"Punjab's Indigenous Start-ups: A Solution to Unemployment Among Youth in the State"

"Innovation, Job Creation, and Economic Growth: The Case for Start-ups in Punjab"

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Introduction: Unemployment among the Punjab Youth 

Unemployment is a major problem in India, especially among the youth. Punjab is no exception, with its youth facing a veritable drought of suitable employment opportunities. While agriculture has been the backbone of the state’s economy, it has reached a saturation point, unable to provide employment to the educated youth. There are no large industries in the state to absorb the skilled workforce, leaving them with no option but to seek employment elsewhere in India or abroad. The state’s education system is unable to cater to the industry needs and requirements, making it difficult for the youth to find meaningful employment in the organised sector. In this scenario, the promotion of indigenous start-ups by the youth could provide an effective and efficient solution to the unemployment problem and emerge as an engine of socio-economic development in Punjab.

According to the Periodic Labour Force Survey (PLFS) conducted by the National Sample Survey Office (NSSO), the unemployment rate in Punjab for the age group of 15–29 years was 16.1% in 2017–18, compared to the national average of 13.2%. This points to the gravity of the situation in the state. In addition, the Gross Enrolment Ratio (GER) in higher education in Punjab was 27.4% in 2018–19, compared to the national average of 26.3%, indicating that more youth are entering higher education but proportionate numbers are unable to find employment opportunities commensurate with their skills and qualifications.

Indigenous start-ups as a possible solution

 The promotion of start-ups by the youth could provide an ingenious and elegant solution to the unemployment problem in Punjab. A multi-pronged approach is, however, required to achieve this objective.

The first step would be to catch the youth when they are in the final year of their education. This would enable them to start working on their business ideas while they are still in college or university. The start-up need not necessarily be in the high-tech or IT sector, but could be in any niche of the organised sector that has potential for growth.

Seed capital is an important aspect of starting a business. The youth can find their own co-promoters while in college or university. This would enable them to pool their resources, pick partners with complementary skills and start the business with a small amount of capital. However, it is important to protect the new-age technically-oriented promoters from signing disadvantageous agreements with angel investors or venture capitalists (VCs). Many a time, start-ups lose their autonomy and control over their business due to such unfair, if not iniquitous, agreements. The youth need to be both educated and counselled in this aspect of starting a business.

The role of the State Government in promoting start-ups should be limited to being a facilitator. The government could provide assistance in terms of simplifying approvals or providing regulatory concessions or relaxations, if so required. The role of banks in providing debt to start-ups needs to be assessed very carefully. Start-ups need to be cautious about taking on debt and need to ensure that they have a viable business model and adequate equity before taking loans.

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Colleges and universities can play a very significant role in promoting start-ups among the youth. They could set up entrepreneurship cells to identify and nurture start-up ideas. They could also provide a network of mentors as well as institutional mentorship to the youth, connecting them with established entrepreneurs and professionals who have preferably some links with Punjab. This would provide the youth with an opportunity to learn from experienced founders who have made it big in the business world.

The Punjabi diaspora could also play a significant role in promoting start-ups in Punjab. They could provide funding and technical know-how on commercial terms, apart from guiding them to obtain access the lucrative overseas markets. Providing mentorship and guidance to the Punjabi youth is another area where they could meaningfully contribute. The diaspora could also act as a link between Punjab and other countries, providing a platform for start-ups to reach a global audience.

One of the biggest challenges in promoting start-ups among the youth in Punjab is the lack of a flagship organization or a comprehensive institutional framework that encourages start-ups. There is a need to create a Y-Combinator like organization that can provide mentorship, funding, and networking opportunities to the start-ups. It could also act as the nodal agency to educate the young, promising entrepreneurs in the various aspects of starting a business, including the legal, financial and marketing aspects. Such an organization can be set up in Mohali or Ludhiana and can act as a hub for promoting start-ups in the region.

Coordination is another critical factor in promoting start-ups among the youth in Punjab. There is a need for an unofficial policy champion who can engage and lobby with the government for concessions and simplification of approvals, if required. The champion can coordinate the efforts of various stakeholders such as colleges, universities, mentors, and the Punjabi diaspora to create a robust ecosystem for start-ups in Punjab.

Comparison of this approach with wooing big industries

Promoting start-ups among the youth in Punjab has several advantages over granting huge concessions to attract investment in large industries. Firstly, promoting start-ups is a sustainable solution that empowers the youth to create jobs for themselves and others. In contrast, large industries may create a significant number of jobs initially but are often dependent on external factors such as government policies, market conditions, and technological advancements. They may also face challenges such as labor unrest, environmental concerns, and resource depletion.

Secondly, promoting start-ups has a multiplier effect on the local economy. Start-ups create jobs not just for themselves but also for the supporting industries such as logistics, technology, and marketing. In contrast, large industries may have limited impact on the local economy as they often source inputs from outside the region and may not generate significant demand for local services.

Thirdly, promoting start-ups encourages innovation and entrepreneurship, which are essential for economic growth and development. Start-ups often operate in niche areas and bring new products, services, and business models to the market. They also have a high potential for scalability and can become significant contributors to the national economy over time. In contrast, large industries may not always encourage innovation and may operate in established markets with limited scope for growth and differentiation.

Synergy with the PM’s vision of “Start-up India”

Promoting start-ups among the youth in Punjab dovetails well with the Prime Minister’s vision and schemes of “Startup India” and “Digital India,” which aim to create a supportive ecosystem for start-ups and promote digital innovation across the country. By encouraging the youth to become entrepreneurs and providing them with seed capital, mentorship, and access to technology, the “Startup India” and “Digital India” initiatives can help create a vibrant start-up ecosystem in Punjab and other states as well. The schemes can also provide the necessary regulatory and policy framework to encourage entrepreneurship, and help connect start-ups with investors and customers through online platforms. By aligning with the larger national vision, promoting start-ups among the youth in Punjab can become a vital component of India’s economic growth and development.

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Challenges and Pitfalls

The model of promoting start-ups by the youth in Punjab can be replicated in other states as well. However, there are several challenges and pitfalls that need to be avoided. One of the biggest challenges is the lack of a supportive ecosystem for start-ups. There is a need to create an ecosystem that provides access to funding, mentorship, and networking opportunities to the start-ups. Marshalling the parental support is also very important in our socio-economic milieu, where salaried employment and job security are generally valued over entrepreneurial ventures. In addition, there is a need to address the regulatory challenges involved in starting a business in India, especially in the domain of Income Tax and GST. Another challenge is the lack of awareness and education about entrepreneurship among the youth. This can be done through various means such as workshops, seminars, and awareness campaigns. Though there’s no wishing away these challenges, with coherent efforts and policies, none of them is insurmountable.

Summing up

In conclusion, promoting start-ups among the youth in Punjab is arguably an essential ingredient of any policy prescription to address the problem of unemployment. It requires a multi-pronged approach that addresses various challenges involved in promoting start-ups. The State Government, colleges, universities, mentors, and the Punjabi diaspora all have a crucial role to play in creating a supportive ecosystem for start-ups in Punjab. With the right support and infrastructure, indigenous start-ups can become a solution to the problem of unemployment among the youth in Punjab, and a model for other states to follow.

There’s just one-word magic mantra at this stage: START!

Are you willing to be that “policy champion” for Punjab start-ups?

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The author superannuated as Special Chief Secretary, Punjab in July, 2021, after nearly 37 years of service in the IAS.

KBS Sidhu, ex-IAS

He can be reached on kbs.sidhu@gmail.com