How grass-root entrepreneurs can take off?

Skills and talent need to create business vehicles AND businesses need to employ skills. BOTH are important for growth. Let us talk about the first one.

Mar 11, 2024

Last year, I read Sahana Singh ji’s X post and realized something. Some people are skilled, and their skills are rare. Their skill needs exposure, and we do not have mechanisms to deliver it. This all came back when she posted an update on X. This is a very important issue so lets delve into it.

Note: Do follow her on X; the link is below the pic.

Skill Development for Business v Business Development for skills

Businesses and people need to employ or hire skilled people. Prime Minister Modi has created the Skill-India initiative for this. The human resource development ministry is also focused on this. It needs a holistic approach, as Ashwini Vaishnav explained, on skill development for the microchip Industry in India.

However, skilled people need a way to transform their skills and talent into a business. This helps shield their personal wealth from their business risks. The jewellery repairman has skills, but he has to trade his skills in a makeshift location, always afraid of the municipal authorities, who will destroy his tools and his setup. How can he create a formal entity to ply his trade at a reasonable cost and with acceptable paperwork?

What stops him - regulations and compliance!

I have said this for many years:

In India, the cost of compliance is high, and benefits are low, whereas it is easy to break the law, and penalties are minimal.

The main effect of this reality is that those who can subvert the system, siphon profits and value out of the system get an advantage. In contrast, those who want to play fair, abide by the law and pay taxes get disadvantaged.

I have repeatedly highlighted this challenge. We need a mechanism to allow such skilled persons to ply their trade legally. That does not mean we should let him set up a shop on a footpath, encroaching on public spaces.

So how can the jewellery repairer ply his trade?

Let us try to imagine ways we can create to help such artisans ply their trade.

Imagine if the artisan can obtain a license to ply his/her trade, which can be verified using a QR code so that the municipal authorities can verify the credentials. At the same time, if the licensed outfit encroaches on public spaces, then s/he will be denied a license throughout the country unless hefty fines are paid digitally.
Imagine if artisans could create a fully cashless business where all accounts are maintained cashless. Their taxes, both GST and taxes on profits, would be automatically calculated and deducted at a discounted rate.
Imagine if all licenses and forms could be filled in automatically and s/he was transparently informed about what s/he needs to get license approvals. And further, those licenses and approvals arrived in time.
Imagine if someone wants to start a small business involving foods, s/he was guided along digitally, and s/he would get automatic approval for a commercial gas cylinder and get digitally sanctioned loans for working capital. Imagine if they had access to videos explaining how food hygiene was to be maintained, etc.
Imagine if thela-walas (cart-based sellers) could have an app to bid for designated spots on a per-day or per-slot basis with the Municipal Corporation. Their carts would be secure during those times, and they would be required to remove their carts after their slots.
There can also be some digital coordination systems for vendors who travel. It could be delivering apps, meeting the vendor or it could be customers able to live-track the location of the vendor.

The ease-of-doing-business that is necessary.

In sum, the digital infrastructure is just the beginning. If we can create digital governance processes, legitimate tax-paying businesses will get a boost and genuine entrepreneurs will get an advantage. As the game becomes fair, the real competitors will emerge, and we can usher in the next phase of entrepreneurship.

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