To foster inclusive economic growth India needs to ensure that atleast 25% of entrepreneurs are women by 2025.
What is the current business scenario in India?
More than 20,000 start-ups in India have emerged as the second largest start-up ecosystem in the world.
It is expected to grow at 10-12 per cent year-on-year.
India jumped 50 places in the overall ‘Ease of Doing Business’ rankings and ranks one among the top 100 countries to do business.
India has developed a vibrant entrepreneurial landscape aided by several progressive initiatives and measures instituted by the government.
The government initiatives including Stand-Up India, MUDRA, and NITI Aayog’s recent Women Entrepreneurship Platform (WEP) are steps in the right direction.
Several women-led leadership and mentorship programs such as empoWer, SAHA Fund and Sonder Connect are also gaining traction in India.
How is the role of women in Indian economy?
Women comprise over 48 per cent of the country’s population, it is impossible to think of economic growth without women as the fundamental drivers of change.
It is projected that by 2025, India’s GDP will get an additional boost of 16 per cent, by integrating women into the workforce.
Innovations by Indian women are actively reshaping engineering, technology, design, handicrafts, weaving, shoe-making, agriculture, organic farming and other cultural and creative industries.
The recent World Economic Forum meeting at Davos adds to the notion of the new age women entrepreneur, putting out a call to bring up an equal number of women, in the labour force.
This equalisation can enhance the Gross Domestic Product of a developing country like India by over 27 per cent.
What are the challenges faced by Indian women entrepreneurs?
According to the Sixth Economic Census by the National Sample Survey Organisation (NSSO), only 14 per cent businesses in India are run by women.
It is estimated that over 90 per cent of finance requirement for women entrepreneurs is met through informal channels since they are unable to source formal, collateral free and transparent financing for their enterprises.
Apart from this cultural and gender bias were amongst the major hindrances for women business owners in India.
How can India achieve inclusive economic growth?
India must adopt Progressive policies.
To achieve inclusive and equitable socio-economic growth, India has to ensure that at least 25 per cent of entrepreneurs in the country are women by 2025.
There is an urgent need to create an enabling environment for women to pursue their entrepreneurial aspirations through progressive policies.
India must focus on establishing basic and necessary infrastructure, such as women-centric incubator and, increasing investment opportunities.
There should be financial accessibility.
Access to new age alternate funding for women entrepreneurs such as women specific venture funds and crowd funding is important for encouraging their growth.
India must encourage women to invest in other female-led companies to balance gender disparity, co-creating both mentorship and networking platforms.
India should focus on Improving Skill sets.
With emerging technologies such as Blockchain Technology, Artificial Intelligence (A.I) and Internet of Things (IoT), it is of vital importance that the skill set of women be expanded to match the current market trends.
SEBI’s Regulatory Clauses For Acquisition Of Business
G.S. Paper 2
Why in news?
SEBI’s regulatory clauses for acquisition of business are being repeatedly waivered for government deals.
This could erode the credibility of SEBI and also affect investor sentiment.
What is the regulation by SEBI for takeovers?
The central government has recently sealed a series of deals involving listed Public Sector Companies (PSCs), where it has given up its majority stake.
These have precipitated a change in management, and were carried out to meet disinvestment targets and free up budgetary resources.
Whenever there is a stake sale that results in a “change in management” of a listed entity, the acquirer entity will have to follow “SEBI’s Takeover Code”.
The SEBI code states that “the acquirer must make an open offer to public shareholders of the entity, to give them a fair exit”.
In this context, the centre has been actively lobbying for its deals to be exempted from these requirements.
What are the recent takeovers that have been exempted?
In 2017, ONGC was persuaded to buy Centre’s 51.1% equity in HPCL for over Rs. 36,000 crore in order to meet the shortfall in disinvestment proceeds.
Discussions are now on to offload the government’s 73.4% stake in listed “Dredging Corporation of India” to three central Port Trusts.
The centre had managed to secured exemptions from “SEBI’s Takeover Code” for both the above mentioned deals.
These are clear cases of a change in management control for the listed companies, with the equity stake changing hands well above 25%.
Therefore, it is unclear on what grounds the acquirers have been exempted from open offer requirements.
Further, exemption has also been sought for LIC’s proposed acquisition of IDBI Bank, but the case is yet to be decided by the SEBI.
Do the exemptions stand up to scrutiny?
The government’s argument is that as the sale is to ‘government’ entities, there is no trigger for an open offer.
But this argument is hollow, as the Centre showcases the very same deals as successes of its public sector ‘disinvestment’ programme.
SEBI is indeed empowered to grant open offer exemptions in special cases to safeguard the interests of minority investors in securities markets.
But in the above cases, interests of investors in the acquired firms are best served by insisting on open offers rather than waiving them.
Further, in the LIC-IDBI case, the whole objective of the deal is to anoint LIC as the new ‘promoter’ to infuse necessary capital into the ailing bank.
Hence, exempting that deal from open offers would be a sham.
What are the challenges?
The multiple instances of securities market laws being bent for the government, reflect poorly both on the Centre and the markets regulator.
The government is also proving to be a poor role model on corporate governance for the promoters of India Inc.
The government needs to recognise that it is repeatedly mistreating market investors in listed PSUs, by seeking exemptions from SEBI.
Meting out high-handed treatment to shareholders can put them off government-owned entities and thereby starve PSUs of funds for development.
Notably, given the persisting budgetary constraints, Centre will have to lean heavily on market investors in the next few years for capital investments.