Start-ups giving growth impetus to economy, says KPMG report Chennai, Nov 7 (PTI) The recent '

Start-ups giving growth impetus to economy, says KPMG report Chennai, Nov 7 (PTI) The recent 'slowdown' in theIndian economy notwithstanding, start-ups are emerging andplaying a crucial role of not only sustaining but also givinggrowth impetus to the overall economy, a KPMG report has said.

The report titled 'Fintech and Start-ups FuellingIndia's USD 5-trillion economy' was released by Tamil NaduChief Minister K Palaniswami at 'CII Connect' here onThursday.

There was no dearth of capital flowing in in thestart-up economy, it said.

The report said the golden triangle ofgovernment, private sector and academia are important playerswho can provide the impetus needed to grow the start-upeco system.

The 'slowdown' in the economy could be partlyblamed on credit crisis due to NBFC (non-banking financialcompanies) funding being 'dried up' and the banking system'scontinued struggle with NPAs (non-performing assets), itsaid.

With liquidity being sucked out of the system therehas been a near complete breakdown in the investment cycle,the report said.

Traditional businesses that relied on banks forfunding significant portions of their planned capex wereholding further investments.

This is where start-ups were emerging and playing thecrucial role of not only sustaining but also giving a growthimpetus to the overall economy, it said.

'There has been no dearth of capital flowing in thestart-up econonmy, with USD 7.67 billion flowing in in justthree quarters of 2019. There were 21 fundings that crossedthe USD 100-million mark,' the report noted.

The country was placed third in the global start-upeco system, with the sector witnessing the emergence of atleast 29 'unicorns' - companies that are valued upward at USDone billion - it said, even as the eco system was generatinghuge numbers of direct and indirect job opportunities.

Start-ups were 'disrupting' the way old businessesworked, setting up businesses across fintech, agri tech, EdTech and healthtech.

Fintech companies, the report said, were playing animportant role by providing easy credit options to MSMEs.

MSMEs, which have historically struggled to gaincredit from the traditional banking system with only sixper cent of the total lending going to the sector, have nowfound new ambits of formal lending through fintech companies.

Fintech start-ups were now adopting advancedtechnology like data analytics to determine creditworthinessof potential borrowers, leading to faster turnaround todisbursing loans to MSMEs, it said.

'As per a recent survey by the Confederation of IndianIndustry (CII), MSMEs have created additional jobs between13.5 million and 14.9 million per annum over the last fouryears,' it added.

As a way forward, the government should createvehicles for start-ups to go global, besides breeding aculture of innovation by involving the corporate sector.

The private sector, for its part, needs to collaboratewith universities and sponsor research and development, itsaid.

Further, the academia must make research an intrinsicpart of its existence by allocating more funds towardsscholarship and research, it said.

KPMG is one of the largest professional servicecompanies in the world. PTI SANVG NVG