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8 Ways Startups Help the Indian Economy
“I skate to where the puck is going to be, not where it has been.”
–Wayne Gretzy, Hockey Star
Moneymaking is the backbone of any economy. When people make money, they spend money on other people’s businesses and those people make money and then they spend money, and the Earth continues to go around.
Of all the economies in the world, the Indian economy is expected to be the fastest-growing one – and startups are expected to contribute a whopping 5% to the GDP of our country in the next 5 years.
This is no small feat. The GDP of India last year was $3.469 trillion – 5% of that is 173,450,000,000, or $173.45 billion. So many zeroes!
But startups bring more to the table than just money.
Let’s take a minute or two on National Startup Day and appreciate how much startups really help us.
Last year, Rajya Sabha member Ram Shakal asked a very important question to Piyush Goyal, the Union Minister of Commerce and Industry.
What good are startups for the Indian economy? Do they contribute to areas like rapidly increasing urbanization, smart mobility, digitization of rural areas, and healthcare?
Piyush Goyal had so much to say that he wrote a 7-page long reply.
In his reply, he said that Indian startups were responsible for creating more than 7 lakh jobs in the country in just the past year.
Startups in fields like IT, Life Sciences, Professional Services, and Food and Beverages were not only providing employment opportunities in metropolitan cities but in rural areas as well.
Employment rate is one of the most important metrics to gauge the health of an economy. Higher rates of employment means the citizens of a country are healthy, educated, and willing to contribute positively.
India has the biggest population of people in the working age bracket in the world.
This means that out of our entire population, a huge number are young, literate, and able-bodied. The working-age population in America is 128.58 million, compared to India’s 900 million!
This is in stark contrast to countries like China, Japan, and America – where most of the population is aged and elderly and unable to contribute to the economy.
India has immense potential, and startups are helping realize our potential.
Swiggy is the single best example of how startups create jobs.
Anybody with a driving license can sign up with Swiggy to become a delivery executive as a source of income – no other qualifications or skills required!
Before Ola, hailing an auto or a cab was an inconvenient thing that you had to plan for and incorporate into your daily plan. But now with Ola, and then Uber, getting a ride is a no-brainer.
Startups bring new, fresh and innovative ideas to the market. These are called disruptions – ideas that completely change the way people do things.
PayTM is another example of a disruptive startup that innovated the way people make payments. Online payment today is synonymous with PayTM, and for good reason.
There are so many examples of startups that innovated their fields – Yulu, 1MG, and Flipkart.
But why is innovation important for an economy?
Innovating the way we do things leads to more productivity, which eventually leads to economic growth. Let’s take the example of Magicbricks to better understand.
Magicbricks is an online platform for homeowners, tenants, and potential buyers to connect. Homeowners and landlords post their property, and tenants and potential buyers can search for their preferred property and connect with the owners.
Before Magicbricks, if you wanted to rent a house in a new city, you would have had to walk around, street by street, looking for TO-LET signboards, or rely on word of mouth.
It would have taken you weeks, if not months, to finally find a place.
But with Magicbricks, you can input your preferences, contact the owners, get pictures of the property and make a payment for the house – all in one single day.
Magicbricks brought innovation to the real estate industry – but most importantly, it saves time and effort for thousands of people every day.
This means that people spend less time searching for houses, and more time doing productive things!
A few decades ago, most industries were dominated by a few companies that were so big nobody could touch them.
Today, the situation is vastly different.
All industries are fair game – anybody with a good enough idea and passion can take on any big company, and that is the beauty of starting up.
Even industries like space travel and healthcare, which were previously seen as high-capital businesses that could only be taken on by big players, have been tackled by startups.
One example is Orange Healthcare. Getting quick, reliable diagnostic tests done was the number one need of the hour in the COVID pandemic, and startups delivered.
Orange Healthcare offers diagnostic test sample collection within 60 minutes of ordering, and test results much faster than the industry norm.
This kind of innovation is important because it motivates legacy businesses to do better. When Orange Health offers 60-minute sample pick-up, other healthcare businesses are motivated to also start offering faster pick-ups and result delivery.
Competition is a very important dimension of a healthy economy. Competition helps bring the best quality goods and services at the lowest prices possible.
Better Quality of Life
There is no doubt that startups have made our lives easier… and better. Ordering food, hailing a cab, and checking if your cough is COVID or not is so easy we hardly think about how life was before these startups changed our lives.
Cult Fit is one such startup. Cult Fit made fitness accessible to everyone – regardless of where they live or what kind of exercise they enjoy.
Startups change the lives of not just its customers, but also its employees, founders, and investors.
Improved Work Culture
The term “startup culture” brings to mind flexible work timings, casual dress codes, and an approachable, easygoing work dynamic.
Compared to the stiff, suffocating culture of the pre-startup economy, being able to call your boss by name seems like a breath of fresh air!
Startups also introduced the idea of unlimited vacation days and employee perks like gym memberships, culture-building activities like off-sites, and more.
Gone are the days of reaching work at sharp 9 a.m., and logging out at sharp 6 p.m. Startup employees enjoy the luxury of going to work whenever they want, and leaving as soon as they like (as long as they get the work done, of course!).
Startups allow their employees to embrace and exhibit creativity in the workplace. It also gives room for immense career growth and skill-building. This is great for freshers or newly graduated college students.
This kind of improved in-office experience has pushed older, more traditional businesses to also do better.
National Startup Day is a good time to appreciate the good things startups have brought to not just work culture but the corporate rat-race in general.
Wherever a startup chooses to set up its base of operations, that place is likely to experience a sudden boom in growth. This is because there is an entire micro-economy set up around each startup.
The best example of this is the city of Bangalore.
Bangalore twenty years ago was a sleepy city that was best known for its gardens and cool climate. Today, it is the IT capital of the country, with thousands of businesses being run out of its techparks.
When a business starts up in a small town or village, it brings money and growth to that place. With money and growth come more businesses, and more money and growth – the cycle feeds itself.
By creating jobs, startups also help people make money for themselves and their families.
Investments in startups have been going up and up for the past few years. Despite the fact that we are currently in a funding winter, there are huge amounts of money being invested into India’s startups.
Where does all this money go?
Startups spend money on hiring talent, starting and sustaining operations, renting commercial property, and more. Every single rupee spent by a startup goes into the pockets of others.
Even failed startups contribute significantly to their local economies!
Let’s take the example of a small online bakery that ships cookies and baked goods to its customers around India.
This bakery sources its flour, sugar, butter, and other raw materials from local suppliers every month. These local suppliers are able to make good money by supplying to the bakery.
In turn, the local suppliers can spend the money they earned on hiring more employees so they can produce more flour and sugar!
These new employees now have a source of income that they can spend on… baked goods, from the bakery!
This is how startups generate wealth – it is a sustaining, self-fulfilling loop that keeps the economy going!
Every startup that comes up with a new, innovative idea to make life easier for the people of India takes us one step closer to a self-sustaining economy.
BoAt is one such startup – they make quality sound gear like earphones and speakers at cost-effective prices.
By buying from BoAt and other Indian businesses, we support our economy and keep the money flowing.
There is also the opportunity for Indian businesses and products to reach the global market, bringing more growth to our economy.