Retail trade is an employment spinner, too

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Employment generation initiatives like food-for-work programme seem to have had a positive impact. The fifth Economic Census report, released on Thursday, said there has been a decent increase of 2.78% in the rate of employment generation in the country during 1998-2005, as compared to the rate of 1.75% during 1990-98.

Most significantly, even as the government is studying the implications of the report by the Indian Council for Research in International Economic Relations (ICRIER) on the ‘Impact of organised retail on the unorganised sector’ released this week, it would be pertinent to note that retail trade alone accounts for 41.83% job opportunities with 14.95 million employed in the sector, according to the Economic Census report.

In fact, establishments involved in retail trade claimed the highest percentage both in the rural (39.28%) and urban (45%) areas. It has been the most sought after activity amongst own account establishments with a share of 48.45%. In rural areas, 46.52% own account establishments were set up for retail trade while the percentage was 51.44 in urban areas.

The ICRIER report, commissioned by the Department of Industrial Policy and Promotion in February this year was to assess whether or not the organised retail would displace the unorganised retailers. The study has given a verdict in favour of modern retail, primarily on the basis of a supply crunch, which would arise if organised retail was not allowed to expand at its current rate of growth, which is pegged at 45-50% annually. Unorganised retail is simply not growing fast enough, ICRIER found.

To minimise the adverse impact of organised retail on traditional retailers, ICRIER has recommended strengthening the role of Competition Commission of India in preventing any collusion or predatory pricing and ensuring availability of institutional credit to the traditional retailers, only 12% of whom apply for bank loans in the first year of retail operations.

The Economic Census has found that retail trade was the preferred activity among establishments with hired workers as well with a share of 31.47%. Manufacturing accounted for 23.17% of the total establishments. Education claimed the third position with a share of 8.91%.