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Economic Survey (2020) Chapter – 02 – Economics – Free PDF Download

 

INTRODUCTION

  • 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.

IMPORTANT FINDINGS

  • 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 –
  1. Social Infrastructure.
  2. Physical infrastructure.

SOCIAL 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

  • 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

 

 

 

Economic Survey | Free PDF