While the jury is still out over job creation in recent years, a survey has revealed that only 5 per cent of the country's population is able to establish their own business. The survey - Global Entrepreneurship Monitor (GEM) India Report 2016-17 - conducted by Gandhinagar-based Entrepreneurship Development Institute of India (EDI), says just eight per cent and 11 per cent of the country's adult population are engaged in 'early-stage entrepreneurial activities' and 'total early-stage entrepreneurial activities', respectively.
The GEM survey was conducted among 3,400 respondents aged between 18 and 64 years to assess the level of entrepreneurial activity. Other interesting findings of the report are: 4 per cent of the population accounts for "nascent entrepreneurs" actively engaged in setting up a business they will own or co-own; 7 per cent are owner-managers running for less than 3.5 years; and just 5 per cent of adults in India establish businesses that survive for 42 months, which is the lowest in the world.
This report includes results based on 64 world economies completing the Adult Population Survey (APS) (between the ages of 18 and 64 years) and 65 economies completing the National Expert Survey (NES).
Among the BRICS economies, Brazil has the highest rate of established business ownership (17 per cent) and South Africa has the lowest (3 per cent). China has a slightly higher rate of 8 per cent, while it is 5 per cent in both Russia and India, the report says. Of those engaged in Total Entrepreneurial Activity (TEA) in India, more than half have low-growth expectation, as they "did not intend to expand their employee base," the report says, adding that 44 per cent expect to hire 1-5 employees over the next five years and only 5 per cent plan to hire more than five employees.
At the same time, business discontinuation rate in India is among the highest in the world at 26.4 per cent, it says. Bureaucratic hurdles lead to business discontinuation in 1.3 per cent of cases. Seven per cent of businesses fail due to financial issues, 6.5 per cent due to personal reasons, 16.9 per cent because of the business turning unprofitable and 58.4 per cent due to other reasons.
Of those engaged in "TEA", an overwhelming 70.9 per cent are in wholesale and retail trade, 12.1 per cent in agriculture, mining, manufacturing and transportation, 9.3 per cent in health, education, government and social service, 4.5 per cent in ICT and finance, and 3.3 per cent in other sectors. The figures show a sharp decrease in early stage entrepreneurial activity in agriculture, which used to be predominant in the previous year at 42 per cent.
With inputs from PTI
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