|»5 Minute Wrap Up by Equitymaster|
On This Day - 30 DECEMBER 2011
Does India support entrepreneurship?
In this issue:
Let us ask you a simple question. What is one of the basic prerequisites for an economy to really grow? Without any doubt, it is investments. You need entrepreneurs to put money in projects that will generate revenue and employment.
There are important factors like entrepreneurs and growth opportunities that India has to its merit. In fact, a lot of major private sector business houses are sitting on ample cash. So the next obvious question is this- Is India Inc investing? The answer to this is not very encouraging.
Consider this-the Piramal Group led by billionaire tycoon Ajay Piramal is sitting on a huge pile of cash after Piramal Healthcare sold off its generic drugs operations to US pharma company Abbott Laboratories for a whopping amount of about US$ 3.7 bn. The irony that Mr Piramal is dealing with is that he is operating in one of the world's fastest growing economies and is yet struggling hard to put that money to some productive use.
As per him, the problem isn't opportunity but India. For instance, he wanted to expand one of his chemical plants. However, he was told that it would take a lengthy process of 5 long years. Now, the same thing could have been accomplished in China in 2 years straight. All this is thanks to a slew of problems such as corruption, red tape, political paralysis, changing government policies, lack of reforms, lousy approval processes, land acquisition problems, etc. As a result, doing business in India is becoming increasingly difficult not only for small entrepreneurs but even big corporate houses. It comes as no surprise that India ranks amongst the world's worst countries at encouraging entrepreneurs.
If India is not business-friendly, there is no way we can dream of growing at 9-10 percent instead of the 7-odd percent we seem to be recording currently. It is time the Government refrains from taking the growth for granted and undertakes some meaningful reforms to encourage entrepreneurship.
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