India’s demographic dividend, which is expected to reach 1.1 billion in the working age group by 2047, is a significant advantage for the country. However, this advantage can only be fruitful if enough jobs are created to cater to this growing workforce. Failure to generate enough jobs can lead to social and economic havoc, serving as a liability instead of an asset.
According to a recent report, Harnessing India’s Demographic, if India’s workers are not well-prepared for the available jobs, then the demographic dividend may turn into a liability. Therefore, it becomes crucial for the government to emphasize development initiatives that can generate a stable number of jobs in the country.
The question on who will create more jobs for India: MSMEs or startups, is an issue that many policymakers are grappling with. While both sectors have the potential to boost the job market, it will depend on several factors such as the sector’s growth rate and the government’s support to each sector.
The Micro, Small and Medium Enterprises (MSMEs) sector, which employs approximately 111 million individuals, accounts for 30% of the country’s GDP. In contrast, India’s startup ecosystem is relatively new but has seen significant growth in recent years. The number of startups in the country has increased from 7,000 in 2008 to over 50,000 by 2019.
MSMEs and startups have different business models, and while both create jobs, they cater to different sectors in the market. MSMEs generally focus on manufacturing and service sectors, while startups primarily deal with technology-based innovation.
Despite some commonalities, both MSMEs and startups require different forms of support from the government to create more jobs. The government has to focus on improving infrastructure and access to finance, reducing regulatory burdens, and fostering innovation to support MSMEs. In contrast, the startup ecosystem requires regulatory reforms, simplified tax regulations, and developing a more enabling environment for entrepreneurship.
In conclusion, the government’s emphasis should be on providing an enabling environment for both MSMEs and startups to create a stable number of jobs for India’s growing workforce. This will require a comprehensive approach that eliminates the barriers to starting and scaling businesses and provides the necessary support for the development of these sectors. The private sector also has a vital role to play by investing in job-creating businesses, leading to economic growth and a growing middle-class in India.
