It appears that the global financial crisis which occurred in 2007 and lasted almost 3 years is finally over. However, its after-effects are still being felt in many economies. Whether the existing financial crises in different countries of the world are related to the crises of 2007 or not, is a debate for another time. In this article, I will discuss the financial situation in India in relation with the entrepreneurial and societal trends which are prevalent in the fast emerging economy.
Throughout 2002 to 2008, India played a vital role in global economic growth. It became one of the fastest emerging economies with advancements being made in several industries. The IT and BPO sector grew to the point where India was labeled as the back office of the world. It was due to this growth that India seemingly survived the global economic down turn unscathed.
The economic growth rate remained strong throughout 2009, 2010 and 2011. The estimated growth is still 6.9 percent for the year 2012, but that represents a fall from about 8%, and is a major slowdown in the economy. The slowdown is not just limited to India, because China and Brazil have also been affected. The economic slowdown indicates that the emerging economies are still growing, but the rate of growth has slowed down immensely, impacting the global economy negatively.
In India, the slowdown has not yet resulted in massive downsizing as in Brazil, but hiring activity has been reduced. The local and foreign investors are keeping a keen eye at the economy, and are not willing to risk their investments by expanding at this point. With a limited number of jobs available in the market, the Indian youth has had to look for alternate ways to earn an income.
Despite the fact that India is an entrepreneurial country, its entrepreneurs have had to struggle to create and nourish their business ventures. A growing pool of first-generation Indian entrepreneurs – the founders of companies such as HCL, Cognizant, Infosys, Bharti and more – have generated vast employment opportunities and enormous wealth. They and others such as IndiaBulls, Makemytrip, Flipkart and Naukri have achieved success in value creation through a public listing. These successes have provided inspiration for a new breed of entrepreneurs especially in the internet and e-commerce space.
As a result, entrepreneurial activity has increased. Many fresh graduates are opting to start their own business instead of looking for jobs in larger firms. Young and talented individuals with new and innovative ideas are searching for investments in order to start their own businesses. Accelerators such as iAccelerator, VentureNursery, The Startup Centre are a positive step in fostering and enabling bold new ideas, while providing entrepreneurs with a hub to nurture their skills and develop to the next level.
An example of young graduates executing their ideas is the company Innoz, which has a very inspiring story. Four engineering students from the small town of Kasargod in Kerala got together to build a text-based messaging service as part of their college project, called SMS Gyan. They have since then, signed agreements with mobile telecom service providers like Airtel, Docomo, Aircel, Loop Telecom and Vodafone. The startup has since gone on to get an overwhelming number of awards and recognition (Forbes, MIT, Wall Street, CNN IBN)
The trend is greater in the US. During the times of the recent recession, when hiring was at an all time low and downsizing was a common practice, many people started their own small enterprises as a means to survive. Some of the enterprises became so successful that they evolved into large organizations with hundreds of employees. Earlier this year, my business partner and I ventured out to implement a concept that we strongly believed in. Check out our website, iFunding.
In India, the young engineers still prefer jobs over startups. However, the low number of jobs available in the market has driven many towards entrepreneurial activity. Although it is more challenging to startup a business and turn it into a successful venture, the rewards are much greater. Increased entrepreneurial activity benefits the society and provides jobs for hundreds of people.
Since entrepreneurship runs of innovation and creativity, it also helps a country advance at a technological and social level. In other words, the economic slowdown is a blessing in disguise because it is changing the way a young Indian thinks.