India is going through a bull market of sorts for entrepreneurship with one of the most vibrant start-up ecosystems. Indian start-ups are likely to end the year raising over Rs 2lakh crore in capital. Of course, the easy liquidity has helped capital flow freely but this op-ed cites three factors whose convergence has created the right time right place conditions for entrepreneurship – Jio, UPI and GST. Using this, the authors also make the point about how the private sector, nonprofit and government can combine to create better economic conditions.
“JIO: India’s per GB internet data costs are just 3 per cent of those in the US. A bold and risky $35 billion bet made by a private company transformed Indians from being data deprived to data-rich; consumption has jumped 15 times because costs fell by over 90 per cent. The addition of millions of consumers and smartphones since Jio’s delightful five-year disruption of the market has exploded the most important universal metric in startup valuation — addressable market. Most Indians toil in low productivity and self-exploitation. Affordable digital connectivity is transforming 75 crore of them into consumers, entrepreneurs, employees, and suppliers.
UPI: Google’s letter to the US Federal Reserve suggesting America learn from India’s Universal Payments Interface (UPI) run by the remarkable nonprofit — National Payment Corporation of India — acknowledged that our real-time, low-cost, open-architecture payment plumbing is a public good. UPI’s mobile-first architecture is a key pillar of the paperless, presenceless, and cashless framework of the Aadhaar-seeded India Stack. UPI’s current four billion transactions a month — it will soon reach a billion a day — greatly reduces friction and costs for entrepreneurs and consumers in low-value payments. Remember the inefficiency and low reliability of cash-on-delivery?
GST: India’s economic tragedy began with the second five-year plan in 1956, leading entrepreneurs to conclude that the benefits of formality were lower than the costs. This informality bred corruption; transmission losses between how the law was written, interpreted, practiced, and enforced. More painfully, informality bred low-productivity enterprises with low-paying jobs, whose business model of regulatory arbitrage and tax evasion made formal enterprises uncompetitive. GST attacked complexity and incentivised law-abiding supply and distribution chains. It was long in the making but going live needed the risk-taking of starting with a second-best architecture, accepting some unjustifiable rates, and state revenue guarantees. The doubling of indirect tax registered enterprises since GST creates a virtuous economic cycle of higher total factor productivity for enterprises and employees.”
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