India has a surprisingly low number of enterprises for an economy its size. This is because it lacks a significant and well-functioning entrepreneurial ecosystem, a new study by strategic consultancy Gallup has found.
A Gallup poll found that only 16 per cent of adults (from a sample of 5,000) said they owned a business.
Even among those who said they ran a business, barely a fifth or so (22 per cent) had formally registered it.
This reluctance could well stem from the fear of an all-powerful government. As much as 46 per cent said the Government makes it hard to start a business.
Gallup listed lack of reliable support from honest and efficient government institutions as one of the four key factors resulting in low entrepreneurship levels.
To a degree, widespread corruption might cause low efficiency and high business start-up costs, the poll found. More than 70 per cent of respondents believed government corruption was widespread.
More than six in 10 agreed that corruption is widespread in business. This perception was particularly high among current business owners (72 per cent) and those planning to start a business in the next 12 months (80 per cent), it added.
Funding was another major issue. Gallup identified the problem as one of ‘too little diversified, localised funding at the initial stage.’
Less than one in three (29 per cent) aspiring entrepreneurs who plan to start their business in the next 12 months agree they have access to the money they need — down from 37 per cent in 2011.
Training and mentoring were also seen as another issue, particularly in rural areas. Only 22 per cent of aspiring entrepreneurs have access to formal or informal training to start a business, much lower than the Asian average of 44 per cent.
One other problem was finding trusted partners. Only 16 per cent of Indian adults say a non-relative can be a trusted business partner, the survey said.