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Are Startups Contributing to Poverty and Unemployment?

Roti, kapda, aur makaan- these three words easily sum up the basic necessities of an average Indian citizen. The most dependable way of fulfilling these needs is to get employed, and that is not only the mentality of Indians, but of all citizens on a global level. In a capitalist economy, the role of the government is to formulate and implement policies that encourage job creation. It is the industries that should take this responsibility, of creating jobs, on their shoulders. However, in India, the word ‘job’ usually translates into government jobs; and employment generation has been, most of the times, interpreted as ‘employment generation by the government.’ This is mainly because government jobs provide their employees with a good amount of salary, benefits as the government-servant, lifetime pension after retirement, and a lot more benefits which the private and commercial firms cannot always afford.

We, as a society, have forgotten to upgrade our expectations of the state of evolving globalized economy, due to the pre-liberalized mentality. While India has transitioned from the socialist ideals into a globalized development ideology, we are yet to figure out on whom to lay the responsibility of job creation. And therefore, the aforesaid responsibility remains a fuzzy area in our society despite of the large pool of the skills and talents that our country has to offer.

The population of India is equivalent to 17.71% of the total world population. It is estimated that by 2022, India will replace China as the most populated nation across the globe.


The gigantic size of its population has resulted in the difficulty of providing ample amount of jobs to the citizens. With unemployment comes the problem of poverty; they walk hand in hand. If the person is unemployed, they won’t have an income, and then they will face difficulties in providing themselves with ‘roti, kapda aur makaan’.

In 2011, around ten million Indians with graduate, post-graduate and technical degrees were looking for work. Unemployment rates were higher among the better qualified, and highest of all among the 7.2 million people with a technical diploma or certificate.

In times like these, when the government pushed for higher employment figures through policies, and corporations struggled to create jobs in an adverse environment; it was the startup ecosystem that emerged as a ray of hope to fulfill the employment aspirations of the society. And citizens pinned their hopes on the foremost revolution — The Indian Startup Ecosystem, because other sectors are seen to be lacking behind when it comes to job creation.

There has been a momentous rise of the Indian Startup Ecosystem. A poll has highlighted that 50% of the young Indians i.e. Indians below the age of 35, prefer to work with startups and not with large corporations. 45% of these young Indians aspire to initiate their own startup in the forthcoming years.

India is running at a really good pace in the race of Startup nations. The Startup landscape of India has emerged as the 3rd fastest growing hub for techie startups in the nation. Entrepreneurship has always been considered as the fuel for a job-creation engine. In the case of startups, the role as an employment generator starts out in a small way and at a small scale. But as the startup evolves into the growth stage and then becomes an established corporation, the growth in jobs created is exponential.

When we look at the numerical data, we can pretty much predict that the number of job-seeking people will reach up to 28.6 million by the year of 2020 i.e. this very year. Thus, India needs to create 10 million jobs every year to keep up with the increasing number of graduates and diplomats. The startup India initiative, which was launched in January 2016 by the honorable PM- Narendra Modi, has created an estimate of 187,004 direct jobs and 560,000 relative indirect jobs, since its introduction.

But then with all these factual reports and digital data, you may ask, why are people still finding it difficult to get employed?

There have been reports in the past that stated about how a few startups withdrew the job offers given to students during placements, and a few other reports stated that they would come up with latter joining dates. These reports have, in a way, tainted the reputation and abilities of the startups in India. Also, the well known startups such as Foodpanda, Zomato, Flipkart, Ola cabs and some other fellow startups have started to lay off their employees. This causes a rise in the overall levels of unemployment in the nation.

The root cause of these problems can be traced to the funding resources. Indian startups claim that even recognition of their brand hasn’t increased their chances of sourcing funds from the markets. Banks do not provide Mudra loans or assistance under the startup India schemes to private limited companies that are less than a year old. On the other hand, venture capitalists and angel investors are interested in funding only the private related companies.

Hence, we can comprehend from the above stated words that, the impetus of fall in the funding has to be borne by the employment sector of the startup ecosystem, which indirectly leads to an upsurge in the poverty levels in the country.

~ Falak Doshi / Panacea Intec (OPC) Pvt. Ltd.

You can also read this article on Medium: Startups of India(This is a link)

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t: +91 7620-286-246
m: info@panaceaintec.com

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