Job creation has become a key topic of discussion in India, especially as the economy has undergone significant changes due to globalization over the past three decades.To tackle the problem of unemployment, India has harnessed the potential of entrepreneurship.
To create employment opportunities, the government has introduced various schemes to promote entrepreneurship and provide wage employment, one of which is the Skill India scheme, launched in 2015 with a goal of developing a human resource base of over 400 million people.
Another important initiative is the Start-Up India programme, which aims to encourage entrepreneurship among the youth by nurturing start-up ventures and creating a favourable business environment.
Recognizing that young people are often at the forefront of innovation and creativity, startups are tapping into India’s vast talent pool. Startups have proven highly effective in creating employment opportunities for those currently unemployed, often outperforming the efforts of larger corporations. In fact, according to a Nasscom report, startups in India have created over 1.5 million jobs, demonstrating their significant impact on the job market.
Startups have had a significant impact on society by reducing unemployment, tackling poverty and stimulating domestic production and national income through increased consumer spending in the Indian economy.
India’s startup ecosystem is currently rated the third largest in the world and here are my expectations from the Union Budget 2024-25.
India eases regulations for startups to realise ‘Viksit Bharat’ ambitions
Startups play a vital role in driving innovation, economic growth and job creation. To continue this momentum, governments need to streamline regulatory procedures, provide tax incentives and enhance funding for early-stage startups. Regulatory flexibility is needed to attract more entrepreneurs and investors.
This will encourage more Indian companies to set up offices in the country, stimulating job creation and economic growth. Additionally, allowing domestic capital participation through large-scale public investments in venture capital firms and providing capital gains tax exemptions on startup investments will further spur investment activity and potentially restore pre-pandemic investment levels.
Increase AI R&D spending by 50%
Startups are continuously encouraging their employees to upskill, adapt to the changing environment and remain at the forefront of their respective fields. The Government of India has allocated Rs 2,000 crore for AI and related technologies under the Ministry of Electronics and Information Technology (MeitY) in the Union Budget for 2022-23.
With rapid advances in generative AI, we need at least a 50% increase over current allocations to accelerate innovation in AI research and development and support upskilling efforts while upholding ethical standards.
Easing the tax and compliance burden so small businesses can thrive
According to a CII report for 2023, over 40% of SMEs find GST compliance cumbersome, leading to increased costs and inefficiencies.Furthermore, a 2022 survey by the National Small Business Corporation (NSIC) highlighted that around 30% of SMEs suffer from tax-related issues due to unclear regulations and frequently changing procedures.
The government needs to streamline processes like taxation and provide additional incentives to boost Indian startups. It is important to simplify the GST structure and make it easier for SMEs to subscribe to tax. Currently, SMEs face huge challenges due to the complex GST regime, which includes high compliance burden and frequent changes in tax rates.
Providing capital and business training to local start-ups
According to a 2023 report by the Ministry of Rural Development, around 60% of rural start-ups struggle to raise funds, with only 15% receiving financial support from formal channels. Strengthening infrastructure development in both rural and urban areas is essential to create more job prospects and foster a vibrant entrepreneurial ecosystem in underserved areas.
The budget should focus on promoting the growth of rural small and medium-sized enterprises to expand off-farm employment opportunities. This could include providing business training to rural youth, streamlining the process of starting a business, and introducing a system for rapid distribution of credit to small village enterprises.
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The views expressed above are the author’s own.
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