Economic Survey 2020: New Businesses on a Rise
As per World Bank data, India ranks third in the number of new firms created
The bottom-of-the-pyramid entrepreneurship in India has seen a significant growth in the recent years, as per the Economic Survey for 2019-2020. Referring to data from the World Bank, the Survey says that the number of new firms in the formal sector has grown by a significant 12.2 per cent between 2014 and 2018, compared to a meager growth of 3.8 per cent from 2006-2014.
“As a result, from about 70,000 new firms created in 2014, the number has grown by about 80 per cent to about 1,24,000 new firms in 2018,” the survey read.
Due to this dramatic growth in new firms, India ranks third in the number of new firms created, as per the same World Bank data. That said, the mean number of new firms registered per year per 1000 workers in India between 2006 and 2016 was only 0.10, which is quite less compared to developed economies like UK (12.22) and US (12.12).
Most Firms Created in Services Sector
The Ministry of Corporate Affairs (MCA)-21 database shows that new firms created in services sector was much higher compared with manufacturing, agriculture and infrastructure.
More importantly, the Survey highlights that literacy and education in a particular district influences entrepreneurial activities in that region. “The eastern part of India has the lowest literacy rate of about 59.6 per cent according to the census of 2011. This is also the region in which formal entrepreneurial activity is the lowest,” the report states.
District wise data shows that entrepreneurial activities in different sectors was largely concentrated in different regions. For instance, the services sector saw highest activities in Delhi, Mizoram, Uttar Pradesh, Kerala and Andaman and Nicobar. Infrastructure sector activities were present most in Jharkhand, Himachal Pradesh, Bihar, Jammu and Kashmir, Arunachal Pradesh and Mizoram, whereas manufacturing services was dominant in Gujarat, Meghalaya, Puducherry, Punjab and Rajasthan.