Sunday, June 26, 2011

EMPLOYING THE FUTURE OF INDIA

 

Friends this was an article that I had written long back in the summers of 2008........Infact it was for "The International Essay Competion-2008" by the World Bank.....Hope it would be a nice read for all.....Cheers from the pied piper till then

EMPLOYING THE FUTURE OF INDIA

INTRODUCTION:

“Youth Unemployment”, a word often encountered in all the leading Indian newspapers along with poverty, social injustice, petty thefts and crimes, political upheaval, terrorism and all those words which a person doesn’t want to read with his morning tea. Words that are placed so far apart even in a dictionary. Then why does some of these words always comes in a package when a person reads an article about any one of them. Is that just an act of randomness or are they some pieces of a jigsaw puzzle that comes together to show us a bigger picture. Well, I never cared being an undergraduate student and still far away from the struggle of survival; but then a story about an 18 year old named Talib Khan run by a magazine made me stop and take notice. Twisting and turning in pain on the hospital bed with his bullet ridden body in bandages, he makes a heroic declaration, 'It'll take more than guns- and much more than this suffering- to scare me away! I'll fight it out again next time....' Talib is no Kargil hero but an aspiring Indian Army candidate, who became martyr to unemployment on 17th July, 1999. On that day, poverty more than patriotism lead to the unfortunate death of 23 young men aspiring to join the army. [1]
Talib is no exception. In 2003, when Indian Railways advertised about 20,000 jobs promising just US$136 per month, 600,000 people applied leading to chaos, violence and death in some parts of the country.[2] Yes, in the second largest populated country in the world, with more than 75% of its population below poverty line (as per World Bank, i.e. people earning less than US$ 1/day/person), life counts less, and every new year adds up new names to this ever increasing list of martyrs while the killer “Unemployment” lives scot free among us.

INDIA UNDER THE SHACKLES OF UNEMPLOYMENT:

How many times have we listened or read this, “Young India rising like a phoenix with more than half of its population below 25 years”. It sounds great for the Indian intelligentsia, but ask those youths who have more immediate concerns of hunger, poverty and terrorism to take care of, struggling everyday for the basic necessities, fighting only for survival; well not to say, they remain as mythical as the phoenix, only rising to the jingoist talks of the politicians.
But all said, with Indian economy rising at the rate of 7.2%, when the developed world is still in the grip of the global crisis, the moot question still remains, “How much does youth unemployment actually affects India?” Well, the answer doesn’t lies in President Obama’s “Buffalo to Bangalore” analogy or the speechless figures published by our government, that last counted the number of people living in its geographical boundaries 9 years ago[3], but it exists among the “common man” who celebrates the governments job guarantee scheme (NREGA) that provides a legal guarantee for 100 days of employment in every financial year to one adult member of any rural household at the statutory minimum wage of Rs.60 (US$1.2) per day!
Our country, made of 28 states, more than a 1000 languages and a billion faces has always been wound together by a unified idea called “India/Bharat”. But today, unemployment has created a rat race where Bharat has lagged far behind to India which has challenged the very foundation of this nation. Result is a cocktail of disasters. Mumbai is kicking out its fellow Indians from poorer states who they feel is stealing their jobs. Youths from neglected northeast India, who come to the mainland in search of better prospects, are being harassed and exploited everywhere. Kashmir is burning because its youth have guns in their hands and not jobs. Naxalism has struck the root in 220 districts with children without education and grownups without jobs. Farmers, considered self employed, still embrace death out of hunger. And let’s not forget the bright minds who flock other nations shores to earn a dime because their motherland can’t provide it, are being abused and brutally killed in some foreign land. Unfortunately, our government still feels we should believe in their incomplete slogan of “India Shining”!
As I write this essay, the geographical boundaries of the states of India may never be the same again. Students are immolating themselves in Andhra Pradesh to carve out a separate state of Telengana. Uttar Pradesh wants to be divided into four parts and Maharashtra into two. Assam is fighting for its sovereignty and Kashmir for its rights. Every corner of the country is being bombed, ironically this time by homebred terrorists. And in all these states, the foot warrior remains the same - “Youth”. Does the Indian youth savour martyrdom or are they inspired by Bhagat Singh’s efforts to drive the tyrants away? Possibly, one answer to that subjective question is a simple mathematical equation. Last year 2,15,000 students sat for CAT examinations, a gateway to the prestigious IIM’s and a probable lifelong passport to hefty pay packages. Unfortunately, it will be only 1000 students that would make the cut, a conversion rate of 0.46%! For how long are we going to bask in the glory of creating one of the toughest exam in this world and start thinking about the careers of the remaining 2,14,000? How many “Slumdog Millionaire” needs to be created by Danny Boyle for us to accept the naked truth of how every second the Indian youth is being pulled into the black hole of crime, prostitution and begging? For these youth stung by unemployment, the choice becomes pretty simple; you need to stab your motherland to feed your mother. After all, isn’t that what Charles Darwin’s “Survival of the fittest” theory tries to teach?
Thus even with the 7.2% growth rate, India is actually entering a phase of “Jobless growth” where the pace of creation of work opportunities has not kept pace with the growing requirement.

INDIA VISION 2020 STUNG BY UNEMPLOYMENT

“Vision 2020”, a decorated term coined by our legendary ex-president Dr.A.P.J.Abdul Kalam, speaks about India becoming a developed nation by 2020. However, every step to achieve that dream has to face numerous hurdles, the prime among them being poverty, illiteracy, terrorism, capital dearth, etc. with unemployment touching the core of each one of them.
As our finance minister in yet another budget session promises a growth of 9%, Kashmir is slowly limping back to “Stone Age”. Inspite of infusion of funds and providing quality education, the lack of security has created a job crunch. For these young Kashmiris, who have lost their childhood to fear and their youth to unemployment, stones have become a weapon of choice to vent both their anger and despair[6]. They become easy prey to radicalization. It’s these victims of unemployment that keep Kashmir burning. Result, the millions of rupees that could have been spent on social security measures, creating jobs, schools, hospitals and powering the growth of this nation, is being spent to quell internal strife’s.
The story is no different for the seven north eastern states, UP, Bihar, Orissa and all the other poorer states. Banned outfits like Indian Mujahideen, Naxalites, ULFA, etc. are inducting educated but ignored young cadres to their wings, creating a war like situation inside the nation. Traditional wars have given way to sophisticated use of technology to wage a reign of terror starving the national economy. Inspite of a huge consumer base, it is this fear that is preventing the infusion of private funds and destroying the huge tourism industry that provides employment to millions, besides tarnishing the image of India.
Lack of employment opportunities and underemployment in the country is strengthening the traditional steady brain drain to all developed economies. The extent to which the desis have actually bolstered the US economy can be gauged by simple statistics. 12% scientists and 38% doctors in the US are Indians, 36% of the scientists at NASA, 34% employees at Microsoft, 28% at IBM, 17% at Intel and 13% at Xerox are Indians.[7] With the country reeling with diseases every doctor out of that pool would have made a major impact in the health scenario. Even within the nation, interstate labour migration is a common trend creating overcrowding, low productivity, exploitation of labour and high level of discontent in these desired regions. This is reflected in the fact that some of the most drought prone districts such as Amreli, Kachchh, Surendranagar and Rajkot, have relatively higher labour productivity vis-à-vis the agriculturally prosperous districts like Junagadh, Kheda and Mehsana. The excess supply of labour contributes to reducing the wage rate as the migrant labour is willing to accept any distress wages that are offered as long as they have access to employment. This undercuts the employment prospects of local labour resulting in violence on ethnic lines. This creates a situation where sectarian political parties gain ground and disrupt the peace of the nation. States start fighting among each other, their decibels proportional to their contribution to the national GDP. India merely remains as a collage of independent states sharing common boundaries. Besides, the growing phenomenon of rural-rural migration also has important implications for future generations who would also suffer from the same debilitating lack of opportunities and low quality of life. For example, whole families of tribal’s from the Dang district of South Gujarat migrate for six to eight months to work in the sugar factories in the plains, resulting in their children being unable to enrol in schools.[8]
On the key education front, critical to the creation of employable youth, India's report card is abysmal. Literacy level in the country stands at a poor 65.2% while that even in Kenya stands at a respectable 85.1%. The education system is mired in corruption with test papers for sale and a teacher absenteeism rate of 25% that is the second highest in the world, behind only Uganda, according to a UNESCO report.[9] Even, higher education today is no longer a guarantee for a job in India, leave alone a good one. Thus while the literacy rate of the country is slowly increasing, the unemployment rate too is increasing with it. In Kerala, where 90.92% of its population is literate, the rate of unemployment is the highest. For a population of a little over 3 crore, it has nearly 40 lakh unemployed educated youth, almost equal that of Maharashtra, which has treble its population at 9.6 crore.[10] All this figures threaten the Government’s “Education for All” movement which makes free and compulsory education to children of ages 6-14 a fundamental right, as the uneducated parents find it profitable to send the kids to plough farms rather than idling at school.
Thus all these problems that stand between a “developing India” and a “developed India” actually come in a vicious circle wherein each one is a cause and each one is an effect.[11] With a staggering 51% of its population of 1.7 billion people under 25 and two-thirds under 35, the future of the nation hinges on how effectively we utilise this youth power. If we succeed, “Vision 2020” will no longer be a dream and if we fail, this unskilled, under-utilised, frustrated young population will derail economic growth, undermine harmony and breed violence.

SCHOOLS OF ENTREPRENEUL EMPLOYMENT (SEE): A YOUTHFUL SOLUTION 
THE IDEOLOGY

In India, while millions remain unemployed, millions more suffer from poverty. While the basic needs of people are yet to be fulfilled and many are eager to work and contribute, the national economy cannot absorb them. This shows that something is seriously wrong with our economic system. NASSCOM and CII have estimated that if India wants to be a developed country by 2020, it needs to create 10 million jobs. Neither the Army nor the police force can absorb such a large amount, nor can the Railways or the government.[12] The private sector though expanding, the rate is not equivalent to the unemployment rate. Besides, unemployment is a critical issue more in rural India as compared to urban India due to lack of opportunities, lower penetration of knowledge and impoverished background. Then the question arises is “How to employ the rural unemployed?”
Fortunately the answer exists in a tried and tested technique, “Entrepreneurship”. According to TiE (The IndUS Entrepreneurs), each entrepreneur creates 30 jobs besides wealth creation setting the stage for a flourishing economy, unlike a job seeker who is a burden to the economy. For example the U.S economy generates 600,000 new small businesses every year. But nearly an equal number of small businesses are also closing down every year there due to losses. Figures show that only 75% of new firms survive for 2 years or more and only 50% of them hold on for five years or more. Many such firms are started by people with no formal management training.[13] Thus to create employment we need to first increase employability and develop entrepreneurship skill so that the individuals besides attracting capital can also create wealth themselves. This is the driving force behind my proposed solution “SEE”.

THE HINDRANCES

Firstly, a common denominator for all budding rural entrepreneurs is the challenge of starting a business, be it through inventing something, looking for a new idea within a business, seeing beyond the contours of his rural boundaries or finding the right opportunity to break into a business.[14] Inspite of their zeal, their knowledge about various taxation policies, governmental clearances, intellectual property rights, etc. are pretty limited. All these require intense knowhow of the market mechanism which generally the 20 something’s fresh from college particularly those in rural India lack leaving them at the mercy of the fluctuating market and vulnerable to touts.
Secondly, every startup faces the problem of attracting capital. Even though with globalisation and the internet boom, many people have actually started to recognise youth entrepreneurship, it is the relative lack of experience and market knowledge and their impoverished background that makes them non bankable, that prevents banks and angel investors to bet on these young horses. As such most of these young guns either rely on family and friends or on credit cards to fund their dreams. In the Indian context, where generally these budding entrepreneurs come from modest background, even attracting family finances becomes a tough ask while credit cards are always a risky proposition. As such either most of them are forced to abandon their dream or plunge themselves neck deep into high interest lending from day one.
Thirdly, every business requires excellent networking be it with clients/customers or like minded people. Many brilliant ideas remain stillborn as they cannot connect with their prospective buyers while a many more cannot expand in the absence of people supporting them. Moreover, any idea however good it may be, needs a proper packaging to make it saleable. Understanding market needs is of prime importance. Thus any idea before being flouted in the market needs to be floor tested to gauge its impact and market viability. For a rural youth with just enough to start his business, market research by any independent agency remains a far cry. Besides, with the cut throat competition the margin of error is pretty low as any idea takes very less time to be replicated and reproduced in a more grandiose way with majority of young entrepreneurs losing out to the quick scaling up of competitors.
Lastly, rural entrepreneurship being generally a labour oriented business, understanding the sensibilities and meeting the expectations of the people working in a startup has traditionally been the toughest ask for an entrepreneur. With the lack of any formal management training, retaining talent and utilising the human capital efficiently are major grey areas for an entrepreneur.

“SEE”ing THE ENTREPRENEUR    

It is this gap between a “nobody” and a “somebody” that the “SEE” plans to bridge. Its motto is to see through the journey of a person from an insightful youth to a successful entrepreneur. At SEE, we would groom the individuals with bright ideas, not only with entrepreneurship skills but also with hands on experience of handling a business. Unlike other management institutions that merely teach management concepts for better paying job, at SEE, the focus would be purely on creating one’s own venture. We also intend to fill the vacuum between angel investors and venture capitalists and young entrepreneurs. As larger funds are usually not interested in investing small amounts of money, say under $1M, because the general partners are legally required to monitor the investment, and it takes as much effort to monitor a large investment as it does a small investment[15], so at SEE, the capital will be raised by SEE on behalf of its would be partners, which would thereafter will be redistributed among the budding entrepreneurs as per requirement. The seed capital would be proportioned in a mutually agreed ratio between the entrepreneur and SEE and for a period marginally lesser than the repayment period of the SEE. This would make the SEE a legal partner of the startup and hence besides monitoring the progress of the business, it would use its experience and contacts to generate profits. This involvement of SEE with the core of the business is where it differs from other microfinance institutes which only lend money at higher interest rates considering the risks involved (Grameen Bank's interest rate (reducing balance basis) on its main credit product is about 20%)[16] distancing itself both from the risks as well as from the profits generated. Moreover, being a part of the entire business cycle, SEE doesn’t land up the poor borrowers in a perpetual ever ballooning debt trap unlike any microfinance instrument which merely acts as a modern version of age old money lenders who take advantage of the poor credibility of the rural populace. This constant monitoring of SEE would further reduce the defaulting ratio of lenders and proportionately also increase the chances of creation of a successful venture. Thus this would provide a win-win situation for both, as the entrepreneur would not only receive the seed capital for his dream venture, but would also get the expertise of SEE, while for the SEE, it gets to generate profits diversifying into different businesses with minimum human capital and resources.
Inspite of aiming to be a self sustaining business venture in itself, the term “SCHOOL” in SEE reiterates its social objective to empower the rural population with the market knowledge to create a sustainable difference in their lives, rather than making them dependent on other organizations to fund their living.
However, one question that remains unanswered is the composition of SEE that makes it a credible enough organization to pool resources from the market. SEE plans to bring together the efforts of various NGO’s and microfinancing institutes working for the development of rural India. Besides, as the requisite capital for rural entrepreneurship is comparatively less, people from urban background with a better credit history can take the loan on behalf of his rural counterpart at lower interest rates.      

SEE THE IMPACT  

Every single entrepreneur churned out by the SEE, would create more jobs for the rural Indian population. Considering entrepreneurs generally create ventures in their homeland as they know the local economics better than anywhere else’s, this would create jobs all around the nation partially resolving the migration issue. SEE idealises to reverse the age-old vicious circle of "low income, low saving & low investment", into virtuous circle of "low income, injection of credit, investment, more income, more savings and more investment".[17] More youths empowered with jobs and financial security will not go down the path of extremism and self destruction, addressing marginally the internal security issue. The entrepreneurs creating own ventures, will no more look towards the government for jobs, slackening the enormous pressure on the government exchequers. More returns for the entrepreneurs will pressurize the government to create laws to foster entrepreneurship. In a more stable environment, traditional employment creators like tourism and manufacturing will get a big boost, improving the overall national economy.
Thus, the SEE in its own humble way, intends to protect the fundamental right to live of numerous young Talib Khan’s and instil a small change that inturn leads to a chain of reactions, leading us to our destined “Vision 2020”.


[1] “The Outlook”  magazine, August 2nd 1999 issue, “Martyrs To Unemployment”
[2] http://www.expressindia.com/news/fullstory.php?newsid=30543
[3] “Businessworld” magazine, Dec 08-05 Jan 09 issue, “Figures That Don’t Talk”
[4] “The Times of India”, 28th Feb, 2010 issue, “Children of a violent past see no future”
[5] Eva Burrow quotes, www.thinkexist.com
[6] “The Times of India”, 28th Feb, 2010 issue, “Kashmir’s Stone Age”
[7] “The Times of India”, 11th Mar, 2008 issue, “36% of scientists at NASA are Indians: Govt survey
[8] “Unemployment and migration” - Swati Narayan – www.indiatogether.com
[9] “India’s Youth Power” – Rahul Singh’s blog
[10] “The Outlook”  magazine, May 7th 2001 issue, “Work: A Generation Gap”
[11] “Youth Unemployment :Social  Balance Sheet-Entrepreneurship Strategy towards job creation” by Dr. Nagendra P. Singh
[12] “India needs more entrepreneurs than managers” - Dhawal Shah, www. zeromillion.com
[13] “Fully Utilizing Social Resources can Eliminate Unemployment” - Ashok Natarajan

[14] “The Challenges for Entrepreneurship Today” – www.smallbusinessnotes.com


[15] "All Financing Sources Are Not Equal" – MIT Enterprise forum


[16] “Grameen Bank” - Wikepedia
[17] “A short history of Grameen Bank” – www. grameen-info.org

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