One of the drivers of India's growth going forward is how well the professional class adapts to emerging opportunities in the new India. Historically, Indians have been reasonably risk-averse, preferring salaried jobs rather than take the plunge into doing something on their own. These days, the IIM graduate taking the entrepreneurial road is still the exception than the rule - which is why these cases make headlines in newspapers rather than being the norm.
The reasons why so few of our qualified people take the plunge are manifold. First, there is the issue of financial safety. Most of us who come from middle class backgrounds simply do not have sufficient funds to take risk, particularly when there is no financial back up. Family commitments can also intervene and diminish risk-taking capability - children's education, parents' medical, retirement worries, etc. Surprisingly, education can often become a handicap. You have more to lose when you can get a job in a good investment bank or consulting firm or a leading corporate. And, therefore, the safer path often seems more attractive.
Second, many communities and societies do not have a risk-taking culture; it's simply not built into their cultural DNA. Plus there is no family or community knowledge or network of how to go about starting a new business or the issues involved in doing so. Equally, there are other communities where risk-taking and starting new businesses are in fact the norm and the expected thing to do. But these communities are fewer than we need.
India's culture of promoters is also unique. Banks require personal guarantees, private equity investors need there to be a strong promoter/manager and investors need a prominent face. All this militates against a professional set-up and reinforces the need to put yourself as the entrepreneur even more on the line. A number of people could be, and are, uncomfortable taking on this added burden. Much better to simply carry on doing your secure job.
This is a shame. To broadbase our growth, India needs an army of entrepreneurs. New businesses create new jobs and increase the value added in the economy. Profitable businesses contribute to enhanced tax collections and make the economy more efficient and streamlined while creating new and unique opportunities for growth. Over time, some of these firms could globalise and become world leaders in their respective areas.
The reasons why so few of our qualified people take the plunge are manifold. First, there is the issue of financial safety. Most of us who come from middle class backgrounds simply do not have sufficient funds to take risk, particularly when there is no financial back up. Family commitments can also intervene and diminish risk-taking capability - children's education, parents' medical, retirement worries, etc. Surprisingly, education can often become a handicap. You have more to lose when you can get a job in a good investment bank or consulting firm or a leading corporate. And, therefore, the safer path often seems more attractive.
Second, many communities and societies do not have a risk-taking culture; it's simply not built into their cultural DNA. Plus there is no family or community knowledge or network of how to go about starting a new business or the issues involved in doing so. Equally, there are other communities where risk-taking and starting new businesses are in fact the norm and the expected thing to do. But these communities are fewer than we need.
India's culture of promoters is also unique. Banks require personal guarantees, private equity investors need there to be a strong promoter/manager and investors need a prominent face. All this militates against a professional set-up and reinforces the need to put yourself as the entrepreneur even more on the line. A number of people could be, and are, uncomfortable taking on this added burden. Much better to simply carry on doing your secure job.
This is a shame. To broadbase our growth, India needs an army of entrepreneurs. New businesses create new jobs and increase the value added in the economy. Profitable businesses contribute to enhanced tax collections and make the economy more efficient and streamlined while creating new and unique opportunities for growth. Over time, some of these firms could globalise and become world leaders in their respective areas.
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