The NSSO findings on India?s unregistered manufacturing sector, released earlier this week, highlight the slow pace of change in this important sector that accounts for close to a third of the country?s manufacturing output, and the sizable gains to be made by utilising its full potential. The sector is crying out for infusion of capital to boost productivity and achieve a modicum of modernity. The most disturbing finding is the distinct lack of buoyancy in this sector, with shrinking employment opportunities and no significant paths in sight towards economies of scale. Nor can it be left to wither away as a relic of the past, the candlemakers in an era of the electric bulb. The unregistered manufacturing sector has as many as 17 million enterprises and employs 36.4 million workers, though it lost 7 million employees in the five years up to 2005-06 even as the number of units stagnated.
Glance again at the numbers above. The average number of people employed per unit has dropped to about 2.1, hardly a scale that could spell hope on manufacturing productivity (in the absence of knowledge wizardry). These are mostly ?own account? self-employment units with a helping hand or two. The NSSO numbers also show that the earnings of wage employees?who account for a quarter of the total employment in this sector?were also meagre, with annual earnings averaging just Rs 26,682, ranging from Rs 14,586 in Bihar to Rs 33,156 in Goa. For this dismal state of affairs, blame the lack of capital employed by these production units and their limited access to finance.
It goes without saying that the larger manufacturing units, with more than six workers each, were found to be slightly better off, with their market value of fixed assets averaging above Rs 5 lakh and value of outstanding loans above Rs 2 lakh. The corresponding averages for smaller units were just around Rs 1.5 lakh and Rs 30,000. All said, it is obvious that any revival of India?s unregistered manufacturing sector would require a massive boost by way of investment, especially in ?own account? enterprises, which account for about four-fifths of all employment in the sector. For these, the average figures for market value of fixed assets and outstanding loans were found to be just Rs 24,646 and Rs 1,023, respectively. They have minimal access to credit.
