Entrepreneurship as a strategy to fuel productivity growth and wealth creation. India ranks third in number of new firms created, as per the World Bank. New firm creation in India increased dramatically since 2014:

• 12.2 % cumulative annual growth rate of new firms in the formal sector during 2014-18, compared to 3.8 % during 2006-2014.
• About 1.24 lakh new firms created in 2018, an increase of about 80 % from about 70,000 in 2014.

Survey examines the content and drivers of entrepreneurial activity at the bottom of the administrative pyramid – over 500 districts in India. New firm creation in services is significantly higher than that in manufacturing, infrastructure or agriculture. Survey notes that grassroots entrepreneurship is not just driven by necessity.

• A 10 percent increase in registration of new firms in a district yields a 1.8 % increase in Gross Domestic District Product (GDDP).
• Entrepreneurship at district level has a significant impact on wealth creation at the grassroots.
• Birth of new firms in India is heterogeneous and dispersed across districts and sectors.

Literacy and education in a district foster local entrepreneurship significantly:

• Impact is most pronounced when literacy is above 70 per cent.
• New firm formation is the lowest in eastern India with lowest literacy rate (59.6 % as per 2011 Census).

Physical infrastructure quality in the district influences new firm creation significantly. Ease of Doing Business and flexible labour regulation enable new firm creation, especially in the manufacturing sector. Survey suggests enhancing ease of doing business and implementing flexible labour laws can create maximum jobs in districts and thereby in the states.

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