Managing an Entrepreneurial surge: learning to replicate good ideas
The national media obsessed as it is, with grand trivia and hero worship, a la Thomas Carlyle ( 1869); a series of very important policy innovations coming from south of India have been missed. I think, we need to underline their significance and create a federal pluralism, so that good ideas get traction everywhere, no matter which state under which ever political party rule has triggered those initiatives. This will not be the first time that the country will show maturity to scale up good ideas coming from different states. Women and child development programs in Tamil Nadu have been a benchmark for similar policies for decades. Employment Guarantee Scheme of Maharashtra inspired MNREGA (though not as meaningfully, as was possible). Watershed development and sanitation programs in Gujarat inspired the rest of the country (again not as vigorously as was the need), and Mitanin scheme of Chhattisgarh became the progenitor of Asha scheme of central government spreading health coverage in rural areas. In some cases, local initiatives at district level became state policy and then spread to many other states such as use of generic medicine to increase health coverage in public health programs begun in Rajasthan. I can give many more examples where horizontal learning culture in India has been stronger than vertical learning curve. State to state spread of ideas is faster than state to centre, unfortunately.
Let me revert to a few path breaking ideas from south which need to be scaled up by all states including the faster growth states like Gujarat, Bihar and Madhya Pradesh, Maharshtra etc.
Kerala announced recently that it will allocate one per cent of the state budget for promoting entrepreneurship. Such a striking commitment to entrepreneurial model of development has never been made in the post independence India. In contrast, you have so called Food Security bill which will make even well earning members of the society ( obviously 67 per cent of the country can not be, must not be and will not be poor) more insolent and indifferent to similar entrepreneurial urge, through underserved access to excessively subsidized food grains.
If Kerala could do it, so should other states do it too. Even higher growth and economically more developed states like Gujarat and Maharashtra should take a cue and announce similar policies. The traction that an additional rupee for promoting entrepreneurship gets in an accelerating economy is much higher than say in less developed region( even with higher growth rates). The reason is that given better infrastructure, and lower transaction costs of doing business, entrepreneurial surge manifests faster and at lesser unit cost.
If Reserve Bank can reduce the cost of credit, particularly longer term credit for small industry, coupled with incentives for capital investment in modernization, the growth will pick up even more. Licensing of innovative technologies may be made attractive so that public R and D and grassroots innovations get higher traction due to tax incentives that Ministry of Finance should provide. The guidelines of District Innovation Fund (extremely inflexible and unimaginative as these are) should be urgently modified to give spur for social innovations and enterprises at district level. If entrepreneurial kick start can be supplemented by appropriate tweaking of eco-system, the social, environmental and economic enterprises can bring new buoyancy in Indian economy.
Karnataka has announced not only district level incubation funds for start ups, but also innovation clubs in each college and polytechnics. These clubs (to search, spread, sense unmet social needs and celebrate innovations) originally Launched by Honourable President Pranab Mukherjee in central universities are now being set up in state universities too.
Instead of depressing entrepreneurial environment, as many central government polices unfortunately are trying to do with great ‘enthusiasm’ , it is the time that states take lead, ignoring Mandarins at central level and repose faith in young people willing to take risk, be more innovative, perceptive of unmet social needs and wanting to start enterprises. Every technical university is sitting over hundred of crores of fund collected from students but, indifferent bureaucrats in some of the states and unwilling vice chancellors in others, will not let these funds be used for angel funding of tech youth. Doesn’t matter, if National Inclusive Innovation Fund excludes funding for innovation based student or young start –ups. BIRAC ( Biotechnology Industry Research Alliance company) set up by DBT ( in which I played a small role in conceptualizing and preparing the policy note), is the only central government window of opportunity for start up having not just proof-of-concept technologies but even just promising ideas. There is no other scheme at central or state level which invests in ideas of youth with alacrity, hunger and impatience (leaving aside small MVIF window at National Innovation Foundation for idea of children and informal sector).
I hope without caring about lineage of new initiatives by Kerala, Karnataka, DBT etc., states including the fast growing ones, will announce without much delay empathetic entrepreneurial polices for supporting different kind of enterprises. There is no time for India to lose any more; it has to become a global inclusive growth engine.