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    Entrepreneurs india2011 Entrepreneurs india2011 Document Transcript

    • The Legatum Institute Survey of EntrepreneursINDIA 2011Nathan GamesterSeptember 2011
    • QUIZ!1. What percentage of Indian entrepreneurs believe 6. What percentage of Indians state that the global that India’s economy will be a “much stronger economic crisis has had a “large negative impact” on global power” in five years time than it is now? the willingness of individuals to start and run their own business? a) 92% a) 50% b) 42% b) 33% c) 15% c) 80% d) 60% d) 17%2. What percentage of 18-34 year olds think that the Indian government is currently doing a “very 7. According to business owners, what percentage good job”? answered that it has become “much easier” to access finance over the last 12 months? a) Almost none a) One-half b) Roughly one in ten b) One-quarter c) Roughly a quarter c) Three-quarters d) Roughly a half d) Almost none3. What proportion of business owners believe that the Indian public places “a lot” of value on the 8. Which group of business owners were the most contribution entrepreneurs make to the economy? positive that India’s economy will be a much stronger global power in five years time than it is now? a) 12% a) Those with annual revenue of less than or equal to b) 70% 300,000 rupees c) 47% b) Those with annual revenue of 300,001 to 750,000 d) 4% rupees c) Those with annual revenue of 750,001 to4. Residents of which major city are most positive 1,200,000 rupees about generally trusting others? d) Those with annual revenue of 1,200,001 or more a) Delhi rupees b) Chennai 9. In which major city have the highest percentage of c) Kolkata people paid a bribe? d) Mumbai a) Delhi5. When asked if Indian society is more welcoming b) Chennai of entrepreneurs now than 10 years ago, what c) Kolkata percentage of business owners responded with “yes, much more”? d) Mumbai Answers: 1b, 2b, 3c, 4c, 5b, 6d, 7b, 8c, 9a, 10c a) 90% 10. What percentage of entrepreneurs believe that b) 49% India will become the most important global power in 20 years time? c) 10% a) 10% d) 2% b) 93% c) 56% d) 74%
    • The Legatum Institute Survey of Entrepreneurs:INDIA 2011Nathan Gamester THE LEGATUM INSTITUTE IS AN INDEPENDENT NON-PARTISAN ORGANISATION BASED IN LONDON. WE STAND FOR GROWTH AND GOOD GOVERNANCE. OUR RESEARCH, PUBLICATIONS, AND PROGRAMMES ADVANCE IDEAS AND POLICIES IN SUPPORT OF FREE AND PROSPEROUS SOCIETIES AROUND THE WORLD. VISIT US AT WWW.LI.COM.Author’s Note: The author would like to thank Greg Gardner of the Legatum Institute for his assistance in writing and editing thisreport, as well as Edo Omic and Freneka Mumford (both of the Legatum Institute) for their contributions towards this report. THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 1
    • CONTENTSOVERVIEW 3SUMMARY FINDINGS 4OPTIMISM 5MOTIVATION, INSPIRATION, AND OPPORTUNITY 8NETWORKS, FAMILY, AND SOCIETY 10CORRUPTION AND “JUGAAD” 13FINANCE AND THE ECONOMY 16GOVERNMENT 19ENTREPRENEURIAL ENVIRONMENT 22SAMPLE 24QUIZ INSIDE FRONT COVERDATA COMPARISON 2010 VS. 2011 INSIDE BACK COVERThis report is part of a wider series on entrepreneurship that includes surveys on India, China,and Nigeria. To download these surveys and for further information visit www.li.comPage 2
    • OVERVIEWOver the last 12 months, the political and economic landscape ofmost Western economies has been dominated by the fear of a double-dip THIS SURVEY PROVIDES SUCHrecession, rising debt levels, and credit rating downgrades. Yet, in India, INSIGHT AS IT AIMS TO ‘GETthe outlook remains largely positive as the country continues its rise as INSIDE THE MINDS’ OF INDIA’San increasingly important global economic power. India’s population now LARGE AND GROWING POOLexceeds 1.2 billion1 and its economy continues to grow at one of the fastest OF ENTREPRENEURSrates in the world: GDP growth was 10.4% in 2010 and is predicted to beslower – but still impressive – at 8.2% in 20112.However, several high-profile corruption scandals over the last yearhave caused widespread protests and created a sense of public disillusionwith the current government. Add to this the fact that double-digitinflation has proved more forthcoming than double-digit growth in recentforecasts, and it is easy to see why question marks have arisen regarding theinevitability of India’s ascent.Whichever path the Indian economy takes, it is sure that its entrepreneurs– the lifeblood of any thriving economy – will have a significant role to play.Whether they are a sole-trader of a tea stall or a CEO of a multi-billionrupee manufacturing firm, entrepreneurs in all their forms have beeninstrumental in India’s rapid development since the economic liberalisation20 years ago. Their decision to take risks, invest in ideas, and develop thegoods and services of tomorrow are the reason India is the diversifiedmarket economy it is today.There exists today a multitude of objective data about entrepreneurship.For example we know the average time it takes to start a business in India(29 days)3, the total tax rates faced by Indian entrepreneurs (63%)4, and thenumber of mobile phones they possess (45 per 100 people)5. But this onlyprovides us with part of the full picture. What is missing is data on howand why Indian entrepreneurs make the decisions they do. What motivatesthem? Who do they turn to for advice? What is it really like ‘on theground’ for an entrepreneur in India?This survey provides such insight as it aims to ‘get inside the minds’of India’s large and growing pool of entrepreneurs. For the thirdconsecutive year, the Legatum Institute, in conjunction with YouGov,has surveyed a panel of over 2,000 Indian business owners andentrepreneurs to provide insight into the characteristics of India’scurrent and future growth, as an economy and as a nation.1 Census of India 2011, Provisional Population Totals, (New Delhi: Government of India, 2011)2 International Monetary Fund, World Economic Outlook 2011, (Washington DC: IMF, 2011)3 International Finance Corporation and World Bank, Doing Business 2011, (Washington DC: World Bank, 2011)4 Ibid.5 World Bank, World Development Indicators 2011, (Washington DC: World Bank 2011) THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 3
    • SUMMARYPervasive optimism is the dominant theme in this year’s survey,although paradoxically it is clear that there are growing concerns INDIA’S REPUTATIONregarding corruption. The outlook among India’s entrepreneurs is AS A BEACON OFgenerally positive and extremely so on several fronts: almost 70 per cent ENTREPRENEURSHIP WILLthink India is currently heading in the right direction and even more BE JUSTIFIED FOR SOMEare confident their country will be a stronger economic power in five YEARS TO COMEyears time. A considerable majority of Indian entrepreneurs are equallypositive about trust in society and their government’s policies to makeIndia business friendly.Despite such optimism, a note of caution: compared to their eldercounterparts, India’s younger generation of entrepreneurs are consistentlyless optimistic about the future, less trusting of society, and less approvingof government. However, this 18-34 year old group still see a positivefuture for India, indicating more an empowered generation willing to speakout, rather than a cohort of discontented revolutionaries.The second major finding was that not only is dissatisfaction concerningcorruption very high – more than nine in 10 entrepreneurs think it isa problem – but 80% believe the problem to be getting worse. Shouldsuch a trend continue, the prospects for entrepreneurs may diminishand the aforementioned optimism could wane.Regardless, for now entrepreneurship in India is in good shape and itis not only the abundant optimism that indicates growth will continue.The communications and IT sector is viewed as having the best growthprospects, but several other sectors are also viewed very positively. Theevidently strong motivation of “being your own boss”, reports of easieraccess to finance, and the fact that 84 per cent of Indian entrepreneursview their country as a good place to succeed are all reasons to believeIndia’s reputation as a beacon of entrepreneurship will be justified forsome years to come.Page 4
    • OPTIMISM Indian entrepreneurs show deep levels of optimism both for the future of their country and for the economic possibilities available to them. Perhaps most strikingly, over half of all Indian entrepreneurs believe that India will be the most important global economic power in 20 years time.THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 5
    • OPTIMISM More than two-thirds of Indian entrepreneurs believe India is heading in the right direction: 69 per cent said things in India are currently going in the right direction, while only 27 per cent of entrepreneurs think things are heading in the wrong direction. Do you think things in India are currently going in the right or wrong direction? 3% 27% 69% right direction 27% wrong direction direction Right 69% 69% 5% don’t know Wrong direction 27% Don’t know 3% 100% 80% 73% 66% This optimism seems to grow with 62% age. While 62 per cent of 18-34 percentage 60% year olds think India is heading in the right direction, this increases to 66 per cent in the 35-54 age 40% bracket, and even more so to 73 per cent for over 55 year olds. 0% 18-34 years 35-54 years over 55 years age bracket Most Indian entrepreneurs believe that hard work will get them ahead financially: 78 per cent said “yes” – a higher percentage than in 2010 – while only 21 per cent of entrepreneurs believe that hard work won’t get you ahead financially.Page 6
    • [q9] Looking ahead, where do you see India’s economy headed in the next 5 years? % India’s economy will be a much stronger global power than it is now 42 India’s economy will be a stronger global power than it is now 44 India’s economy will be about the same in global terms as it is now 11 India’s economy will be a weaker global power than it is now 2 India’s economy will be a much weaker global power than it is now 1 Dont know 1 Getting access to finance over the last 12 months Easier: 68 per cent of entrepreneurs 25 per cent “much easier” 3 per cent “much harder” 15 per cent “somewhat harder” Looking ahead to the next five years, India’s Looking further ahead, most Indian entrepreneurs entrepreneurs are optimistic about their believe India will be the most important global country’s standing on the world stage with 86 economic power in 20 years (56 per cent), per cent believing India will be a stronger power followed by China (26 per cent). The US is not than it is now, and 42 per cent of those believing regarded highly here, with only eight per cent it will be “much stronger”. Only 11 per cent of entrepreneurs believing it will be the most believe it will be about the same as it is now and important economic power in 20 years. Brazil, just three per cent believe it will be a weaker Germany, Japan, Russia, and the UK are barely power than it is now.[q9] Looking ahead, where do you see India’s economy headed in the next 5 years?India’s economy will be a much stronger global power than it is now % considered, receiving just 10 per cent, combined. [q11] And looking further ahead, which country do you think will be the most important global economic power in 20 years time? (Please tick one option) 42 % Brazil 1India’s economy will be a stronger global power than it is now 44 China 26India’s economy will be about the same in global terms as it is now 11India’s economy will be a weaker global power than it is now India 2 Germany 56 2India’s economy will be a much weaker global power than it is now 1 Japan 4Dont know 1 Russia 1 United Kingdom 2 United States 8 Other 0 Looking ahead, where last 12you see India’s economy Getting access to finance over the do months And looking further ahead, which country do you think Dont know 1 Easier: 68 per cent of entrepreneurs headed in the next five years? 25 per cent “much easier” will be the most important global economic power in 20 3 per cent “much harder” 15 per cent “somewhat harder” years time? 11% US China 42% 44% India India’s economy will be a much stronger global power Brazil 1% Russia 1% [q11] And looking further ahead, which country do you think will be the most important global economic power in 20 years time? than it is now (Please tick one option) 42% % China 26% United Kingdom 2% Brazil 1 China 26 India’s economy will be a stronger global power than it is now India 44% 56 India 56% United States 8% Germany 2 India’s economy will be about the same Japan Russia 4 1 Germany 2% Don’t know 1% in global terms as it is now United Kingdom 11% 2 United States Other 8 0 Japan 4% India’s economy will be a weaker global power than it is now Dont know 2% 1 India’s economy will be a much weaker global power than it is now 1% Don’t know 1% In assessing the overall level of opportunity available in India, entrepreneurs perceive India to be a good place to succeed. When asked whether India overall is a good or bad place for entrepreneurs to succeed, 84 per cent state that they think it is a good place, with one-third of respondents claiming it is a “very good” place. This optimism remains consistent across all age categories, all growth rates of business, and all sizes of business, both in terms of the number of employees and annual revenue. THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 7
    • MOTIVATION,INSPIRATION, ANDOPPORTUNITYThe desire for independence is cited as the mainmotivation for starting a business, while having suitableaccess to finance is cited as the most helpful factor.Page 8
    • MOTIVATION, INSPIRATION, AND OPPORTUNITY When asked the reason they became entrepreneurs, 12 per cent of respondents stated that they had no other employment options, so became an entrepreneur out of necessity in order to get by. The overwhelming majority, 88 per cent, had employment options but chose to pursue their entrepreneurial aspirations. When asked for the main motivation for starting their own business, Indian entrepreneurs primarily cite being independent (46 per cent) followed by the desire to make more money (25 per cent). Interestingly, these are also the top two reasons cited by aspiring entrepreneurs for wanting to start a business. Only 14 per cent of Indian entrepreneurs cite their main motivation for starting their business as the desire to exploit an opportunity to develop a product or service, and only eight per cent do it to be innovative. WHAT WAS YOUR MAIN MOTIVATION IN ASPIRING ENTREPRENEURS STARTING YOUR OWN BUSINESS? ENTREPRENEURS To make more money 25 17 To be independent and “be my own boss” 46 49 To exploit an opportunity to develop a product or service 14 12 To be innovative 8 12 To make a difference for society 6 10 Other 1 0 The most helpful factor in becoming an entrepreneur is the ability to access finance. This is cited by 31 per cent of entrepreneurs as the most helpful factor followed by knowing another entrepreneur which 24 per cent state is the most helpful factor. Most Indian entrepreneurs believe that Indians tend to be more entrepreneurial people compared to the people of other countries: 73 per cent think Indians are more entrepreneurial, with 34 per cent of those stating Indians are “a lot more” entrepreneurial. Only 12 per cent think that Indians are equally entrepreneurial compared to other nationalities, with a further 14 per cent thinking that Indians are less entrepreneurial. When asked where entrepreneurs gain their desire to become entrepreneurs, the highest response was that of knowing another entrepreneur (32 per cent), closely followed by family (30 per cent). The other most frequent responses were social networks and previous business experience both of which were cited by 11 per cent of entrepreneurs. Interestingly, in responding to the same question, a much higher percentage of 18-34 year olds cite the influence of school/university than elder entrepreneurs. THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 9
    • NETWORKS, FAMILY,AND SOCIETYLevels of trust have risen in the past year butare not yet as high as two years ago and thesocial impact of business is still very importantfor Indian entrepreneurs.Page 10
    • NETWORKS, FAMILY, AND SOCIETY When asked if in general people can be trusted, 60 per cent of Indian entrepreneurs answered “yes”. This is higher than 2010 (54 per cent) but not as high as 2009 (74 per cent). Do you generally think people can be trusted? 80 74% 70 60 percentage of respondents 60% 54% 50 40 41% 37% 30 20 22% 10 0 Yes No Yes No Yes No 2009 2010 2011 survey year Interestingly, when looking at the total respondents, females are far less trusting than males: equal numbers of women answered “yes” and “no” to this question, whereas significantly more males answered “yes” (58 per cent) compared to “no” (37 per cent). The proportion of over 55 year olds who think people cannot be trusted is just 20 per cent, which is less than half the percentage of 18-34 year olds who believe people cannot be trusted (42 per cent), signifying a more sceptical and distrusting younger generation. Just under half (49 per cent) of Indian entrepreneurs believe that Indian society is “much more” welcoming of entrepreneurs than it was 10 years ago. A further 43 per cent believe it is “somewhat more” welcoming, while only five per cent think it is “about the same” as it was 10 years ago. As already mentioned, the most helpful factor to starting a business is having access to finance (31 per cent). However, the second and third highest responses are, knowing another entrepreneur (24 per cent) and having support from family (18 per cent), signifying a reliance on networks and family in becoming an entrepreneur. THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 11
    • When it comes to seeking advice and help, there is a difference in response from entrepreneurs compared to senior managers. Entrepreneurs primarily consult family and friends (29 per cent) as well as other entrepreneurs (26 per cent), while senior managers consult professional consultants and business journals (30 per cent). WHEN YOU HAVE QUESTIONS OR NEED INFORMATION TO MAKE IMPORTANT BUSINESS ENTREPRENEURS SENIOR MANAGERS DECISIONS, WHO DO YOU TURN TO FOR ADVICE? Consult other entrepreneurs 26 14 Read business journals, publications, and websites 23 30 Consult family and/or friends 29 13 Consult your colleague(s) in your company 6 10 Professional consultants 13 30 Dont know 1 2 When asked about the social impact of their work, 92 per cent of Indian entrepreneurs say that it is important with 65 per cent stating that it is “very important” and is a main motivation for what they do. Female respondents consider the social impact of their work more than their male counterparts do – 71 per cent of women citing it as a main motivation, compared to 62 per cent of men. When asked what entrepreneurs believe is the biggest positive effect of their business on others besides creating value and satisfying customers, 40 per cent say it is improving the quality of life in the community where they work. The next most common answer was making an impact on the standards and ethics in the entrepreneur’s profession (29 per cent).Page 12
    • CORRUPTION AND “JUGAAD” Corruption continues to be a serious problem that hurts business in India and the proportion of entrepreneurs who think corruption is getting worse has risen in the past 12 months.THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 13
    • CORRUPTION AND “JUGAAD” When asked whether corruption was a problem that hurts business, 91 per cent of Indian entrepreneurs said that it was a problem, with 65 per cent of those stating it was a “serious problem”. This has not changed since 2010 but it is an increase from 2009 when only 56 per cent cited corruption as a “serious problem” that hurts business in India. Of India’s six largest cities (Bangalore, Chennai, Delhi, Kolkata, Hyderabad and Mumbai), the capital city Delhi is where the biggest percentage of resident entrepreneurs report corruption as being a “serious problem”. Most worryingly for Indian business, 80 per cent of entrepreneurs say that overall corruption is getting worse. Furthermore, the number of entrepreneurs who think corruption is getting “much worse” has risen by five per cent since 2010. Now, more than half (52 per cent) of Indian entrepreneurs view corruption as getting “much worse”, with an additional 28 per cent stating it is getting “somewhat” worse. HOW WOULD YOU SAY THE LEVEL OF CORRUPTION 2011 TOTAL % 2010 TOTAL % HAS CHANGED OVER THE LAST FEW YEARS? It is getting much worse (i.e. it is more of a problem) 52 47 It is getting somewhat worse 28 28 It is about the same 11 17 It is getting somewhat better 8 7 It is getting much better (i.e. it is less of a problem) 1 1 Cleaning up corruption is cited among Indian entrepreneurs as the most important factor for ensuring India’s future economic growth – 30 per cent cited this as the most important factor. Despite the importance entrepreneurs place upon cleaning up corruption, non-entrepreneurs or senior managers clearly view it as even more urgent, with 40 per cent citing it as the most important factor in future growth. Entrepreneurs are almost equally concerned with the government becoming more business friendly (27 per cent) as they are with corruption, whereas only 16 per cent of non-entrepreneurs and senior managers see business reforms as the priority. When asked to describe in their own words the types of problems that entrepreneurs think are caused by corruption, there was a wide range of responses. The frequently cited problems included “having to pay bribes to obtain licenses” and “delayed and uncertain (business) progress”, although as many as 10 per cent of respondents said no problems arose from corruption.Page 14
    • The number of entrepreneurs who say Has your own company ever been pressured to pay a bribe? they have been pressured to pay a bribe has also risen sharply to 55 per cent (up from 44 per cent in 2010). Further, nine 9% per cent of Indian entrepreneurs stated 4% they would “rather not say” if they have been pressured to pay a bribe, 32% 55% suggesting that the actual number is higher than reported. Almost two- thirds of respondents living in Delhi reported paying a bribe, the highest proportion of any of the six largest cities, while less than a quarter say they have not been pressured to pay a bribe All Entrepreneurs in the capital. Yes Don’t know No Would rather not say 13% 4% 5% 4% 8% 1% 53% 57% 64% 34% 24% 33% Bangalore Chennai Delhi 7% 9% 6% 11% 2% 60% 51% 46% 27% 39% 43% Hyderabad Kolkata Mumbai 4% 9% Jugaad – the Hindi word meaning ingenuity and the ability to improvise to get around, or to deal with, prohibitive rules and institutions – remains important to Indian entrepreneurs with 48 per cent stating it 55% 32% is “very” important and 38 per cent stating it is “somewhat” important. Jugaad is most important among businesses that are earning the most revenue and growing at the fastest rate. For example, for those companies that grew more than 50% in the last year, Jugaad was considered “very important” by 72 per cent of respondents. All Entrepreneurs When looking at Jugaad across genders, there is an interesting difference: 57 per cent of women find Jugaad “very important”, whereas only 43 per cent of men said it was “very important”. THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 15
    • FINANCE ANDTHE ECONOMYAlthough still recovering from the negativeeffects of the global economic crisis, Indianentrepreneurs state that access to finance hasbecome easier in the past 12 months.Page 16
    • Getting access to finance over the last 12 months Easier: 68 per cent of entrepreneurs 25 per cent “much easier”FINANCE AND THE ECONOMY 3 per cent “much harder” 15 per cent “somewhat harder” The economic crisis has had an overall negative impact on the willingness of Indian’s to start their own business according to 58 per cent of Indian entrepreneurs, indeed 17 per cent say this has been a “large” negative impact. Interestingly, 27 per cent of entrepreneurs believe that the financial crisis has had a positive impact on individuals to start and run their own business. Gaining access to finance has become easier over the last 12 months according to 68 per cent of entrepreneurs, with 25 per cent saying it has become “much easier”. Only three per cent say it has become “much harder” and 15 per cent say it has become “somewhat harder”. Has access to finance become easier or more difficult over the last 12 months? 3% 15% 25% Much easier 25% 14% Somewhat easier 43% Neither easier nor more difficult 14% 43% Somewhat harder 15% Much harder 3% Indian entrepreneurs state that gaining access to finance is the most important factor needed for success, when listing their top three priorities. Accessible finance tops the list with 51 per cent followed by the ability to take risks (45 per cent) and possessing creativity and invention (43 per cent). When asked for the main source of finance used to start their business, most Indian entrepreneurs cited a bank loan (38 per cent), followed by personal savings (31 per cent) or a personal loan from a family member (17 per cent). Of those who used a bank loan, 69 per cent used a state run bank while 31 per cent received their loan from a private bank. THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 17
    • 50 When asked which three sectors of the Indian economy offer the greatest prospect of growth right now, Indian entrepreneurs listed as their top three: communication and IT (46 per cent); 40 banking and financial services (45 per cent); and technology (27 per cent). Which three sectors of the Indian economy present the greatest growth opportunity right now? (Please tick up to 3 options) 30 percentage % 20 10 0 Banking and financial services Technology (products and services) Consumer products Real Estate Educational services Healthcare products and services Agriculture Sciences Environmental products and services Professional Services Construction Legal services Defence products Transportation and Infrastructure Media/Entertainment Retail Manufacturing Hospitality Communication and IT sectorPage 18
    • GOVERNMENT Overall, Indian entrepreneurs are positive about their government’s performance in making India a business-friendly place although data reveals that government can do more to encourage an increase in entrepreneurial activity.THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 19
    • GOVERNMENT Overall, Indian entrepreneurs are more positive than negative about the Indian government’s current performance. When asked if the government is currently doing a good or a bad job, more respondents selected “very good” and “fairly good” than selected “very bad” and “fairly bad”. However, this is hardly a ringing endorsement of the current government particularly when you consider that a quarter of respondents selected “neither good nor bad”, which suggests a high degree of lethargy among entrepreneurs about the government’s performance. DO YOU THINK THE INDIAN GOVERNMENT ENTREPRENEURS % IS CURRENTLY DOING A GOOD OR BAD JOB? Very good job 17 Fairly good job 32 Neither good nor bad job 24 Fairly bad job 15 Very bad job 13 Generally, younger Indians are showing higher levels of discontent with their government’s performance than citizens aged 35 and above. When asked to name the most important factor for India’s future economic growth, the top responses all have direct implications for government: cleaning up corruption was cited as the most important by 30 per cent of Indian entrepreneurs; government becoming more business friendly was next with 27 per cent; while one in four believe a better-equipped workforce from an improved education system is the priority. A strong majority (60 per cent) of under 35 year olds do not think the government is doing a good job. Yet, exactly half of over 35 year olds believe the current Indian government is doing either a “fairly good” or “very good” job.Page 20
    • When asked more specifically about the government’s performance in making India a business-friendly country, Indian entrepreneurs are more positive. A total of 67 per cent believe the government is doing a good job, indeed 22 per cent say is it doing a “very good” job. Only 14 per cent said the government was doing a “bad job”, while 19 per cent said its performance was “neither good nor bad”. There is a high level of positivity for state governments’ performance on this metric. A total of 63 per cent believe their state government is doing a good job, and 28 per cent say it is doing a “very good” job. How would you rate the present government’s performance in making India a business-friendly country? Indian government Very good State government Fairly goodNeither bad nor good Fairly bad Very bad 0 10 20 30 40 50 percentage % With regards to the perception of whether the respondents’ state is a good place for entrepreneurs to succeed, the situation looks more positive. Three-quarters think their state is a good place for entrepreneurs to succeed, with 31 per cent of those saying it is a “very good” place. Only four per cent think their state is a “very bad” place for this. Delhi scores highest (of the six largest cities) in this regard as 38 per cent think the capital is a “very good” state in which to succeed, while just a quarter of respondents in Bangalore rate their state (Karnataka) as a “very good” place for entrepreneurs to succeed. When it comes to understanding which factors provide most assistance when starting-up as an entrepreneur, the Indian government performs poorly. For example, when asked to name the most helpful factor in becoming an entrepreneur, only four per cent cited pro-business actions by the government. THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 21
    • ENTREPRENEURIALENVIRONMENTIn general Indian entrepreneurs believe that India isa good place to be successful and indeed businesseshave experienced an increase in growth over thepast 12 months.Page 22
    • ENTREPRENEURIAL ENVIRONMENT When asked to assess the value the wider public places on the contribution entrepreneurs make to the economy, Indian entrepreneurs are very positive: a total of 85 per cent believe that the public value the contribution they make, indeed 47 per cent believe the public place “a lot” of value on their contribution to the economy. As previously mentioned, entrepreneurs perceive that India is a good place for entrepreneurs to succeed. When asked whether India overall is a good or bad place for entrepreneurs to succeed, 84 per cent state that they think it is a good place, with 33 per cent of those stating it is a “very good” place. When asked to state the growth rate of their business over the last year, only eight per cent reported growth of “less than 5%”. A high 35 per cent of entrepreneurs experienced annual growth “between 5%- 10%”, closely followed by 31 per cent of entrepreneurs who experienced “between 10% - 15%” growth. Only eight per cent of entrepreneurs experienced annual growth upwards of 25%. When compared with 2010 data, some differences emerge. The most obvious difference (see table) is that the median growth rate for Indian businesses has increased. This means that in 2011 more businesses have moved out of the lowest bracket of growth, and now occupy the slightly higher brackets of growth. AND WHAT WAS THE GROWTH 2011 2010 500 1-49 RATE OF YOUR COMPANY OVER ENTREPRENEURS ENTREPRENEURS EMPLOYEES EMPLOYEES THE PAST YEAR? % % OR MORE Less than 5% 8 18 0 7 Between 5% and 10% 35 36 18 39 Between 10% and 15% 31 20 33 31 Between 15% and 25% 17 12 22 15 Between 25% and 50% 6 6 15 5 More than 50% 2 4 11 1 Don’t know 1 5 1 1 When you look at the growth data in terms of business size, it becomes clear that big companies are growing faster than small companies. Nearly half (48 per cent) of all companies with 500 employees or more grew at a rate of 15% or more in the last year, with 26 per cent of those companies growing at more than 25% growth in the last year. Whereas, only six per cent of companies with 1-49 employees grew at a rate of 25% or higher. THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 23
    • SAMPLEThis survey is part of a series published by the Legatum Institute, inconjunction with YouGov – the world’s leading online polling researchfirm. The results were gathered in June 2011 from a panel of entrepreneurs,senior managers, and aspiring entrepreneurs from across India. The totalnumber of respondents who completed the survey was 2,012, of which50 per cent were classed as entrepreneurs*, 40 per cent as aspiringentrepreneurs**, and the remaining 10 per cent identified themselvesas senior managers*.Of the total respondents, 78 per cent were male, 68 per cent were inthe 18-34 age bracket, 85 per cent were still in education at the ageof 20, 81 per cent identified themselves as belonging to the Hindureligion (only one per cent say they do not belong to a religion), and 60per cent answered the survey from home (33 per cent from work).The reason for running a panel survey is to enable year-on-year comparisonsand to track changes over time. Where interesting changes have occurredsince last year, they have been highlighted in this report. For certainquestions, comparison is not possible because the question has beenmodified over the past year in order to improve the quality and clarity ofthe data collected.Entrepreneus are categorised by answering Option (a) to the following question and SeniorManagers by answering Option (b):* Entrepreneurs and senior managers are categorised by their answer to the following question: Which of the following applies to you? (a) I run my own business (b) I am employed as a senior manager** Aspiring Entrepreneurs are those who answered with option (a) to the following question: And which of the following best applies to you? (a) I am the type of person who would like to start their own business (b) I am the type of person who would prefer to be employed by an existing businessPage 24
    • DATA COMPARISON 2010 VS. 2011This table tracks some key differences and similarities between the findings from our 2011 survey and thefindings from our 2010 survey: 2011 201069% believe India is heading in the right direction 64% believe India is heading in the right direction56% believe that India will become the most important 50% believe that India will become the most importantglobal power in 20 years global power in 20 yearsSector perceived as having the highest growth potential: Sector perceived as having the highest growth potential:Communication and IT (46%) Banking and Financial (49%)67% think that the government is doing a good job in 63% think that the government is doing a good job inmaking India business friendly making India business friendly29% consult a family member or friend when making an 42% consult a family member or friend when making animportant business decision important business decision55% of entrepreneurs have been pressured to pay a bribe 44% of entrepreneurs have been pressured to pay a bribe60% of entrepreneurs believe people can be trusted 54% of entrepreneurs believe people can be trusted78% think that people in India can get ahead financially 74% think that people in India can get ahead financiallyby working hard by working hard49% believe India is “much" more welcoming of 49% believe India is “much" more welcoming ofentrepreneurs than 10 years ago entrepreneurs than 10 years ago65% cite corruption as a serious problem for business 63% cite corruption as a serious problem for businessEntrepreneurs with 500+ employees who say “Jugaad” is Entrepreneurs with 500+ employees who say “Jugaad” isvery important: 48% very important: 61%31% think their local/regional governments need to 17% think their local/regional governments need toreduce the time and costs associated with enforcing reduce the time and costs associated with enforcingcontracts contracts80% believe that corruption has got worse over the last 74% believe that corruption has got worse of over thefew years last few years51% think access to finance is the most important factor 43% think access to finance is the most important factorin helping an entrepreneur succeed in helping an entrepreneur succeed30% think cleaning up corruption is an important factor 30% think cleaning up corruption is an important factorfor Indias future economic growth for Indias future economic growth47% believe the Indian public place a lot of value on 35% believe the Indian public place a lot of value onentrepreneurship entrepreneurship17% cite family as their initial source of start-up capital 39% cite family as their initial source of start-up capital65% indicate that the social impact is the main 61% indicate that the social impact is the mainmotivation of their work motivation of their work8% think school/university is where others gain their 6% think school/university is where others gain theirdesire to become entrepreneurs desire to become entrepreneurs75% think their state is a good place for entrepreneurs 71% think their state is a good place for entrepreneurs toto succeed succeed86% believe India will be in a stronger economic position 84% believe India will be in a stronger economic positionin five years time in five years time THE 2011 LEGATUM INSTITUTE SURVEY OF ENTREPRENEURS: INDIA Page 25
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