Chapter 2- Entrepreneurship – Economic Survey 2020 Analysis

Entrepreneurship and Wealth Creation at the Grassroots


C1:    Entrepreneurship intensity is the new firms registered per year per 1000 workers. It was    just 0.10 which is very low for the manufacturing sector. But in the case of service sector there is comparative advantage.

F1: A 10% increase in the registration of new firms per district yields a 1.8%  increase in GDP.

F2: Entrepreneur activity are more evenly balanced in agriculture sector in comparison to other sector

Conclusion:   Emphasis has to be on new firm creation.


C2:    More liberal laws means more number of form creation and more number of manufacturing firms formed.

Example Rajasthan Labour law reforms. Salient features of Rajasthan labour law reforms are as follows:

  • The cost of formation of union was increased by increasing the minimum membership requirement to form a union to 30% of the total work force. Earlier the requirement was 15%.
  • No Prior approval for shutdown a firm employing upto 300 workers. Earlier the figure was 100.
  • A worker can also object to wrongful termination only within a period of three years.


C3:    Higher education enables high chances of entrepreneur activity. Knowledge economy foundation lies on the supply of ideas. US is perfect example even our IT prowess is an example of it. ( Growing rate of start up based on ICT )


C4:    Better Physical infrastructure lead to better chances of growing entrepreneurial activity. But the impact of Physical infrastructure is realised to a point only. Beyond that point hyper competition discourage entrepreneurship.


C5:    High literacy rate also ensure high rate of entrepreneurial activity.


F3:    Number of firms in the formal sector grew at a cumulative annual growth rate of 3.8% from 2006-2014. The growth rate from 2014-2019 has been 12.2%. using the World Bank’s Data on Entrepreneurship, this chapter confirms that Indiaranks third in number of new firms created.

F4:    Privatization of engineering colleges helped to spur the IT growth in India.


C6:    How to improve entrepreneurial activity:

  • Emphasis on new firm creation especially manufacturing units at district level.
  • Focus on literacy and education.
  • More investment in Physical infrastructure.
  • Labour reforms: especially do away with the old labour laws.
  • More investment in Higher education.


C–à Concepts

F—> Facts.


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