How Epidemic-led Financial Crisis Arisen New Companies

- BY Jaspreet Kaur
Feature Writer, BusinessEx
- |
- Aug 23,2021
- |
158 Mins Read
Every financial crisis has taught vital lessons to economies across the world. Considering the first global financial crisis of the 21th century--2007-08 Financial Crisis, turbulence was seen everywhere. However, amid such mayhem, individuals and companies recognised how bad debt can crumble down a business ecosystem. On a similar note, the 2020-21 financial crisis has given realisations about how businesses dealing in essential items cannot go out of the business.
Such observations emphasize the economic theory of creative destruction. Under the creative destruction concept, out-of-date trends or practices are discontinued and new ones emerge. According to the Dun & Bradstreet report, business dynamism can perhaps be described as the velocity at which creative destruction takes place. It can be measured as the rate at which new businesses enter a market and the rate at which existing ones exit. In the present context, business dynamism resonates with the influx of emerging businesses in the Indian sector.
A Spike in New Businesses
Over the last year, when the pandemic spread in every corner of the world, business economies were ruined. A few industries managed to survive and also, shore up in the sector. However, surprisingly, the particular sector saw the rise of new businesses as well. The D&B’s report stated that the birth rate of new businesses (number of new businesses registered as a percentage of active firms) showed a healthy pace of increase from 10.2 per cent in FY20 to 11.6 per cent in FY21, despite the pandemic and subsequent waves of lockdown. The increase is significant given that there were fewer firms that went out of business in FY21 compared to FY20 – 12,924 vs 75,408. A total of 195,880 businesses were registered in FY21 compared to 158,442 businesses in FY20, growing at 24 per cent.
Sectors Alluring New Entrepreneurs
Trends changed drastically in the past year. The global epidemic followed by its impact on the businesses, the needs of consumers reduced limiting to basic amenities only. Agriculture sector in India witnessed the highest count of business registrations. The sector observed 12,368 (business) registrations in FY21 compared to 6,107 in FY20, an increase of 6,261 firms or a growth rate of 103 per cent.
Following this, the manufacturing sector experienced 39,539 registrations in FY21 compared to 26,406 in FY20, an increase of 13,133 firms or a growth rate of 50 per cent. The services sector is third in the row with 83,079 business registrations in FY21 compared to 73,149 (business registration) in FY20, an increase of 9,930 firms or a growth rate of 14 per cent.
Shift in Consumer and Business Minds
There are various sectors that experienced a high growth in new registrations in FY21--agriculture production (crops), food and kindred products manufacturing, wholesale of non-durable goods, chemicals manufacturing, social services--to name a few. Higher registrations in these industries seems reasonable given that consumers restrict their expenditure to necessities and cut down on non-discretionary spending during economic downturns. The above-cited report informs that a good monsoon season could have provided further impetus. Higher registrations in chemicals manufacturing and social service (hospitals, nursing homes, trusts, etc.) are justified as these sectors are experiencing a pandemic induced spike in demand. Individuals also tend to reskill themselves to improve their future job prospects during recessions.
These variations in the business ecosystem have been lately recognised. Consequences of the epidemic-led financial crisis will have a significant impact on the business in the offing. It is hoped that future consequences will arise new opportunities and bolster the Indian economy.
More from Jaspreet Kaur
Six benefits of blockchain technology...
Blockchain can be implemented in every field. This...
May 19, 20183 Min Read
How to make your office a better...
Employees are the wheels of all the companies. You...
June 14, 20183 Min Read
Business opportunities in textile...
Textile market place covers a wide range of cloth...
June 20, 20183 Min Read
Accept the Nascent Digitization...
Embrace digitization into the organizational structure
October 10, 20183 Min Read
Women Heading C-Suite Roles in...
Transitional time has come as eminent leadership roles...
October 10, 20183 Min Read
3 Painting Tools Which Are Essential...
Painting is a small endeavour which demands skill and...
December 06, 20183 Min Read
Use Of Social Media Marketing Tools...
The software companies are updated with newly established...
December 11, 20183 Min Read
3 Tip-offs To Selling A Small Scale...
he selling process of the small-scale business is intricate...
December 11, 20183 Min Read
How To Initiate A Home Health Care...
An abundance of private industries have initiated healthcare...
December 12, 20183 Min Read
Why Should Constructors Give Up...
With the advancing time, new construction materials...
December 14, 20183 Min Read
How Does Facility Maintenance Help...
Facility management is the broad term which incorporates...
December 14, 20183 Min Read
4 Type Of Rugs That Every Interior...
In the home decorating process, a rug is an imminent...
December 17, 20183 Min Read
Recommended for you
- September 09, 2021
- August 09, 2021
- July 15, 2020
Latest News & Articles
- May 19, 2018
- June 14, 2018
- June 20, 2018