Entrepreneurs' problems

Fri, Jul 25 01:00 AM

FOR YOUNG Indians, reaping benefits of high economic growth gets embroiled in corruption and poor finance from banks. A National Knowledge Commission survey has found that about 60 per cent of entrepreneurs faced corruption when they tried to start a new business.

"Another hurdle was in accessing reliable information on registration procedures, finance and other schemes," says the report submitted to the Prime Minister's Office recently. The respondents - from Delhi, Mumbai, Ahmedabad, Pune, Kolkata, Bangalore, Hyderabad and Chennai - also elaborated on the bribes they had to pay to get government clearances.

The survey said 13 clearances are required to start a new venture, which takes a minimum of 33 days. To obtain a licence requires 20 clearances taking 224 days while registering property requires six clearances taking 62 days.

To overcome this, the commission has recommended a unique company number to get all clearances at one go. As many as 61 per cent - who started businesses between 2000-07 - said they did not get a bank loan when they started.

"There was a high perception among entrepreneurs that it is very difficult to get bank loans at the start-up stage while it become comparatively easy to the growth stage," the survey said. As many as 63 per cent had to start their ventures with their own finances, while 22 per cent got loans.

Only 20 per cent said getting loans at the start-up stage was easy. The entrepreneurs said getting skilled manpower was the biggest problem.

Only 5 per cent of India's existing workforce has received skill training compared to 96 per cent in Korea, 75 per cent in Germany, 80 per cent in Japan and 68 per cent in the UK. The commission has recommended the government have a policy to improve skills of existing workers. As many as 98 per cent of these entrepreneurs are graduates, the survey found.

The survey also found a steady increase in MBAs and those with higher qualifications starting new ventures. The biggest motivating factor for becoming an entrepreneur was the willingness to be independent of the family and a job, the survey said.

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