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Corruption rules

For young Indians, reaping benefits of high economic growth gets embroiled in high corruption and poor finance from the banks, reports Chetan Chauhan.

delhi Updated: Jul 25, 2008 01:21 IST
Chetan Chauhan

For young Indians, reaping benefits of high economic growth gets embroiled in high corruption and poor finance from the banks.

A National Knowledge Commission (NKC) survey has found that about 60 per cent of entrepreneurs faced corruption when they tried to open a new business venture. “Another hurdle was in accessing reliable information on registration procedures, finance and other schemes,” the survey report submitted to the Prime Minister’s Office recently said.

The respondents, who had opened business between 2000-2007, also elaborated on the bribes they had to give to get government clearances. The study also states that a newcomer is required to clear 13 procedures, which takes minimum of 33 days. To get a license, 20 procedures are required taking 224 days. Registering property has six procedures taking 62 days. To overcome some of these problems, NKC has recommended a unique company number to get all the clearances at one go.

As many as 61 per cent of respondents interviewed in Delhi, Mumbai, Ahmedabad, Pune, Kolkata, Bangalore, Hyderabad and Chennai said that they did not receive bank loan when they planned their new venture. “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 a result, 63 per cent of the interviewees had to start their ventures on their own finances whereas only 22 per cent got bank loans. Only 20 per cent of respondents said that banks loans at the start-up stage was easy.

Once the projects starts, the entrepreneurs find that finding skilled manpower was the biggest problem. In India, only five per cent of existing workforce has received skilled training as compared to 96 per cent in Korea, 75 per cent in Germany, 80 per cent in Japan and 68 per cent in United Kingdom. To tackle this problem, the commission has recommended the government to have a policy to improve skills of the existing policy.

What even surprised the commission was the finding that 98 per cent of respondents, who ventured into new projects, were undergraduates, underlining the fact that ability to think different is key for starting new projects, rather than just high education. Only two per cent had a Ph.D degree.

However, 95 per cent of the respondents felt that education was important for a new project to succeed. It also reflected with a steady increase in MBAs and those, with higher educational qualification, starting new ventures, the survey said.

The biggest motivating factor found for becoming an entrepreneur was the willingness to be independent of the family and a job. Even though in most cases, entrepreneurs took help of the family to start the business enterprise, the survey said.

The survey, which formed basis of a set of recommendations to the PMO on attracting more talent for business, found that most of the entrepreneurs’ projects were in the knowledge sector, infrastructure and telecommunications.