- Entrepreneurship plays very important role in economic development and subsequent emplsoyment growth.
- Hence, it represents a key focus area for many policy
- Entrepreneurs are seen as agents of change that accelerate innovation in the economy.
- India has the 3rd largest entrepreneurship ecosystem in the
- Number of new firms in the formal sector grew at a cumulative annual growth rate of 3.8% from 2006-2014, the growth rate from 2014 to 2018 has been 2%.
- As a result, from about 70,000 new firms created in 2014, the number has grown to about 1,24,000 new firms in 2018.
ENTREPRENEURSHIP AND GDP
- The entrepreneurial activity is related to economic growth.
- Entrepreneurial activity has a significant positive impact on
- Though the peninsular states dominate entry of new firms, entrepreneurship is dispersed across India and is not restricted just to a few metropolitan cities.
- Entrepreneurial capabilities in the Agriculture sector are distributed evenly across most districts in India.
- Entrepreneurial activity in the Manufacturing sector is highest in the regions of Gujarat, Meghalaya, Puducherry, Punjab and Rajasthan.
- Further, states classified in the Economic survey 2018-19 as states with inflexible labour laws such as West Bengal, Assam, Jharkhand, Kerala and Bihar were classified in the lowest quintiles of entrepreneurial activity
- Entrepreneurial activity in the Services sector is highest in the regions of Delhi, Mizoram, Uttar Pradesh, Kerala, Andaman and Nicobar, and Haryana.
- Entrepreneurial activity in the Infrastructure sector is highest in the states of Jharkhand, Arunachal Pradesh, Himachal Pradesh, Mizoram, Jammu and Kashmir and Bihar.
DETERMINANTS OF ENTREPRENEURIAL ACTIVITY
- The focus is on two key sets of district-level attributes that drive the level of entrepreneurial activity in the district –
- Social Infrastructure.
- Physical infrastructure.
- It largely relate to the general education levels in the district.
- Higher education levels in a district enable the development of better human capital that relates to increased supply of ideas and entrepreneurs.
- Higher education also increases the supply of talent available to entrepreneurs for managing & growing their companies.
- Thus, districts with better education levels will have higher entrepreneurial activity.
- Physical infrastructure include- Access to basic physical infrastructure in the district.
- As well as physical connectivity.
- The access to physical infrastructure in a district is measured using the proportion of villages in a district that is connected by tar roads.
- Physical connectivity is measured as the mean distance from a population centre that has at least 500,000 people.
SUGGESTION FOR MORE ENTREPRENEURIAL ACTIVITY
- Increase the literacy levels rapidly through the institution of more schools and colleges.
- Better connectivity of villages through tar roads. But first priority should be education.
- Policies that foster ease of doing business and flexible labour