{"id":143990,"date":"2021-10-29T20:19:31","date_gmt":"2021-10-29T14:49:31","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=143990"},"modified":"2021-10-29T20:19:31","modified_gmt":"2021-10-29T14:49:31","slug":"the-new-economic-scrabble","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/the-new-economic-scrabble\/","title":{"rendered":"The New Economic Scrabble"},"content":{"rendered":"\n

Synopsis:<\/strong> India\u2019s start-up ecosystem is radically breaking from its past in company valuations, unicorn numbers, funding round sizes, foreign interest, and growth.<\/p>\n

Introduction<\/strong><\/h5>\n

The three acts of entrepreneurship from five years ago \u2014 Jio, UPI, and GST have converged to accelerate startup ecosystem. This triad<\/strong> of private, nonprofit, and government courage demonstrates the economic upsides of a better balance between the three sectors.<\/p>\n

How economic development is like a game of scrabble?<\/strong><\/h5>\n

The Harvard economist Ricardo Hausmann suggests economic development is like a game of scrabble.<\/p>\n

Goods and services are made by stringing together productive capabilities such as inputs, technologies, and tasks just as words are made by putting letters together.<\/p>\n

Countries with a greater variety of capabilities can make more diverse and complex goods, just as a scrabble player who has more letters can generate more and longer words. If a country lacks a letter, it cannot make the words that use it.<\/p>\n

In Hausmann\u2019s framing, the government provides the vowels and the private sector provides the consonants.<\/p>\n

The 1955 Avadi resolution poisoned India\u2019s economic scrabble by restricting constants and shrinking the state\u2019s resources to provide vowels.<\/p>\n

How triad helped entrepreneurs?<\/strong><\/h5>\n

JIO:<\/strong> India\u2019s per GB internet data costs are just 3 per cent of those in the US. A bold and risky $35 billion bet made by a private company transformed Indians from being data deprived to data-rich.<\/p>\n

Increased consumption<\/strong>: it has jumped 15 times because costs fell by over 90 per cent.<\/p>\n

The addition of millions of consumers and smartphones<\/strong>: Jio\u2019s delightful five-year disruption of the market has exploded the most important universal metric in startup valuation.<\/p>\n

UPI is a public good<\/strong>: Google\u2019s letter to the US Federal Reserve suggesting America learn from India\u2019s Universal Payments Interface (UPI) run by the National Payment Corporation of India. UPI\u2019s mobile-first architecture is a key pillar of the paperless, presenceless, and cashless framework of the Aadhaar-seeded India Stack.<\/p>\n

UPI reduces friction and costs for entrepreneurs and consumers in low-value payments.<\/p>\n

GST:<\/strong> informality bred corruption and low-productivity enterprises with low-paying jobs, whose business model of regulatory arbitrage and tax evasion made formal enterprises noncompetitive. GST incentivised law-abiding supply and distribution chains.<\/p>\n

The doubling of indirect tax registered enterprises since GST creates a virtuous economic cycle of higher total factor productivity for enterprises and employees.<\/p>\n

How UPI, GST and JIO helped startups?<\/strong><\/h5>\n

India now has the highest ratio of unlisted to listed companies with a $1 billion valuation. Initial public offering documents filed by early startups like Nykaa, Paytm, Zomato and PolicyBazaar roughly average a 10x valuation rise since the triad went live.<\/p>\n

Estimates suggest India\u2019s startup ecosystem valuation will explode from $315 billion today to $1 trillion by 2025.<\/p>\n

What is the lesson of this economic scrabble?<\/strong><\/h5>\n

A government does more when it does less. In the post-1947 economic policy, consonants were restricted and vowels were misclassified or missing.<\/p>\n

The recent episode of Air India is the start of righting the historical wrong of misclassifying many private consonants as government vowels.<\/p>\n

What is the way forward?<\/strong><\/h5>\n

First<\/strong><\/em>, India needs a healthy balance between the state, entrepreneurs, and foreigners. The triad reinforces each element to drive inclusion and prosperity by enabling billions of people and millions of enterprises to do billions of sachet size transactions with low or no cost.<\/p>\n

Second<\/strong>,<\/em> Gandhiji\u2019s notion of democracy, where the weakest have the same opportunity as the strongest is only possible when entrepreneurs have all the consonants and vowels.<\/p>\n

Source:<\/strong> This post is based on the article \u201cThe New Economic Scrabble<\/strong>\u201d published in Indian Express<\/strong> on 29th October<\/strong> 2021.<\/p>\n","protected":false},"excerpt":{"rendered":"

Synopsis: India\u2019s start-up ecosystem is radically breaking from its past in company valuations, unicorn numbers, funding round sizes, foreign interest, and growth. Introduction The three acts of entrepreneurship from five years ago \u2014 Jio, UPI, and GST have converged to accelerate startup ecosystem. This triad of private, nonprofit, and government courage demonstrates the economic upsides… Continue reading The New Economic Scrabble<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216],"class_list":["post-143990","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704923871},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/143990","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=143990"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/143990\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=143990"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=143990"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=143990"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}