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Startups are the growth engine for job creation in India

By 2030, India will need to create ~90 million new jobs in the non-farm category to cater to ~60 million entering the workforce as per current demographic trends and an additional 30 million workers who could transition from farm-related work to more productive non-farm related sectors

By Ratna Mehta

A powerful quote from Ayn Rand tells us the importance of the job that we take up in life: “The verdict you pronounce upon the source of livelihood is the verdict you pronounce upon your life.” Job creation is a key priority for most nations today, especially after the pandemic. For a galloping nation like India, job creation through increased investment is more critical than any other initiative.

By 2030, India will need to create ~90 million new jobs in the non-farm category to cater to ~60 million entering the workforce as per current demographic trends and an additional 30 million workers who could transition from farm-related work to more productive non-farm related sectors.

India’s GDP needs to grow by 8.0 to 8.5% annually over the next decade, or about double the 4.2% rate of growth in the fiscal year 2020, to meet this job requirement. Manufacturing and construction are likely to contribute 1/5 of incremental GDP to 2030, while construction could add 1/4 of the incremental jobs. India needs to triple the size of large firms – India has over 600 large firms with more than $500 million in revenue that generate 40% of all exports. While large firms contributed 48% of total GDP in 2018, we need to reach 70% contribution in line with outperforming economies.

Some of the sectors are at the forefront of contributing to jobs by virtue of their growth and startup creation:

· Information Technology: Although COVID resulted in an economic downturn, the IT sector has consistently generated employment. According to NASSCOM, in FY21, the Indian tech sector was expected to add 1.38 lakhs jobs. Interestingly, startup creation in the tech sector is consistently high. NASSCOM believes that over 1,600 startups got added in FY21, leading to increased opportunities for job creation.

· E-commerce: As the adoption of online shopping increases, more startups will be launched, and the existing ones will grow, resulting in more jobs being created. Online stores such as Amazon and Flipkart have generated $4.1 billion in sales during the festive season in 2020, compared to $2.7 billion in 2019. The sector is expected to add 300,000 jobs in 2021.

· Healthcare: NSDC estimates that the healthcare sector will create 7.5 million jobs by 2022.With the increased need for healthcare services during the pandemic, there was a huge demand-supply gap in this sector. Also, the situation highlighted that a lot needs to be done to build a more robust healthcare ecosystem.

· Infrastructure: Although India’s construction sector is largely fragmented and unorganized, it is a major source of employment and directly affects government policy. More favourable fiscal policies that encourage infrastructure development will eventually lead to increased employment.

Startups are engines of growth for our country. They are important vehicles for job creation – each startup initially creates 10-15 jobs. These direct jobs further lead to indirect jobs (delivery partners for e-commerce and food delivery). Rising entrepreneurship/increasing launch of startups is a precursor to robust job creation.

Rising Entrepreneuship

Source: DPIIT

If we only look at the 50,000 startups registered with the Startup India initiative, they have created over 5.5 lakhs jobs. As per the IVCA Bain report, VC investments have played a key role in bolstering the startup ecosystem in India—only behind the US and China globally—creating more than 3 million jobs directly or indirectly over the past eight years. Some startups connect rural India with services and solutions to address grassroot level issues and drive large-scale job creation through innovation and technology.


· A rural tech startup that provides a B2B marketplace that connects buyers and sellers from rural villages in India

· Customers can buy or sell various products and perform banking and other financial activities from their villages

· It provides employment opportunities at scale through local village level entrepreneurs called a‘Hesaathis’, who logs in to the Hesa digital platform and transacts on behalf of the buyer and seller

· Hesa services 600,000 rural customers and employs +8000 Hesaathis over 5000 villages

Frontier Markets

• Frontier Markets is an assisted rural e-commerce platform, providing quality products in 2000+ villages through a network of ~10,000+ rural women entrepreneurs (‘Sahelis’)

• ‘Sahelis’ have strong local connect with customers, understand customers and curate demand for products including home appliances/mobile phones, agri products, FMCG, cattle feed etc

• They use an app to showcase products, manage sales & inventory, ‘Saheli’ homes double up as stores/local touchpoints. The products are of better quality than usually available in villages

• ‘Sahelis’ earn 10-30% commission on sales, earning as much as 15-20K in a good month

Source: BWBusinessWorld Disrupt

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