DNA Money Edit: Start-ups and employment generation in India

While the infant mortality rate among start-ups in the country is increasingly high, they are contributing their might to light up the employment scenario. IT veteran and former Infosys director TV Mohandas Pai said India has about 30,000 start-ups currently employing about 3.5-4 lakh people. What is more, 5,000-plus such ventures keep sprouting every year. He predicts that there will be 1 lakh active start-ups in India by 2025 that employ about 32 lakh people. Start-ups received about $13.65 billion funding last year, which have steadily built about $95 billion in value, according to him.

On the flipside, the failure of start-ups continues to be an enigma. According to Pai, 60% of them may fail owing to various factors. Market dynamics are changing so fast making it difficult for start-ups to keep their strategies and business plans agile. They may be constrained to show the profit within a finite period if additional funding is to be sought.

While some start-ups bank heavily on the quickly changing government policies, a given recipe for disaster, some ideas are well ahead of their time. While most startups bootstrap their initial phase before they are able to raise funds, increase in expenditure subsequently could raise a question mark on their survival. If the government can hand-hold them and reduce the mortality rate, it will give a big boost to the employment scene in the country.