2.84 million jobs, unicorns, smartphones and job creation

Even as India toasts its 100 unicorns for giving work to millionsit is important to recognize the role played by infrastructure development, in particular, low-cost data and the United Payments Interface (UPI)— by making it possible.

Within six years since Prime Minister Narendra Modi’s government introduced the Startup India initiativea combination of factors a helped some of the brightest minds in the country succeed in their journey to entrepreneurship.

Sustained government efforts to help the startup ecosystem have seen a dramatic increase in the number of startups recognized from 726 in FY 2017 to 66,359 in FY 2022 (as of March 21, 2022).

These startups, recognized by the Directorate for the Promotion of Industry and Internal Trade (DPIIT)under the Ministry of Trade and Industry, were responsible for job creation of over 7.07 lakh­. That’s a huge leap from the 48,000 recognized startups that employed nearly 5.50 lakh people through June 2021.

For their part, the 100 unicorns of India created on average 3,489 full-time jobs, as in the date. While 34 unicorns created less than 1,000 jobs—ranging from 100 to 854—the other 66 created 2.83 million out of 2.84 million jobs.

Among the 66 unicorns, the the top 10 take the lion’s share of 2.58 million jobsaccounting 90.5% of the total.

Whoawith 1.5 million drivers in its ecosystem and 12,000 employees on its reels, counts as 53% of total jobs created. This is followed by Zomatowho has 3.5 lakh delivery partners and 4,259 employeesrepresenting 12.4% total job creation. Flipkart (7.85 percent), Swiggy (7.19 percent), and Delhivery (3.10 percent) complete the top 5 unicorns in the job creation leaderboard.

But what really helped move the needle was the 2016 launch of the Unified Payment Interface (UPI)a brainchild of the National Democratic Alliance government led by Prime Minister Modi.

In a February 2021 report by UBS Securities Asiaanalysts pointed out that the Indian government launched the UPI-based system payment system without merchant discount rateor MDR.

The same report pointed out that the UPI in India was dealing 11 billion transactions with an annualized gross market value (GMV) of $373 billion in 2020, compared to $287 billion in 2019.

And the numbers have only increased since. As of March 29 this year, the National Payments Corporation of India (NPCI) recorded UPI transactions worth $1.09 trillion (or Rs 83.45 lakh crore) in the financial year 2022, surpassing by far the Rs 41 lakh crore reported in the financial year 2021.

Without a doubt, UPI has been a powerful catalyst for tech startups providing internet-based products and services to consumers beyond metropolitan cities.

Growing internet penetration has also helped Indian startups expand beyond metros and Tier I cities. Data from Telecom Regulatory Authority of India (TRAI) reveals that India has over 1.14 billion wireless telecommunications subscribers in March 2022. Of this number, urban subscribers were 624.23 millionand 517.86 million subscribers were from rural India.

Internet penetration has also been boosted by sustained government efforts to bring down the average cost of data, which stood at Rs 11.78 per GB in the year 2018compared to 226 rupees per GB in 2015, according to an August 2019 analytical report on wireless data service in India by TRAI. In 2020, the data cost further reduced to Rs 10.9 per GB.

Reduced data cost and cheaper smartphones enabled drivers and delivery partners to join the startup’s workforce in large numbers.

the job creation has had its own positive multiplier effect on poor households also. A research report based on a survey of Tata Institute of Social Sciences (TISS), Hyderabadentitled Understanding the Food Delivery Platform: Delivery People’s Perspective pointed out that there is not much difference in the average net income of Delivery Partners whether they work full-time or part-time.

While full-time delivery partners managed to generate a monthly income of 15,500 to 35,500 rupees per monththose who worked part-time managed to pull between 14,647 to 34,000 rupees per month.

To explore the question of dignity at work for delivery people, researchers from TISS Hyderabad asked delivery partners about how their families perceived their work. And, 56% of respondents gave a positive answer. Clearly, job creation for these households has great potential to lift them out of poverty and also improve their standard of living.

Going back to India’s 100 unicorns, these companies are clearly on the fast track with a combined valuation of $331 billion and cumulative fundraising of $62.9 billion since 2011. While 2021 saw a record 44 startups join the elite billion dollar valuation club, by 2022 we already have 15 new entrants to the coveted unicorn club so far.

And their numbers are only set to grow as venture capital firm Iron Pillar says India is on track to have more 250 unicorns by 2025.

The booming startup ecosystem, along with the growing number of unicorns, would only help PM Modi Aatmanirbhar Bharat ambitions.