The Startup Ecosystem has Vastly Improved Under Modi Government

As an entrepreneur @ my startup IndusB2C, it amazes me to see too much of Media hype centered on crazy Startup valuations. More recent news seems to be now sensationalizing the stress being faced by these Startups. In between these two extremes, there is an entire world which exists. So, when Mr. N V Subramanian of Newsinsight asked me to write about Startups - I decided it’s best to give insights both on macro-view as well as ground-level experience in managing a Startup in India.

So, here I presented the Part-1 of the Series of articles “Startup diaries”. Each week I would be taking the reader to different aspects of Startups and the Startup ecosystem.

In this series, I have also contrasted the Indian startup ecosystem with the Western one, so that readers can be aware of core realities in India and develop an understanding of beneficial actions of the Modi Government.

Startup diaries – Part-1: Political ecosystem

The most critical aspect of current times is that we have just come out of the “Lost decade” of Messer’s Manmohan Singh and Sonia Gandhi. India was a near $2 trillion economy in Dollar terms as handed over to Congress, by Vajpayee Government. The beneficial effects of work of Vajpayee Government showed up with a lag and economy boomed during 2004-2008, in spite of Congress sitting pretty and only playing the role of a spoiler. What happened during the lost decade was a body blow to reforms as started in 1998. Corruption touched heights never seen since independence and crony socialism took root through NAC (National Advisory Council).

Then Congress did “Quantitative Easing” (QE – meaning printing of money by Government to increase money supply in the Financial system), which many world Governments were doing in their own countries to stave off 2008 recession. Congress Finance Ministers Pranab Mukherjee and P Chidambaram, took the example of QE by these Governments and did QE in India, in spite of the fact that there was no recession in India, just the GDP growth had lowered. Rs. 10 lakh crore of loans were handed over by corrupt Congress to crony capitalists, under pretext of QE – most of which are now NPA (Non-Performing Assets) on books of Banks.

Congress realized by 2012 that it won’t come to power in 2014 and hence resorted to Scorched Earth policy, thereby killing sector by sector. The anti-growth Land acquisition Bill, RTE (Right to Education) and RTF (Right to Food), being some of the corruption-fanning and deficit-creating schemes brought in guise of poverty alleviation.

The Rupee tanked and from 40 during Vajpayee’s times, reached 68 to a USD when Congress handed power to BJP. The list of how India was ruined is too big to even recount within the scope of this piece. Modi inherited an economy, which was of the same size ($2 trillion) as was ten years back, albeit with reforms momentum completely broken down and grave challenges in front, all of which required long-term solutions to be corrected.

Subsequent achievements of Modi government like increase in Forex reserves by $100 billion, massive action in railways, roads, power, ports, defense and huge number of schemes are a hallmark of Modi’s belief in seeing the glass half full.

If one goes by the media narrative, we are in midst of multiple duels – that of India vs Bharat (meaning the West-eulogizing ruling elite vs rural have not’s), that of neo-modern India (as a 70 year old independent nation) vs classical India (as an 8000 year civilization) as well as crony capitalism/ crony socialism vs market economy cohabiting with a welfare state. But taking the right decisions, beyond contradictions, has been the remarkable achievement of this Government.

The Startup system has too much of a direct connection to politics and macro-economics, not to get affected by the lost decade.