the significance and role of entrepreneurship in economic

The Significance And Role Of Entrepreneurship

In Economic Development Of India.

Dr. Udita Dixit Assistant Professor,Department of Commerce, Sri Jai Narain Misra P.G.College, Lucknow, India.

Email :- [email protected]

ABSTRACT

Entrepreneurship can contribute an important role in enhancing the economic

development to one of the upcoming country of the world like India. Entrepreneurship

transforms the course of national economies, industries or market. One of the key goal of modern

economies is to ascertain factors that control the economic development. In fact,

entrepreneurship is the engine of economic growth and it has come to be deemed as a catalytic

agent for development and encouragement of productive activities in every aspect of economic

life of all over the world. The key objective of the article is to illuminate the significance and

role of entrepreneurship in economic development of India. The main aspects that have been

taken into consideration to realize the significance of entrepreneurship in India, inspiring factor

of entrepreneurship, future of entrepreneurship, role of entrepreneurship in economic

development of India.

Key words :- Entrepreneurship, Economic development, Modern economies.

INTRODUCTION

Entrepreneurship is one of the most significant factor in the economic development of a country.

It is a primary character of an entrepreneur. Entrepreneurship is the tendency of mind to take

voluntary risks with a self confidence to accomplish a pre-determined business or industrial goal.

It is the risk-taking potential of an individual, of course associated with accurate decision-

making. The capability to take risk autonomously and individually, with a vision to make profits

and grabbing an opportunity to earn more in the market oriented economy is the dominant trait of

modern entrepreneurship, enterprise, all set for the quest of business and responsive to profit by

way of producing and or marketing goods and commodities to fulfill the escalating and

diversifying actual and probable needs and demands of the customers, is what comprises

The International journal of analytical and experimental modal analysis

Volume XII, Issue VI, June/2020

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entrepreneurial stuff. This sort of compassion of creative citizens casts up a group of

entrepreneurs In emerging countries like India, new genre of entrepreneurs is required, because

here the economic progress is necessary along with social justice In India, Entrepreneurship

therefore has to fulfill the national objectives. There is an evident inconsistency between social

objectives and economic vitals. This variance has to be contemplated first by the individual

entrepreneur in his own intellect and make economic growth, which brings industrial

development as one of the tool of achieving the social objective. Thus a substance of

accountability is thus an important feature of budding entrepreneurship in India.

OBJECTIVES OF THE STUDY

1. To study the future of Indian entrepreneurship.

2. To analyse the relationship between entrepreneurship and economic development..

3. To elucidate the role entrepreneurship in economic development of India

METHODOLOGY OF THE STUDY

The data and information has been collected from secondary sources like magazines,

business newspapers, journals, periodicals, reports, text books and websites.

NATURE AND DEVELOPMENT OF ENTRENEURSHIP

Entrepreneurs have performed a significant role in the economic growth of the developed

nations. In the developing countries, the people are also getting more and more conscious of the

importance of entrepreneurial development. Now a days people have began to appreciate that to

achieve the objective of economic development it is essential to enhance entrepreneurship both

qualitatively as well as quantitatively in the country. It is accomplished only through keen

entrepreneurs who fully discover the capabilities of the country’s available resources, labour,

technology and capital. Schumpeter, visualized the entrepreneurs as the key figure in economic

development because of his role in introducing innovations. Peter Drucker, has aptly described

the relationship between an ‘ entrepreneur & changes’ . He says “ Entrepreneur see changes as

norms & as healthy. Usually, they do not bring about the changes themselves. But the

entrepreneur always searches for change responds to it and exploits it as an opportunity”.



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David McClelland has established a new aspect to the significance of entrepreneurship in

economic development. He states that the development of entrepreneurship directly related to

human motivation to achieve or need of achievement. McClelland’s theory is that society with a

generally high level of achievement will produce more enthusiastic entrepreneurs who in turn

would hasten the process of economic development.

The factors given below may be considered as the developing and determining factors

which help to attain the entrepreneurial development.

External resources

Efficiency and economy

Creation of capital assets

Availability of human resources

Technological advancement

Suitable investment

External factors influencing the growth of Entrepreneurship

There are certain factors of external environment which surround the business

enterprise. These factor are as follows :-

Cultural Environment.

Social Environment

Economic Environment

Political Environment .

Legal Environment

International Environment



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RELATIONSHIP BETWEEN ENTREPRENEURSHIP AND ECONOMIC

DEVELOPMENT

Small business is an important driver of economic activity. Subsequently

entrepreneurship and economic development couple in many ways. Economic development is

somewhat subjected on businessman because any impediment in development for small business

has the capacity to slow down an economy. Where as, new entrepreneur depend on a growing

and stable economy to provide employment and produce sales.

Local and national government allocate large amount of fund for the growth of small businesses

in a region. Government provides loans and from time to time grants to qualifying businessmen

and probably specific minority sections including women. This results due to the increasing

awareness that government officials share adjoining the fact that entrepreneurship and economic

development are related with each other. A government may be required to lay down the base for

new business by initially building a community that is supportive to commence. This could be

through infrastructure expansion along with any financial encouragement that might be granted.

When the conditions are favourable, new entrepreneurs can begin engaging employees

conducting business in an area and supporting the growth of a local or national economy.

. Large financial bank sustain lending divisions that are intended to fulfil the financial

requirements of businessmen. Other than financing they may also offer training or support to

enterpreneurs to enhance the probability for success. The financer hass to provide capital to new

businesses for a share of the eventual profits , in return. Due to the private finance entrepreneur

can formulate new technologies and result in productivity which can support local or national

economies.

Entrepreneurship can be assessed in lieu of its direct effect on national or local economic

development articulated in form of GDP or an economic growth narrated in terms of

employment. The prompt growth of small scale industries has evolved a concept that small

number of businesses are significant basis of entrepreneurship and as a vibrant factor, they add

directly to economic development.



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Table :- Growth of SSI Sector (1994-95 to 2007-08)

Year No. of units

(in lakh)

Production (Rs.

crore)

Share In

GDP (%)

Employment

(in lakh)

Export (Rs.

Crores

1994-95 79.6 (4.1) 1,22,154 (23.6) - 191.4 (4.8) 29.068 (14.9)

1995-96 82.8 (4.1)) 1,47,712 (20.9 - 197.9 (3.4) 36,470 (25.5)

2000-01 101.1 (4.1) 2,61,297 (11.8) - 239.1 (4.4) 69,796 (28.8)

2001-02 105.2 (4.1) 2,82,270 (8.0) - 249.1 (4.2) 71.244 (2.1)

2002-03 109.5 (4.1) 3,11,993 (10.5) 5.92 260.2 (4.4) 86,013 (20.7)

2003-04 114.0 (4.1) 3,57,733 (14.7) 5.79 271.4 (4.3) 97,644 (13.5)

2004-05 118.6 (4.1) 4,18,263 (16.9) 5.84 282.6 (4.1) 1,24,417 (27.4)

2005-06 123.42 497842 (12.32) 5.83 299.85 150242 (20.7)

2006-07 128.44 587196 (12.65) 5.94 312.52

2007-08 133.67 695126 (13.00) NA 322.28

Source: Reserve Bank of India, Handbook of Statistics on the Indian Economy 2004- 05. Mumbai,

Table :- Avg. GDP share % & Trend growth rate (%PA)

GDP share Gr. Rate GDP share Gr. Rate GDP share Gr. Rate

1950s 56 2.7 16 5.8 28 4.1

1960s 48 1.5 21 5.5 31 4.5

1970s 43 1.8 23 4.5 34 4.6

1980s 36 2.9 25 6.5 39 6.6

1990s 29 3.2 27 6.2 44 7.7

2000s 22 3.9 24 7.2 54 9.2

Source Central Statistical Organisation.

YEARS PRIMARY SECONDARY TERTIARY



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Table :- Contribution of MSMEs in Country’s Economy at Current Price

YEAR MSME

GVA

GROWTH

[ % ]

TOTAL

GVA

SHARE OF

MSME IN

GVA [ % ]

TOTAL

GDP

SHARE OF

MSME IN

GDP [%]

2011-12 2622574 - 8106946 32.35 8736329 30.00

2012-13 3020528 15.17 9202692 32.82 9944013 30.40

2013-14 3389922 12.23 10363153 32.71 11233522 30.20

2014-15 3704956 9.29 11504279 32.21 12467959 29.70

2015-16 4025595 8.65 12566646 32.03 13764037 29.20

2016-17 4405753 9.44 13841591 31.83 15253714 28.90

Source: Central Statistics Office (CSO), Ministry of Statistics & Programme Implementation .

Employment in MSME sector ( Nature of activity wise.)

other services

362.22

33% manufacturing

360.41

32%

Trade 35% Electricity

0.07

0%



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“ENTREPRENEURSHIP IS ESSENTIAL FOR ECONOMIC DEVELOPMENT OF A

COUNTRY”

The escalation in the number of entrepreneurs is the marker of the growing

consciousness of the country to be industrious and generative. This will gradually boost

the gross national product of the country through increased yield and the quest of

excellence and cost efficacy.

The wealth of the country is determined by a significant rise in the foreign exchange of

the nation due to rise in the no. of businessmen in the field of Information technology and

various other sectors.

Employment breaks are greater than before and standard of living of the citizens of a

country has improved. This enhances the local development of a nation.

These factors transpire the fact that Entrepreneurship is necessary for economic growth of a

nation.

FUTURE OF INDIAN ENTREPRENEURSHIP

The history of Indian entrepreneurship is full of irony under British rule. In the present

day, Indian entrepreneurs have not only earned success as well as respect throughout the globe

for their wisdom.

1. The Early Phases :- Before the Mughals India was known as the land of the “Golden

Bird” representing the excellence in all fields of life due to a rich legacy of trade and

commerce which has caused in accrual of the significant wealth and prosperity in the sub

continent. During the mughal era trade and commerce prevailed through constrained to

several restrictions. But with the British rule the concept of entrepreneurship came to a

harsh arrest. The government not only put an end to forwarding the support to the

industries but took harsh steps to kill the entrepreneurial will power of the country. This

long segment of sitting idle due to foreign goods supremacy left its impact even after

independence.



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2. The Post Independence Scenario

Sixties :- This decade witnessed a large prominence on government supported large

industries paying least or no attention to the small and medium ventures that some

struggling organization were struggling hard to establish. There were a lot of small

ventures which emerged to provide additional support to the large industries but narly

half of them suffered set back within a very short span of time.

Seventies :- The Baburaj was its crest during this period which saw some steps by the

government to promote export oriented industries as a prompt measure to increase

foreign exchange reserves. There was a meagre development in the by and large business

environment mainly because of restricting factors among which baburaj was at the top

of the list.

Eighties :- till this time the countryalong with the government had begun to appreciate

the vainness of a hybrid economy on the pattern of the socialist USSR . There was

increased action in the small and medium industry sector. Fractional amputation of high

import duties and exorbitant commerce restrictions brought the fall of a new era in Indian

entrepreneurship

Nineties :- The immediate and persistent efforts to liberalise the economy were called

for because of the economic crisis at the begining of this period. At last ,the good time of

the entrepreneur were indoors, the government policies turned the table to shift towards a

market facet economy indicated the initiation of a fresh era which witnessed

instantaneous success regarding the boost to the national economy within the initial few

years. The whole environment was breezed with increased actions in all aspects of trade

and the pick up was led this time, by the small and medium industries .



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21st Century Entrepreneurship In India.

The new century began and it witnessed that the Indian entrepreneurs were ready

to conquer the world. Confident by the preliminary success of the nineties even the government

was also eager to lend a helping hand to the SMEs. The accessibility to a large and trained man

power at aggressive cost the Indian enterprise became most exigent across the globe. The classic

Indian adoptability in reducing cost and working rigorously caused an impact that SMEs in India

could compete with MNCs in a cut throat fight.

This new era had also blessed with the easy availability of capital. The economy was

growing year after year. Another advantage for the Indian SMEs was the onset of services

oriented business concept which was robustly supported by technological advancements which

helped the outsourcing of work abroad. The Indian entrepreneur had in fact reached on the global

stage and have a say towards the economic development of the nation. To achieve the goal of

economic development, it is necessary to make expansion in entrepreneurship both ways

qualitatively as well as quantitatively.

ROLE OF ENTREPRENEURSHIP TOWARDS ECONOMIC DEVELOPMENT OF

INDIA.

It is explicitly held that small scale industries endow with instantaneous large number

employment, enable a better reasonable sharing of national income and ease out an valuable

resource utilization of capital and skill which might otherwise remain unused. The establishment

of entrepreneurship development institute by the Indian government is a good indication to her

strong recognition about the contribution entrepreneurship submits in economic progress of the

country.

The important contribution entrepreneurship submits in economic progress of an

economy can now be summarized in a more organized and efficient manner as follows :-

Creation of modern change :- An entrepreneur is a person who always welcome for

modification. Entrepreneur is accountable for merging the factors of production in an

efficient mode to enhance the production base. He constantly attempts to set up modern



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technique of production of services and goods. An entrepreneur produces economic

development through continuous improvement

Promotion of Capital formation :- Entrepreneurs promotes capital formation by

channelizing the inoperative savings of public. He is accountable for utilizing savings for

production purposes which in return results in to multiplying outcome to the capital

formation. It effects in to value addition and creation of wealth, which is very significant

for industrial and economic development of nation.

Creation of Employment opportunities :- By establishing industrial units, entrepreneur

generates job for himself as well as to the unemployed people in the society.As these

ventures grow they create direct and indirect employment opportunities to many more.

Entrepreneurs has an effective contribution which helps in dropping the problem of rising

unemployment in the country which in turn drives the nation towards the economic

development.

Increase Per Capita Income :- Entrepreneur open up and utilize every possible

opportunity persuade valuable resource channelization of capital and expertise launch

new product and extend markets for development of the economy. Henceforth helps in

escalating gross national product over and above per capita income of the population in a

nation. Rise in gross national product enables further economic development.

Promotion of Balanced regional development :- Entrepreneur facilitates to get rid of

the local discrepancies by establishing the industries in under developed and backward

areas. The development of industries and trade in such areas gives rise to a large no of

public benefits and progress of the backward region.

Promotion of Export Trade :- Entrepreneur yields products and services extensively

with the intent of bringing in large sum of foreign currency from export. Entrepreneurs

modernize their products which are pretty useful for export promotion and import

substitution. Hence encouraging export ensures economic freedom and progress of the

nation.

Wealth creation and distribution :- Entrepreneur provides unemployed people with

jobs for income, as well he can also bring in more prosperity by exploiting natural

resources.



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Reduce concentration of Economic power :- The obvious result of industrial and

business transactions is the economic power. Industrial growth typically accumulates

economic power among a few individuals which gives rise to monopolies. To mitigate

this dilemma a large no. of entrepreneurs are warranted to be encouraged to help reducing

this accumulation of economic power.

Increase the standard of living :- Entrepreneurs generate employment opportunities.

This course of action leads to boost income and buying capacity and it also provides

prospect for manufacture of extensive range of merchandise and services.

Facilitates overall development :- The entrepreneurs proliferate their entrepreneurial

actions to create enthusiasm and passing on momentum for total progress of the area.

Entrepreneur create new businesses :- contribution of entrepreneurs in the form of

modern merchandise and services, produce new employment which can effect a surge or

in the economy.

Entrepreneurs also create social change :- contribution of entrepreneurs in the form of

modern merchandise and services, indirectly eliminates obsolete systems and

technologies. Moreover it effects in to an improved living standard greater drive and

financial freedom.

Economic Independence :- It is implicit that entrepreneurship is significant for getting

financial independence. Increased yield minimises the dependence on other countries.

Personal growth :- Entrepreneurship has provided huge number of decent jobs. The

entrepreneurs experiences high level of confidence and better self reliance. Although

independence born out of entrepreneurship bears certain problems with them.

Entrepreneurs often work beyond days and night and don’t hesitate to threaten their

personal property in promoting their businesses.

Entrepreneurship puts new business ideas into practice :- Entrepreneur generates

jobs that helps in personal improvement with their ground breaking ideas and dreams, as

well as they can deal with social problem also. They are keen towards passing their

values to the next generation.

Induce backward and forward linkage :- Entrepreneurs tend to perform in an

environment of modifications and attempt to draw optimum profit by innovation. When a



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venture is established as per norms of the modern technology, it brings backward and

forward linkages which incites the course of economic development in the country.

Promotion of research and development:- Entrepreneurship is the modernization and

as such the modern ideas of merchandise and services have to be judged by carrying out

tests. Hence, entrepreneurship imparts funds for research and development with research

institutions. This endorse the research and development of the economy Entrepreneurship

is the revolutionary passion that brings momentum in our civilization. We should be

grateful to it for bringing prosperity in every aspect of human life whether economic,

technological or cultural.

.

Conclusion

Entrepreneurs extend a midas touch to a venture , whether it belongs to public

sector or private sector or joint sector in gaining speed, flexibility, novelty and a strong

sense of will power. They fetch a new visualization to the economic development of a

nation. The study of entrepreneurship is valuable now a days because it enlightens

entrepreneurs. Entrepreneurship boosts national income by producing new jobs as well as

it also induces positive energy in economic growth by linking between innovation and

market place. To summarize, the role of entrepreneurship in economic development of a

country can best be put as “ an economy is the effect for which entrepreneurship is

the cause”.

REFERENCES

https://msme.gov.in/sites/default/files/MSMEINSIDER-JAN-2019-ENGLISH.pdf

Central Statistics Office (CSO), Ministry of Statistics & Programme Implementation .

http://www.indiastudychannel.com/resources/Role of Entrepreneurship- economic-

development.aspx.

http://www.yourarticlelibrary.com/essay/role-of-entrepreneurship-in-economic-

development.



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