Causes of Slow Growth of Indian Entrepreneurship

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It is found that the growth of Indian entrepreneurship is rather slow. There are two important reasons for this slow process. The cunning rule of the British is the first reason. The second reason is the underdevelopment of the country. India is not yet recognized as a developed country. This does not mean that no development has taken place in the country. In spite of the difficulties and international situation, the Indian entrepreneurs are leading towards growth. It will be necessary to examine the work done by Indian entrepreneurs.They have tried their level best to use the available resources in the best way. There is no problem regarding manual labour in India. Unskilled labour is plenty and it is cheaper too. But it has become rather troublesome to acquire perfect site for new business. The Government of India has taken good steps in providing perfect sites to entrepreneurs, like the NIDC (National industrial Development Corporation)

The second difficulty which the Indian entrepreneurs have to face is the difficulty of lack of demand from the people. The Indian people are very poor. They hardly can meet their day-to-day needs as with their small incomes, they cannot save anything. so, the situation of market places in India becomes very precarious. The entrepreneur in India does not have any demand for new articles which he is able to present in the market. They have to use their personal relations in creating the demand for their products and then they use their relations to keep the demand constant.

Small scale industry is another characteristic of Indian entrepreneurship. These industries are helpful in providing the needs of regional people. There is possibility of concentration of economic power in the few big business houses if only the big industries are given preference to make progress. Small scale industries and cottage industries provide work to the village people and they fulfil their needs.

In India, entrepreneurship is considered as self-employment. Growth of entrepreneurship can be looked upon from the point of solving the problem of educated unemployed people. The government is taking keen interest in providing training, finance and all the other important facilities to these young men and is trying to help them to become future industrialists. These budding entrepreneurs can covert themselves into big industrialists and provide employment to hundreds of needy people.India still needs innovating entrepreneurs as they are expected to satisfy the needs of their customers.

Causes of Slow Growth

In India the growth of industrial entrepreneurship has been very slow. The main reasons for delayed growth are as follows:

1. British rule : Colonial policy of plunder delayed the industrial development of the country. British policy created adverse psychological conditions and Indian initiative was discouraged. Alien rulers wanted to serve the British interest by keeping India as a supplier of raw materials to British industries and market for British goods.

2. Lack of Social mobility : Indian society was based on rigid caste system. Indian craft which was the main form of entrepreneurship was hereditary. Caste system and joint family system restricted social and geographical mobility. In the absence of mobility,there was little scope for the expansion of entrepreneurship. The hierarchical Indian society had internal constraints and contradiction.

3. Shortage of capital : This is a common feature of underdeveloped countries like India. Modern industry requires greater capital per unit of operation than agriculture and other commercial activities. Therefore, the supply of capital proves insufficient even in the least capital-intensive industries.

4. Underdeveloped capital market: Securities market and banking system in India was not well developed before independence in the absence of a sound institutional framework,private investment in industry could not be attracted. Banks financed mainly British trade and industries. Indian entrepreneurs were deprived of funds. Lack of banking support hindered the growth of Indian enterprise.

5. Agrarian System : Before the arrival of the Britishers, there existed a self-sufficient agricultural and rural economy in India. Indian handicraft flourished due to closer ties between handicraft and agriculture. Community served as the unit of production.Imposition of land tax destroyed and community system and peasants lost their economic independence. They were forced to produce according to the dictates of zamindars and money-lenders. Independent professions like craft were damaged and entrepreneurship reached a point of stagnation.

6. Decline of Indian crafts : Before the advent of the British, craft was the primary form of enterprise in India. Entrepreneurial activities were based on various types of crafts such as handicrafts, Woodwork, brass-wares, etc. Establishment of colonial rule destroyed the Indian crafts. India became a market for British goods and a supplier of cheap raw materials. Destruction of crafts stopped the growth of craft-based entrepreneurship.

7. Lack of infrastructure : Colonial government did not develop the required infrastructure for the development of heavy and basic industries. No activity for independent economic development was undertaken. Lack of infrastructure and Government support discouraged Indian entrepreneurs to start manufacturing activity.

8. Custom barriers : Very high (70 to 80 per cent of value) customs duties were imposed on Indian goods to protect British industry. Preferential duties made British goods cheaper in the Indian market. As a result Indian goods could not compete with British goods.Therefore, Entrepreneurial initiatives of indians were killed.

9. Shortage of skilled labour : In the absence of well-developed educational and training facilities, there was shortage of technical and skilled labour. Necessary technology for modern industry was not available within the country.

So these were some of the causes for the slow growth of entrepreneurship in India in the last half of the 20th century.Off late,the scenario has changed and entrepreneurship has been continuously on rise.

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