While the global financial system has been overhauled, in India, it is still remains the same: ‘Make in India’!
There was a time when finance was a dependent variable. Its circulation through any organisation was compared to blood flowing through any body, a colorful analogy, directed towards showing money’s all pervasiveness and how it touched each and every part of the organisation. However, with changing times, it became all the more difficult to associate the finance stream with the blood stream. Finance assumed a character of its own.
Finance could work for finance and money could be used to make money. There was no need for fresh physical effort being added to it. Investment came on board and finance acquired a character of its own.
Being a venture capitalist became a full-fledged career. Now, to talk of capital is to talk of entrepreneurship. To talk of entrepreneurship is to talk of human enterprise. In fact, one of the leading writers on this subject compared capital to steroids. The assumption was: As there is too much of cheap capital available, not only will start-ups sprout quickly, but will also have terrible side effects and indeed have counterproductive results. Flashy names in business always have unpredictable life.
Many avid readers will recall the book: In Search of Excellence. This book, co-authored by Tom Peters and Robert H Waterman, Jr was read and re-read. It was assumed that this book captured the basic truths. Five years later after the publication of this book, a survey was conducted to find out what had happened to those firms most of them had gone bankrupt. So much to be said for the so-called “best practices”.
Today, the world is swearing by e-commerce companies like Flipkart, Snapdeal Alibaba etc. For how long will these companies last will be matter of conjuncture. Be that as it may, the life of these organisations is only a part of the story.
The bigger story has to do with the understanding of trends. Today, surge and venture capital has helped companies scale quickly and definitely. Between April 2015 and October 2015, Ola cabs raised around $910 million. The number of rides rose from 1,000 a day to a million a day.
It is true that capital helps to build the supply side rather quickly and create a network effect. The interesting thing about evolution of finance as an area is that it has also acquired certain regional characteristics. A simple illustration may help to clarify this observation.
In 1956, Indian philosopher and statesman Sarvepalli Radhakrishnan, while addressing a convocation at Patna university talked of ‘self-employment’. This, in an era when private sector jobs were few, compared to Government jobs that were considered to be much sought after. The concept of self-employment did not actually find much space.
A few years later when the National Small Industries Corporation was set up, nucleating entrepreneurship activities (read self-employment) became a Government objective. This was truly a strange version of a welfare state.
The first geographical center that the National Small Industries Development Corporation chose was Naini.
This was the constituency of the then serving Prime Minister Jawaharlal Nehru. Whether Nehru prompted this or the powers that be in NSIDC did this, to be pleasing to the Prime Minister is a moot question. Irrespectively, something had been launched; this was to be a force multiplier. The core concern then was not getting technology for small enterprises but capital.
Sixty years down the line, the key slogan of the Government though of a different pedigree still remains Make in India! One wonders about the distance one has covered.
They were discussing self-employment and entrepreneurship then, they are doing so now. While the character of finance has changed across the world and regionally, in India, it continues like in many other sectors more of the same.
Even in entrepreneurship, regional variants are loud across the globe. Typically, Australian Prime Minister Malcolm Turnbull on December 7, 2015, announced a one billion dollar innovation and science package. Australia’s $100 million is going to be available in extra finding for Commonwealth Scientific and Industrial Research Organisation and provide capital gain tax holidays for investing in startup enterprises.
The message is interesting. An Indian variant of a new component to a new package is possible, provided of course, the Reserve Bank of India et al, move beyond the obsession of interest rates!