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New freedom of financial choice

business Updated: Aug 14, 2009 23:22 IST
Gaurav Choudhury
Gaurav Choudhury
Hindustan Times
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She lives in a village called Nandi Kandi, barely 50 km from Hyderabad. But like many girls of her age, she dropped out of school after sixth grade, and was married off soon after. She stitched clothes, struggling to earn Rs 40 a day, while her husband managed Rs 20 from the grocery store he ran. The couple had three daughters, two of whom had to be married off before completing school.

That was the life of Suvarna, now 32, till she mustered enough courage to borrow Rs 7,000 from a micro-finance outfit. She employed the capital in the grocery store, filling it up with stocks. The family hasn’t looked back since. The store now boasts of a refrigerator full of soft drinks, making it a popular hotspot among villagers.

Sanjay Banerjee, 34, is the only son of a business family of Lucknow. According to tradition, Banerjee should have settled down to the family’s pharmaceutical distribution business. But he set forth to Delhi seeking financial independence.

His first job with BAG Films taught him the rough-and-tumble of an animation professional’s life. He moved to another television company, and enrolled himself for advanced training in 3D animation and film-making course. Also, he put in extra hours for standalone projects to earn an extra buck.

Two years ago, Banerjee decided to break free. He founded Turtle Animations, took part in a contest by Nasscom and was hailed as one of the best start-ups.

Until the early nineties, a Suvarna or a Sanjay wouldn’t have been commonplace. Today, their tribe is growing.
If there’s one thing that sets this generation apart is the sheer number of financial decisions it makes at an early age.
Till about 20 years ago, the number of successful business start-ups could be counted on fingertips. It would also be impossible for a twenty-plus youth to buy a house.

For, risk appetite was low and there was very little freedom in the choice of financial instruments.

Chetan Maini, who developed India’s first electric car Reva, perhaps epitomises how founding a start-up is more about having – and exercising – the freedom of choice. “We were four friends in college, aspiring to launch a business in the electric vehicle space,” Maini recalls.

Enthused by one of their ideas, a friend’s father invited them to work for him in the summer of 1990. “I ended up working for a company that was working on electric vehicle technology. Over time, it led to us starting the REVA,” says Maini.

But that was the early 1990s, and the hurdles, too many. “Now a new breed of venture funds, private equities and angel investors are making it far easier to set up a company,” Maini remarks.

Over 1,200 Indian companies have accessed venture capital or private equity funding during the last five years. The figure was 76 in 2004.

“The firms supported by venture capital and private equity do have a significant impact on the economy in promoting entrepreneurship, innovation, commercialisation of new technology, employment generation and competitiveness,” said Mahendra Swaroop, president of Indian Venture Capital Association.

Banerjee is now-a-days busy in meetings with private equity investors and venture capitalists as a Hollywood studio has expressed interest in associating with Turtle Animations.

And it is not only about venture capital and private equity. In 2007-08, 223 micro-finance institutions cumulatively loaned Rs 5,954 crore. As many as 14.1 million individuals took an average loan of about Rs 4,000.

Or, take Rahul (name changed), for instance. The 26-year-old advertising professional from a small town of West Bengal wants to pay off his home loan by the time he reaches mid-30s. Therefore, he works a few extra hours after his job.

“Lowering home loan interest rates has brought consumers to the real estate market,” said Parsvnath Developers chairman Pradeep Jain, who had charted his own way out of his family’s grain business.

Even 20 years ago financial freedom was measured merely by one’s salary. Now, it accommodates the poor Suvarna, the talented Banerjee and the aspiring Rahul.