View: Padman can be a role model for solving India’s huge job crisis

Why was Britain so successful in harnessing the (first) Industrial Revolution to become the most prosperous nation? Why was America then able to use the second Industrial Revolution to catapult its way to the top? The answer, according to Nobel laureate Edmund Phelps and author of ‘Mass Flourishing: How Grassroots Innovation Created Jobs’, is that in both countries, prosperity was not driven by just a few visionary entrepreneurs like Henry Ford or Bill Gates.

Rather prosperity was the result of many innovations small and large driven by millions of people empowered to develop and market innumerable new products. Even people with few skills and humble means were allowed to use their minds to solve problems and think of new ways to do things. As more and more people started tinkering, as pioneering entrepreneurs multiplied, they ignited a mass entrepreneurial revolution that resulted in the economies taking off.

The evidence that invention and entrepreneurship were not elitist activities is compelling. Richard Arkwright, inventor of the water-driven spinning frame, was the illiterate son of a tailor. James Hargreaves, an illiterate weaver, came up with the multi-spool spinning machine. James Watt, the famous inventor of the steam engine, was the son of a shipwright and George Stephenson, who invented the locomotive, was illiterate.

In America, John Fitch, who developed the steamboat, was a farmer, while Isaac Singer of Singer Sewing machine fame was a barely-schooled tinkerer. Celebrated inventor Thomas Edison was from a humble family and self-educated. (So was Steve Jobs who was put up for adoption at birth and dropped out of school, although Phelps warns that America is becoming more unequal and elitist)

The idea that ordinary people, often without formal education, can solve many of their problems, sometimes creating a business is a powerful and empowering one. India’s humungous jobs crisis cannot be solved in any other way. Demographics dictate that we will have to find a way to productively engage the hearts, minds and hands of an additional 120-150 million young Indians over the next decade.

The formal sector is important but employs only 10% of all people today. Moreover, technology, competition and better methods are driving a massive wave of productivity improvement which means that growth will be capital-driven rather than employment-creating. The data already shows this.

The top five Indian IT companies grew 6-7% last year but net employment was marginally down. An efficient bank like HDFC grew well but still shed people as did engineering giant L&T. This is inevitable as companies relentlessly drive productivity improvements.Recognizing this, China embraced “mass entrepreneurship” as a policy in 2014; recently Premier Li Keqiang stated that since then, 14,000 new businesses have been registered per day, and this has accelerated to 16,000/day. Seventy percent of these businesses are apparently active and this has been responsible for creating employment for 10 million people last year.


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