SME Times News Bureau | 31 Jan, 2020
The Economic Survey 2019-20 called for supporting policies
for the manufacturing sector, at a time when the creation of new firms in the
services sector is "significantly" higher currently than in the
manufacturing, infrastructure and agriculture sectors.
The survey which reflects the economic health of the country
said policies that foster ease of doing business and flexible labour regulation
should be undertaken, especially in the manufacturing sector, said the Survey.
As the manufacturing sector has the potential to create the maximum jobs,
states must focus on enabling ease of doing business and flexible labour
regulation to foster job creation.
The survey tabled by Finance Minister Nirmala Sitharaman in
Parliament on Friday said new firm creation has gone up since 2014. It shows
that the growth is particularly pronounced for the services sector. "This
fact reflects India's new economic structure, i.e. comparative advantage in the
services sector," it said.
Referring to the World Bank's Data on Entrepreneurship, the survey said India
ranks third in number of new firms created. While the number of new firms in
the formal sector grew at a compounded annual growth rate of 3.8 per cent from
2006-2014, the growth rate from 2014 to 2018 has been 12.2 per cent, said the
Economic Survey.
"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," it said.
The Survey also noted the fact that entrepreneurial activity is related to
economic growth.
Suggesting measures to increase entrepreneurial activities in the country, the
pre-Budget survey has said the government needs to focus on increasing the
literacy rate and policies for ease of doing business. It also suggested that
better connectivity of villages through tarred roads would improve access to
local markets and improve entrepreneurial activity.
"Measures to increase the literacy levels rapidly through the institution
of more schools and colleges will spur entrepreneurship and consequently local
wealth creation," the survey said.
Literacy and education in the district level foster local entrepreneurship
significantly as per the Economic Survey. It said the eastern part of India has
the lowest literacy rate of about 59.6 per cent according to the census of 2011
and it is also the region in which new firm formation is the lowest.
It also advocated privatisation of education in line with privatisation of
engineering colleges in the country for enhancement of education capacity.
"Following the successful contribution of privatisation of engineering
colleges to India's software exports, governments could also explore the
privatisation of education to augment education capacity at all levels of
education."
The survey which reflects the economic health of the country said policies that
foster ease of doing business and flexible labour regulation should be
undertaken, especially in the manufacturing sector.
As the manufacturing sector has the potential to create the maximum jobs,
states must focus on enabling ease of doing business and flexible labour
regulation to foster job creation.