ED

1. Factors affecting entrepreneurial growth in
India
• Development of a nation depends on the development of
entrepreneurship. Emergence & development of entrepreneurship is
not a spontaneous phenomenon. It depends on several economic,
social, political & psychological factors which are often regarded as
supporting conditions to entrepreneurship growth.
• These conditions may have both positive & negative influence on the
emergence & growth of entrepreneurship.
• Positive influence promotes entrepreneurship
• Negative influence inhibit entrepreneurship

3. 1. Economic Factors
• Lack of adequate infrastructure facilities
• Non-availability of capital
• Lack of good quality cheap labor
• Lack of good quality cheap raw materials

4. Lack of adequate infrastructure facilities
• Successful implementation of an enterprise requires various
infrastructural facilities like, transportation, communication,
power supply, technical knowledge, irrigation facilities etc.
• These facilities help the entrepreneur improve his efficiency &
reduce the cost of production.
• Developing country like India lack these facilities, & the
entrepreneur has to obtain them at his own expense. This
greatly affects his profit margin & discourages him.
• It is not possible for entrepreneur to set up his own railway
line or power project & then indulge in entrepreneurship

5. Non-availability of capital
• Maximization of production & minimization of cost are twin objective of all
inventions.
• Huge amounts of capital is needed for conducting research & development
activities.
• Capital is needed for purchasing machinery & equipments, to adopt latest
innovations, to import raw materials and also to meet working capital
requirements.
• The rate of interest charged by banks on loans & the rate of domestic
savings affect the capital requirements of an entrepreneur.
• Non-availability of adequate capital & the low rate of domestic savings
prevent the development of entrepreneurship in India.

6. Lack of good quality cheap labor
• Easy availability of right type of workers also effect entrepreneurship.
The quality rather than quantity of labor influences the emergence
and growth of entrepreneurship. The problem of labor immobility can
be solved by providing infrastructural facilities including efficient
transportation.
• Need cheap quality labor

7. Centralization of Economic Power
• Dominance by few industrialists on most of the industries in India
implies that small entrepreneurs do not get the opportunity to get
ahead. The big industrialist is capable of molding the government
policies and rules in their favor.
• These big industrialists run their industrial empire, parallel to the
government, and as a result, the government is also unable to have
the adequate industrial development of the country.
• The centralization of economic power in the hands of a few big
Industrialist has also resulted in slow entrepreneurship growth in
India.

8. Low Expenditure on Research and Development
• The government and private entrepreneurs incur expenditure on
research and development activities.
• The entrepreneurs regard expenditure on research and investigation
is unnecessary.
• As a result, innovations do not get encouragement. The Indian
entrepreneurs incur expenditure on research and development only
for strategy formation for competitions, whereas expenditure
incurred on research and development is a long-term investment in
the real sense.

9. Insufficient Government Facilities and Incentives
• In India, the development of infrastructural facilities is quite
inadequate.
• In backward areas, the entrepreneurs are unable to establish
Industries because sufficient incentives are not being provided by the
government to the entrepreneurs in the form of allotment of suitable
land, sources of energy and other required infrastructural facilities.

10. Social factors
1. Social Factors
1. Caste Factor
2. Family Background
3. Education
4. Attitude of the Society
5. Cultural Value

11. Caste Factor
• There are certain cultural practices and values in every society which influence
the’ actions of individuals. These practices and value have evolved over hundred
of years. For instance, consider the caste system (the varna system) among the
Hindus in India. It has divided the population on the basis of caste into four
division. The Brahmana (priest), the Kshatriya (warrior), the Vaishya (trade) and
the Shudra (artisan): It has also defined limits to the social mobility of individuals.
• By social mobility’ we mean the freedom to move from one caste to another.
• The caste system does not permit an individual who is born a Shudra to move to a
higher caste. Thus, commercial activities were the monopoly of the Vaishyas.
Members of the three other Hindu Varnas did not become interested in trade and
commence, even when India had extensive commercial inter-relations with many
foreign countries. Dominance of certain ethnical groups in entrepreneurship is a
global phenomenon

12. Family Background
• This factor includes size of family, type of family and economic status
of family.
• Muslim families -> More into business
Education
• In any society, the system of education has a significant role to play in inculcating entrepreneurial
values.
In India, the system of education prior to the 20th century was based on religion. In this rigid
system, critical and questioning attitudes towards society were discouraged. The caste system and
the resultant occupational structure were reinforced by such education. It promoted the idea that
business is not a respectable occupation

13. • Later, when the British came to our country, they introduced an
education system, just to produce clerks and accountants for the East
India Company, The base of such a system, as you can well see, is very
anti-entrepreneurial.
• Our educational methods have not changed much even today. The
emphasis is till on preparing students for standard jobs, rather than
marking them capable enough to stand on their feet.

14. Attitude of the Society
• Certain societies encourage innovations and novelties, and thus
approve entrepreneurs’ actions and rewards like profits.
• Certain others do not tolerate changes and in such circumstances,
entrepreneurship cannot take root and grow.
• Similarly, some societies have an inherent dislike for any money-
making activity.

15. Cultural Value
• If the culture is economically or monetarily oriented,
entrepreneurship would be applauded and praised; wealth
accumulation as a way of life would be appreciated. In the developing
countries like India, people are not economically motivated.
Monetary incentives have relatively less attraction.

16. Other factors
• Bureaucracy and Redtapism
• Besides the fact that Government of India has been provided providing very
few facilities to the entrepreneur, another fact is that due to the prevalence of
Bureaucracy and red-tapism, even these facilities have benefited very few
entrepreneurs.
• Several times, the entrepreneur runs away, rather than obtaining these
facilities, on account of lots of formalities.
• Lack of Education Training Facilities
• Education and training facilities relating to entrepreneurship skill lack in India.