Economic Survey 2020: India ranked third in entrepreneurship

News:The Economic Survey has a chapter on “Entrepreneurship and Wealth Creation at the Grassroots”.

Facts:

Key Highlights:

  • As per World Bank,India ranks third globally in the number of new firms created with about 1.24 lakh new entities coming up in 2018.
  • New firm creation in India increased dramatically since 2014 as there was a 12.2 % cumulative annual growth rate of new firms in the formal sector during 2014-18 compared to 3.8 % during 2006-2014.
  • However,a large number of India’s enterprises operate in the informal economy which was not captured in the data.
  • New firm creation in the services sector is significantly higher than that in manufacturing, infrastructure or agriculture.
  • A 10 percent increase in registration of new firms in a district yields a 1.8 % increase in Gross Domestic District Product(GDDP).
  • The overall Entrepreneurial activity is highest in Delhi, Mizoram, Uttar Pradesh, Kerala, Andaman & Nicobar Islands, and Haryana. 
  • The survey also endorses literacy and education as a criteria in fostering local entrepreneurship.
  • For instance,the eastern part of India has the lowest literacy rate of about 59.6% according to the census of 2011.This is also the region in which new firm formation is the lowest. 

Suggestions:

  • Enchanting ease of doing business and implementing flexible labour laws in job-creating sectors can create the maximum number of jobs in districts and thereby in the States. 
  • Literacy, education and physical infrastructure can also foster entrepreneurship and thereby leads to job and wealth creation.
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