By Dr. Gyan Pathak
The decline in India’s job market and the government’s inability to create adequate employment opportunities have significantly increased the number of jobs and businesses in the informal sector, also known as the ‘Unincorporated Sector.’ According to the Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2023-24, there are approximately 7.34 crore establishments, reflecting a growth rate of 12.84 percent, employing 12.06 crore workers—a 10.01 percent increase. The Gross Value Added (GVA) stood at Rs 17,97,278 crore, showing a growth rate of 16.52 percent. While this indicates robust recovery compared to the disruptions caused by COVID-19, it also signifies a shortfall in meeting decent job creation goals.
The survey encompassed unincorporated non-agricultural establishments across three sectors: manufacturing, trade, and other services. These establishments operated under various forms, including proprietorships, partnerships (excluding Limited Liability Partnerships), Self-Help Groups (SHGs), cooperatives, societies, and trusts. Most jobs within these entities typically lack social security coverage, thus failing to qualify as decent jobs.
Unincorporated enterprises, as defined by UN standards, consist of producer units not legally recognized as entities independent of their owners. The assets used by these enterprises are owned by the proprietors, meaning they cannot engage in transactions with other economic units or assume liabilities independently. Furthermore, the owners bear unlimited personal liability for any debts or obligations incurred during production.
Conducted from October 2023 to September 2024, ASUSE 2023-24 includes data from the first six months of the current financial year 2024-25, during which the government’s budget introduced significant initiatives aimed at decent job creation in India, involving three Employment Linked Incentive Schemes totaling Rs 10,000 crore, which are yet to be implemented.
Nonetheless, ASUSE 2023-24 points to a strong recovery post-COVID-19 disruptions in 2020-21, when these enterprises faced immense challenges due to lockdowns and containment measures that halted economic activity. The inaugural comprehensive survey was conducted in the financial year 2021-22 from April 2021 to March 2022, with the current survey marking the third in the series.
The ASUSE 2023-24 identified 7.34 crore establishments, with 2.02 crore in manufacturing, 2.28 crore in trade, and 3.04 crore in other services. It estimated the GVA growth in the unincorporated sector at 16.52 percent at current prices for the period October 2023 to September 2024.
Of the estimated 12.06 crore workers surveyed in the unincorporated sector for 2023-24, 5.61 crore were located in rural areas, while 6.45 crore were in urban regions. Worker growth rates were recorded at 10.03 percent in manufacturing, 1.93 percent in trade, and 17.86 percent in other services. The survey also noted a 13 percent increase in emoluments per hired worker, with Rs. 1,41,071 as the average compensation; Rs. 2,91,895 for formal hires; and Rs. 1,25,910 for informal workers.
According to ASUSE 2023-24, growth in the unincorporated sector was primarily fuelled by the ‘other services’ sector, which experienced 23.55% growth in establishments, 17.86% in employment, and 26.17% in GVA. The GVA percentage share was 21% for manufacturing, 35% for trade, and 44% for other services.
However, productivity metrics showed that GVA per establishment was merely Rs. 2,45,687 and GVA per worker stood at Rs. 1,49,742, reflecting growth rates of just 3.16 percent and 5.62 percent respectively compared to the previous survey year. The proportion of female-owned proprietary establishments grew from 22.9% in 2022-23 to 26.2% in 2023-24, while the number of establishments utilizing the internet rose from 21.1% to 26.7% during the same period.
The latest survey results indicated that along with the increase in total workers, there was also a rise in hired workers in this sector, growing from 2.95 crore in ASUSE 2022-23 to 3.15 crore in ASUSE 2023-24. Furthermore, the overall percentage of market establishments saw a slight increase from 99.56% in 2022-23 to 99.66% in 2023-24.
While the proportion of proprietary and partnership establishments remained consistent at 94.42%, the percentage of establishments employing hired workers declined from 14.94% to 13.65%, presenting a concerning trend for the informal workforce. (IPA Service)
