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As the economy recovers from the pandemic, more jobs are being created, forcing fewer people towards entrepreneurship in 2023. Between January and November 2023, India saw the formation of 1.5 lakh new companies. This is lesser than the number of companies formed in the same period in 2022 and 2021, according to the Ministry of Consumer Affairs data.
According to the MCA numbers, the year 2021 saw a 21 per cent increase in new company registrations compared to the previous year. The growth was just 1.7 per cent in 2022 and in 2023, the numbers came down by 4.3 per cent.
Signs of recovery
Pune-based Chartered Accountant Pritam Mahure says that low new company registrations indicate that the economy is recovering from the pandemic. “Around the time of the pandemic, many people lost their jobs. That dire situation clubbed with the lockdown prompted a lot of people to start new businesses in 2021. However, now, the situation is stabilising and this may be one of the reasons why there isn’t a sudden spurt in the number of new company formations,” he says.
“Another reason could be the ongoing funding winter in the Indian start-up ecosystem, deterring aspiring entrepreneurs,” says Chanakya Shah, MD Holistique Business Consulting.
The lowest number of company registrations was in February 2023, when the number of new companies was just 2,818. That was around the time when Version 3.0 of the MCA portal (MCA 21) was launched.
However, multiple people had reported glitches and following this, Finance Minister Nirmala Sitharaman sought the formation of a team to address these issues.
Fewer closures
MCA data also show a dip in the number of companies struck down between November 2022 and 2023. In that period, 33,056 companies were closed in the country. In the same period last year, 99,569 companies were deregistered.
Fewer closures also point towards a stable demand environment, more conducive for businesses.
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