Take growth to grassroots, let a million flowers bloom

Having been a part of this growth story for more than three decades now, I often reflect on this resurgence with fondness. Looking back, I must say till the onset of liberalisation, Indian entrepreneurship had remained hostage to excessive state control. A controlled licensing regime did suit the deeply entrenched business interests in the country. Obviously new entrepreneurs like me found it hard to break the shackles. During my early days, I tried my hand at all kinds of things, starting from manufacturing bicycle crabshafts to importing power generators to assembling push-button telephones. Manoeuvring through the maze of government regulations was challenging but nonetheless a great learning experience.

Economic liberalisation led to de-licensing in different business sectors attracting both new entrepreneurs and established business houses. With more players in the market, business obviously became more competitive even in traditional sectors like steel, cement. But the most visible changes came about in the sectors that emerged from the forces of internal liberalisation and globalisation. Software development and Business Process Outsourcing, which leveraged India’s strength in technical manpower, witnessed the rise of remarkable first-generation success stories like Infosys’s Narayan Murthy. Biotechnology too provided Indian technocrats a window to turn global entrepreneurs. Closely following the software and BPO wave have arrived sectors like telecom, aviation, insurance, media, tourism, and retail, providing new entrepreneurs opportunities to make their mark.

The aggression shown by the new breed of entrepreneurs is truly remarkable. Thanks to them, some of these market spaces have undergone revolutionary changes in terms of market penetration. A sector like telecom which had just about 5 million subscribers in 1991 has grown 45 times, hitting 225 million in 2007. In fact India today is the fastest-growing global telecom market, adding 7 million subscribers every month. Similarly aviation and retailing too have seen the rise of many first-generation entrepreneurs who have helped these sectors grow rapidly. What these entrepreneurs have brought to the marketplace is risk-taking ability and innovative business models. They have virtually redefined the rules of the game in individual marketplaces.

Thanks to the consistent growth in the domestic market, Indian companies have grown in size to think of global expansion. While an entrepreneur like L N Mittal, who had left India in the seventies, has already acquired global iconic status through his acquisitions, other Indian entrepreneurs too have been accomplishing global acquisitions on a consistent basis. In fact global mergers and acquisitions by Indian companies, which were valued at $4.3 bn in 2005, crossed the $15 bn mark in 2006. What is most gratifying is that Indian entrepreneurs are active both in the traditional manufacturing spaces like steel, aluminum and auto components and emerging sectors like software, pharma and telecom.

Indian entrepreneurs have definitely come of age. But it’s important to keep the momentum going. They still have some way to go before they actually dominate the global market. Even in the domestic economy, a huge chunk of the consumer market still lies untapped. The upside is truly enormous. I believe the current rate of 8-9 per cent GDP growth can easily be taken beyond double digits. This can only be made possible if we can generate the required drive among the entrepreneurial class.

Our experience of the last six decades clearly points to the fact that the entrepreneurial energies by and large are shaped by the environment they operate in. While referring to environment, I am not only pointing to the physical infrastructure that enables the entrepreneur to accomplish his business goals, but the regulatory and financial world within which the entrepreneur is asked to operate. Physical infrastructure like roads, ports, airports and energy have a direct bearing on the operation of business. Given our current weakness in physical infrastructure, we not only need more public funds to be diverted towards infrastructure but need more innovative models of public-private partnerships to cover the shortfall.

The entrepreneur needs a regulatory environment that is stable, predictable, forward-looking and market oriented. This is particularly important for sectors that are witnessing rapid transformation. A moderate taxation regime helps the market expand. Since it boosts government revenues as well, a moderate structure actually works both in the interest of the entrepreneur and the state. We have already witnessed definite gaps in funding in several core infrastructure sectors. So creation of a friendly FDI regime is a precondition for development of those sectors. They make it easier for the domestic entrepreneur to mobilise the required capital.

The country today is in the midst of an economic resurgence. But this growth story needs to be taken deeper into the remote corners of the country. To achieve this we need to kick off another entrepreneurial revolution at the grass-roots. These grass-root entrepreneurs would not only broaden the national consumer market but help address unfulfilled consumer needs in these remote areas to make life better. But to usher in a movement of this nature, we need to set right a few things. Funding small entrepreneurs in the villages remains a critical issue. There is an urgent need to reorient our rural banking structure towards supporting the small rural entrepreneur; much the way Grameen Bank is doing it in Bangladesh.

Indian entrepreneurs have made a discernible impact on economic growth. The movement is going wider and deeper. From a few dozen flowers that bloomed in the 1970s and rose to a hundred in the ’80s and then may be a thousand in the ’90s, we are perhaps ready to witness a million flowers bloom across the country. In them we will have a million levers to carry forward the fruits of growth to the countryside. There cannot be a better way to touch the lives of the poor and marginalised and achieve inclusive growth.

The writer is Chairman of Bharti Group and CII (Confederation of Indian Industry)