Incentivise startups for employment generation

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Most crises produce a churning and the current pandemic is no exception. According to figures furnished in the Rajya Sabha on July 30, start-ups are creating an increasing number of employment opportunities in the country even as the traditional sectors of the economy are suffering. In 2018, 2019 and 2020, recognised start-ups created 95,825, 144,682 and 171,930 jobs. The number till July 21 was 115,080.

The best indicator in the start-up firmament is the stock market. They are having a ball in the market. Directly aided by buoyant investor sentiments, they are flocking to the market to raise money as ducks take to water. In the past seven months as many as 28 companies have raised more than Rs 42,000 crore through IPOs. Close to three dozen companies have approached Sebi to float IPOs. According to reports another 50 companies have expressed their intention to raise money this year. A large number of these companies are start-ups.

Most of the huge amount of money these companies are raising will be invested to create new capacities and add manpower for expansion of business. All this comes at a time when the economy has shed millions of jobs and has slashed the wages of millions more.

Even amidst the pandemic-triggered gloom and the impending third wave of the virus, some sectors are showing increased hirings. A survey by the National Council of Applied Economic Research has shown that the business sentiment index has actually risen in the western part of the country that has accounted for about one-third of the formal sector employment in May, the worst month of the pandemic.

Start-ups might emerge as the white knight in employment generation just as sectors such as IT and telecom created employment in the 1990s and the next decade. All governments in the country need to incentivise start-ups through support in policy and implementation. The best thing about the tech-driven start-ups is that they don’t need much infrastructural support in procuring land, water and power supply as traditional industries do. The state should stand on the fringes and extend a helping hand.