India witnesses spike in registration of new companies in FY21

There has been a spike in the number of people getting into entrepreneurship especially during the year of the pandemic- 2020, data from the ministry of corporate affairs suggests.

An analysis of the ministry’s data shows that nearly 15,000 companies were registered almost every month in the 2020-21 financial year as opposed to around 10,000 companies, which were registered each month from March 2017 till March 2020.

The only months in the year that had low registrations were April and May when the government had imposed a lockdown due to the coronavirus pandemic. While in April, a little over 3,000 companies registered, in May, 4,700 companies got on the MCA’s rolls.

The number of companies being registered touched a peak in March 2021 when 17,324 companies registered.

Experts suggest that this could be linked with joblessness in the country. “This can be attributed to joblessness and unemployment but the trend started much before the pandemic which is reflected in the data,” says Mahesh Vyas, Managing Director and CEO at the Centre for Monitoring Indian Economy Pvt Ltd (CMIE).

“We’ve been monitoring the labour market since 2016 and we have witnessed a decline in salaried jobs. Since people cannot stay jobless for a long time, they take up entrepreneurship.”

India’s unemployment went into double-digit numbers in May and June 2020. Unemployment was 21.73 per cent in May 2020 and 10.18 per cent in June 2020, according to the CMIE. After that, it has been hovering between 6.50 per cent and 8.35 per cent.

The increase in the number of Limited Liability Partnership (LLP) firms is also steady, where from March 2017 till March 2020, there were mostly 1,000 or 2,000 LLPs being registered each month but in the last one year around, 3,000- 4,000 LLPs, each month have been registered.

Professor Himanshu from JNU’s Centre for Economic Studies and Planning says that entrepreneurship has increased, a lot of it is not reflected in the corporate affairs ministry’s data. “Unemployment is also in the lower levels and those people do not necessarily register companies. They open shops which are not reflected in the MCA’s data.”