State of the unorganized sector in India

Last month, the National Sample Survey Office (NSSO) released the results of its annual survey of unincorporated sector enterprises (ASUSE). The survey was conducted during October 2022 to September 2023.

ASUSE is conducted to measure various economic and operational characteristics of unincorporated non-agriculture establishments in manufacturing, trade and other service sectors (excluding construction).

The key highlights of the survey are as follows:

Demographics

·         There are 65 million establishments belonging to unincorporated ‘manufacturing’, ‘trade’ and ‘other services sector’ in India. Out of these estimated 65mn establishments, about 55% (35.6mn) are in rural areas and about 45% (29.4mn) in urban areas. 85% (5.53cr) of these units are Own Account Establishments (OAE means no hired worker) and the remaining 15% are Hired Worker Establishments (HWE).

·         Uttar Pradesh (13.82%), West Bengal (12.03%) and Maharashtra (9.37%) have the most number of unincorporated non-agricultural establishments.

·         Maximum number of HWEs has been observed in Maharashtra (13.29%). At the same time, Uttar Pradesh comprising 14.46% of the total OAEs, becomes the State to comprise most of the OAEs of the country.

·         Telangana (43.32%), West Bengal (32.74%), and Karnataka (31.42%) are three states where more than 30% of the proprietary establishments have been run by women entrepreneurs.

·         Most of the owners of proprietary and partnership concerns belong to Other Backward Classes (OBC) (51.9%), followed by Others (30%), Scheduled Caste (SC) (13.2%) and Scheduled Tribe (ST) (4.4%) at all-India level.

Activities

·         Of these 65mn establishments 27.4% are ‘manufacturing’ units; 34.7% are engaged in ‘trade’ and 37.9% render ‘other services’.

·         ‘Other retail trade’ and ‘Manufacture of wearing apparel’ are the top two activity categories in rural areas and rural and urban combined basis also. In urban areas, ‘Other retail trade’ and ‘Other community, social and personal service activities’ reported the maximum number of establishments in the urban sector.

·         Only 3.7% of the total establishments had participation of SHGs, through financial intermediation.

Operations

·         Overall, about 41% of the total unincorporated non-agricultural establishments operate within household premises About 83.7% of HWEs are located on a permanent structure outside household premises; whereas operations of majority (about 46%) of the OAEs are home-based.

·         Only 6.4% of the total establishments reported to have maintained audited books of accounts.

Use of technology

·         23.6% of HWEs and 3% of the OAEs have used computers for business purposes during the survey period.

·         47.7% of HWEs and 16.4% of the OAEs have used the internet for entrepreneurial purposes during the reference period. Use of the internet, for entrepreneurial purposes, has increased to 13.5% from 7.7% in rural and to 30.2% from 21.6% in urban sector during ASUSE 2022-23 as compared to ASUSE 2021-22.

Employment

·         Unincorporated non-agricultural economy employed about 110mn workers during the survey period. in comparison to about 98mn workers during the previous survey, an increase of about 12mn.

·         Out of the total estimated workers, 52% (57.2mn) were from urban areas; whereas 48% (52.4mn) were in rural areas.

·         ‘Other Services’ contributed the maximum share (36.45%) to the total employment followed by ‘trading’ (35.61%) and ‘manufacturing’ (27.94%). ‘Other retail trade’ singly generated about one-third share of total employment at rural, urban and also at all-India level.

·         Overall, 25.63% of the total workers of the unincorporated nonagricultural sector, during the survey period were female.

Economic contribution

·         During the survey period GVA per establishment was Rs2.38lacs, up from Rs 2.25lacs in previous period.

·         GVA per establishment for HWEs (Rs. 8,84,310) was much higher as compared to OAEs (Rs. 1,27,073).

·         Delhi (Rs. 3,72,569) in rural, Chhattisgarh (Rs. 5,09,712) in urban and Delhi (Rs. 4,50,728) for overall (i.e., combined rural and urban) produced the maximum annual GVA per establishment.

·         Average annual emoluments paid to a hired worker was Rs.1.25lacs during the survey period.

·         During the survey period, average fixed assets owned by unincorporated nonagricultural entrepreneurs was Rs. 3.18lacs (vs Rs. 2.81lacs in previous period).

·         Outstanding loans per establishment, on average, were Rs. 50,138 at all-India level.