a long way in having
an impact on the growth of your entrepreneurial venture. A location with quick and
easy access to communication tools and the latest technology will help boost your
business or company. For example, if your product would require shipping to
different parts of the country or other countries, it is ideal that you are located in a
place with access to quick and secure shipping facilities.

 Labour

For a business to see growth and success, you will require skilled labour. The
quality of labour should be given importance over the quantity of labour. However,
the availability of quality labour at an efficient cost would be a bonus. Choose a
location that will be able to provide the labour population you require. If
transportation and accommodation become an issue, these factors could add to
your expenses and result in losses. If your company is going to require manual
labour, choose a location that is close to the communities where the manual
labourers live. Otherwise, make arrangements for the labourers to be able to reside
next to the place of business to save transportation costs. If you are planning to
start a software or IT company, it would be ideal to invest in a place that is the IT
hub of the city or the country. There would be more chances for this city to have
the personnel with the required skills and expertise for the company.

 Raw Material

Just as important as labour is raw material procurement. When choosing the

location for your business make sure it is near the raw material source. While it is
possible to transport the raw material through a supply chain, such requirements
would increase expenses. To gain maximum profit at a low cost, a location close to
the raw material source is the ideal choice. For example, an entrepreneur may be
interested in starting a furniture business, but if the required wood types are not
available nearby, the cost of transporting the raw material would double the
expenses. As such it would be ideal to start the furniture company in a location
where different wood types would be accessible. Or else, the company can focus on
one particular type of wood for all its products as its specialisation.

 Market

The market plays an important role in ensuring the growth of your business. The
size of the market, as well as the marketing techniques used, are both important. A
market is a place where entrepreneurs and consumers interact. It is a place where
buying and selling take place. With the advanced technology available today, the
world has become one big market. You can market your product to any part of the
world using the internet and shipping facilities. This improves your chances of
increasing profit and sales. It expands your market beyond the immediate location
of your company. The availability of various E-commerce platforms also increases
your market size. You could sell your product through such platforms saving the
cost of shop rent and labor charges. Make sure to study what is dominating in the
market where you are planning to introduce your product. Consistently work
towards expanding your market in the offline or online space.

Non-Economic Factors

Various non-economic factors come into play in affecting the growth of

entrepreneurship. Some of these are:

 Social Mobility

Social mobility is an important factor in the growth of a business. The society where
you are starting your entrepreneurship journey should be an accepting one. Certain
societies are not easily adaptable to change. Such communities would hinder the
growth of the company. Assess the social environment where you plan to start your
business and make sure it is a place that is adaptable to change and growth.

 Education

Education has an important role to play in defining your entrepreneurial journey.

This may be formal or informal education. While one should acquire the degrees
required to start a business, this opportunity may not be accessible to all. However,
every person can get educated through experience and consultation. Work for
different entrepreneurs and learn how they get their businesses to grow. Learn
from their mistakes and errors. Consult experts and professionals. The whole
journey of entrepreneurship is a never-ending learning process.

 Entrepreneurship Legitimacy

All societies in the world come with their terms, norms, and regulations. The
entrepreneur must learn to adapt himself and his business to society. There are
cultures and traditions passed down through generations that cannot be ignored in
totality. The entrepreneur must keep these norms and regulations in mind while
also growing his or her business. For example, the fast-food corporation McDonald’s
makes alterations in their menu as per the country’s religious norms and
regulations.

 Attitude of the Society

The attitude of society is another factor that should be considered for the growth of
entrepreneurship. For entrepreneurs to flourish, society should learn to accept
changes. They should learn to encourage growth when it is directed towards the
progress of the community as a whole. There might be instances where it is
necessary to have slight changes in cultural traditions and norms for growth and
development. The society has a role to play in showing a positive attitude toward
entrepreneurial advancements.

 Cultural Value

The cultural values of a country also impact the growth of entrepreneurship. If the
culture has a leaning toward the growth of the economy and money-making
business, there are higher chances of entrepreneurs flourishing in the country.
There are certain countries whose cultures encourage a strong work ethic. These
kinds of countries are the ideal place to start a business or company for an
entrepreneur.

OBSTACLES TO ENTERPRENUERSHIP DEVELOPMENT IN INDIA

What are the Economic Challenges in India?

In India, various economic challenges confront the nation. These challenges

possess significant implications for the country's growth, development, and overall
well-being. Notable among these economic concerns in India are:

1. Poverty and Income Inequality:

In India, poverty and income inequality are pressing issues. The country is home to
a significant population living below the poverty line, with a wide gap between the
rich and the poor. This divide presents challenges to social cohesion and inclusive
growth.

2. Unemployment and Underemployment:

Unemployment and underemployment pose persistent challenges in India,

particularly among the youth. The government faces the ongoing task of creating
sufficient job opportunities to accommodate the expanding labor force.

3. Agricultural Distress:

Agricultural distress is a pressing issue in India, impacting the vital sector of the
economy and affecting a significant portion of the population. Challenges such as
low productivity, lack of modernization, and vulnerability to price fluctuations and
climate change have hindered its growth.

4. Infrastructure Deficit:

India faces an infrastructure deficit that calls for significant investments in

transportation, energy, and digital networks. The insufficiency of these essential
systems hinder economic growth and impede smooth business operations.

5. Fiscal Deficit and Public Debt:

The Indian government faces a perpetual challenge in maintaining a stable fiscal
deficit and managing public debt levels. The repercussions of high fiscal deficits
include inflation and economic instability.

6. Inflation:

Inflation presents the challenge of balancing economic growth with effective

control. The fluctuation of food and fuel prices results in higher inflation rates,
thereby influencing the cost of living for citizens.

7. Corruption and Red Tape:

Corruption and bureaucratic inefficiencies greatly hinders the ease of conducting

business in India, consequently discouraging foreign investment.

8. Environmental Sustainability:

Environmental sustainability poses significant challenges due to rapid

industrialization, urbanization, and their detrimental impact on our environment.
These challenges encompass pollution, deforestation, and climate change. Striking
a balance between economic growth and environmental preservation is an intricate
endeavor.

9. Healthcare and Social Welfare:

Access to affordable healthcare and social welfare programs is a persistent

challenge for the vulnerable segments of society. This issue significantly impacts
overall human development and productivity.

Solutions to Economic Challenges in India

India's population is quickly increasing, and overcoming obstacles to economic

progress can take time. Some potential solutions to these problems are provided
below.

1. Infrastructure Investment: The government must begin investing in

Indian infrastructure in order to improve the country's facilities.

2. Privatization: Privatisation accelerates economic growth by increasing per

capita income.

3. Promote Investment Demands: There is an urgent need for the

government to enhance investment demands, i.e., to undertake concerted
efforts to boost commerce. Other countries must invest in India in order to
boost the country's earnings. This occurs when trade expands, which can be
accomplished by exporting surplus jobs to India.
4. Promoting joint ventures: India should encourage joint business ventures
in which the government collaborates with other individuals or countries to
build good infrastructure in India.

5. Industrial production: India's industrial production and machinery should

be increased. It is vital to do so since farm laborers are in short supply and
must be absorbed by our industries.

6. Improving Education Standards: India's education standards should be

improved. The country ensures that individuals learn about new and
developing technology by raising education levels. This results in the
availability of more and better options for people to choose from and
qualified individuals are hired in the industrial sectors. This also assures that
the agriculture sector's employment excess does not grow anymore.

7. Indigenous manufacturing: India should start consuming products made

in the country. As export duties are reduced, the country's per capita income
rises. It also generates job opportunities. Swadeshi is a prime example of
this.

8. Taking anti-corruption measures: Corruption is another major issue

confronting the Indian economy. Corruption must be eliminated for our
economy to develop.