In 2008, when the Global Financial crisis hit western countries, India was at grave risk. Somehow, our economy managed to hold up. But, the lesson was clear and the lesson was that the world will be looking to deglobalise in future and India must be prepared for it. Aatmanirbhar economy is only an antidote to the excesses of globalisation.
Aatmanirbharta – Startup boom in India
Reports from every sector of the economy suggest that India has made a massive jump towards utilising its young consumer base. Recently, Piyush Goyal, Minister of Commerce informed the world that India has achieved a stupendous feat of having 75,000 start-ups. The official statement stated that the boom is fuelled by innovation, enthusiasm, and entrepreneurial spirit.
These numbers tell the power of a vision.
A vision to see innovation & enterprise drive growth.
India is now home to 75,000 startups in the 75th year of Independence and this is only the beginning. pic.twitter.com/Dh6sVxUnLU
— Piyush Goyal (मोदी का परिवार) (@PiyushGoyal) August 3, 2022
Moreover, the unnecessary jibe of ‘suit-boot ki sarkar’ has also been falsified by the start-up numbers. 49 per cent of these startups are located in Tier 2 and Tier 3 cities of India, rather than Tier 1 where big business houses have their bases. Moreover, in consonance with changing demands, 12 per cent of these startups cater to IT services. 9 per cent to healthcare, 7 per cent to education, while 5 per cent each serves professional commerce and agriculture. Raghuram Rajan’s fear of jobless growth is also shattered by these start ups as they have created 7.46 lakh jobs so far. Though, in terms of job creation, it is still a long way to go.
Domestic investors making up for FPIs
While Indian citizens are heavily participating in job creation, it would be a gross underestimation that they are running a rat race of startups. Indians have now deep-rooted confidence in Indian market as well. According to latest numbers collected by primeinfobase.com, holding of domestic institutional investors (DII) in NSE listed companies hit an all time high in June this year. It coincided with a decadal low share of Foreign Portfolio investors (FPIs).
During the latest quarter, DIIs pumped in more than ₹ 1.28 trillion in Indian markets. At the same time, due to a change in policy stance by US Federal reserve, FPIs pulled out more than ₹ 1.07 trillion from the Indian market. The gap between DII and FPI holdings has also narrowed down to 26.77 per cent. Now, the combined share of DII, retail investors and High Net Individuals in Indian markets stand at 23.53 per cent.
Aatmanirbhar Bharat (Self-reliant India) and PLI Scheme did the job
Both 75,000 start ups and rise of DIIs are remarkable achievements considering the fact that traditionally Indian governments have not been supportive of entrepreneurship and other risk taking aspects of their countrymen and women. But, Modi government’s emphasis on Aatmanirbharta has brought a massive shift in how people look at these aspects.
Initially, it was tough for Aatmanirbharta to get going, but as soon as government pumped in incentives through PLI scheme, the initiative accelerated the growth of production. The ₹ 1.97 lakh crores worth of incentives have brought in tremendous change. Sectors such as drones, automobiles, white goods, textiles, pharmaceuticals, smartphones among others are witnessing a boost in the productivity. The minimum production in the country is expected to be worth around ₹ 37.50 lakh crores, and the minimum employment generation is expected to rise by one crore over five years.
Also Read: Startup India and Make in India expected to boost employment in 2022
FDIs are not a threat to Aatmanirbharta
Okay, got it, production is increasing, but where will those produces be consumed? The answer is that most of them will be consumed in India itself. In 2025, India’s median age will be around 30, which is the age at which most people start to settle down and buy more and more stuff. The consumption capacity will be fuelled by increasing purchasing power and jobs which people are getting in aforementioned sectors.
In other words, Indians will work in Indian-owned factories, earn wages and then will spend that money to buy products which other Indians are producing. The only foreign hand in this chain is that of investors who are currently pouring money into India through FDIs. But, given the fact that FDIs are being watched cautiously by the government, they are less likely to negatively impact our prospects in near future, at least not for a decade. Chinese investors looking to invest in India know it better than anyone else.
At the same time, Indian startups are growing in terms of valuation. We have more than 100 Unicorns. It simply means that our own Venture Capitalists are set to increase further. Just like DIIs are filling space vacated by FPIs, local VCs will be taking over Foreign funding as well. After knowing all this, show me a better example of an Aatmanirbhar economy.
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