Even before demonetisation, jobs in the country’s informal sector barely grew despite the fact that the number of enterprises rose at a decent pace and wages saw an impressive jump. According to the key indicators of unincorporated non-agricultural enterprises (excluding construction), released by the National Sample Survey Organisation (NSSO), while the number of enterprises witnessed a 10% rise in its latest survey from the one conducted five years earlier, that of workers grew just 2.9%. However, workers’ emolument during this period jumped 86.2%. This suggests some of the informal sector enterprises either cut employment or hardly added jobs to protect margins even before the note ban in November last year accelerated the pace of churning in the informal sector. The latest survey covers the period from July 2015 to June 2016, while the earlier one was from July 2010 to June 2011.
The survey is important, as it covers 11.13 crore workers, roughly a fourth of labour force, across 6.3 crore enterprises, 82% of which operate from homes or other permanent structures and are, therefore, not very temporary operators. The aggregate gross value added (GVA) by these enterprises engaged in market production was as much as Rs 11.52 lakh crore in 2015-16.
Although the latest survey incorporates certain changes, the methodologies adopted in earlier and the current surveys are more or less similar, so the findings are broadly comparable.
That job addition was minimal also got reflected in the fact that while the GVA per enterprise grew 67% since 2010-11, the GVA per worker rose at a faster pace–78%. Fixed assets per enterprise, too, didn’t grow much—just 10% since the 2010-11 survey. Although agriculture enterprises are not taken into accounts in this survey, analysts say the farm sector has a bearing on the performance of these non-farm entities as well, as the rural economy is still agriculture-driven. Two straight years of drought through 2015 in many parts of India affected farm production and dented growth in rural disposable incomes. Importantly, at 70%, the contribution by enterprises in urban areas to overall GVA was much higher than that of rural enterprises (30%).
Maharashtra had the highest share (11.8%) in the aggregate annual GVA at all-India level, followed by UP (11.0 %), Tamil Nadu (9.2 %), Karnataka (8.0 %) and West Bengal (7.4 %). These five States accounted for nearly half of the aggregate annual GVA by the unincorporated non-agricultural enterprises. Though the share of manufacturing in the total number of unincorporated enterprises has risen in 2015-16 from 2010-11, the GVA per unit still trails that in services.