The pandemic has altered the way in which businesses function. Many business owners capitalized on the evolving trends, leading to an increase in business registrations. Dun & Bradstreet recently released a report on Business Dynamism in India which showed a total of 195,880 businesses were registered in FY21. Much of the new registrations were in sectors that witnessed a pandemic induced spike in demand.
Rise of the agricultural sector
The birth rate of new businesses showed an increase from 7.8% in FY16 to 10.2% in FY20 and further to 11.6% in FY21, despite the pandemic and subsequent lockdowns. The agriculture sector recorded the highest growth in new business registrations at 103% in FY21. It observed 12,368 registrations in FY21 compared to 6,107 in FY20. The manufacturing sector recorded the second highest growth in new business registrations at 50% in FY21.
Why it did well
One of the reasons why agriculture and food manufacturing had higher registrations could be because the consumers restricted their expenditure to necessities and cut down on non-discretionary spending during economic downturns and the long months of lockdowns. A good monsoon season could have helped give a boost to the agricultural sector.
Benefits of reskilling
During this time many people decided to reskill themselves to improve their job prospects during recession. This resulted in higher business registrations in the educational services category. The pandemic has also accelerated the rate of digital adoption as more people worked and learned remotely.
Other sectors in the fray
Higher registrations in chemicals manufacturing and social service like hospitals, nursing homes, and clinics happened as these sectors experienced a pandemic induced spike in demand.
A note of caution
Historical survival rates of businesses that fall in this category are low. Hence, businesses that partner with these newly registered businesses need to continuously monitor their portfolio and establish red flag alerts to protect their capital.