The Union government recently released the reports of its Annual Survey of Unincorporated Sector Enterprises (ASUSE) for 2021-22 and 2022-23.
The survey of unincorporated sector enterprises (USE) was earlier conducted once in five years, with the last being in 2015-2016 and will now be conducted on an annual basis. While the labour force surveys (Periodic Labour Force Survey, PLFS) give us some idea of the status of employment in the informal sector, the ASUSE gives us information on enterprises from the production side.
This is an important source of information on a sector which is the biggest source of employment outside of agriculture.
A large section of the non-agricultural informal workers are employed in these enterprises and it also contributes to a significant part of the gross value added (GVA) in the country. With this survey there will also be a better basis on which the estimates for the unorganised sector to be included in the national income accounts can be made.
In accordance with the K-shaped recovery that India has been witnessing over the last few years, the ASUSE also shows a slowdown in the growth of the USE. While the official press releases and the report are focussing on the growth between 2021-22 and 2022-23, a more useful comparison would be to look at 2022-23 with the earlier survey in 2015-16.
While 2021-22 was an abnormal year, affected by the COVID-19 pandemic, this longer period can also give an indication of the impact of the two major economic shocks that affected the informal sector particularly – demonetisation and Goods and Services Tax, as well as that of the pandemic.
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It can be estimated that while GVA by the sector increased at over 7% per annum in real terms between 2010-11 and 2015-16, it contracted by about 0.5% per annum between 2015-16 and 2022-23. The number of USEs increased from 5.77 crore in 2010-11 to 6.34 crore in 2015-16, but then to only 6.5 crore in 2022-23 (with a dip to 5.97 crore in 2021-22).
Although the number of USEs in 2022-23 is slightly higher than in 2015-16, the GVA per enterprise in 2022-23 at Rs 2.38 lakhs compared to Rs 1.82 lakhs in 2015-16 represents a decline in real terms. The total estimated number of workers in the USEs has reduced in absolute numbers from 11.13 crore workers in 2015-16 to 10.96 crore workers in 2022-23.
Over 85% of the USEs are own account enterprises (OAEs) and only the remaining 15% are hired worker establishments (HWEs). The GVA per OAE is only Rs 1.27 lakhs in 2022-23 i.e. these enterprises are making hardly Rs 10,000 a month.
The hired workers’ emoluments on average have also fallen slightly in real terms in 2022-23 compared to 2015-16. In 2022-23, hired workers in HWEs on average received Rs 1.25 lakhs annually.
Therefore, even workers in these relatively bigger enterprises are earning only about Rs 10,000 a month, lower than the minimum wages in many states.
Despite all the fuss about digitisation, at the all-India level only 6.1% of the enterprises reporting using a computer, up from 5% in 2015-16. The proportion of enterprises using internet for entrepreneurial activities during the previous 365 days a year of their operation was however much higher, at 21% (a rise from 4% in 2015-16). About 41% of the total unincorporated non-agricultural establishments operated within household premises.
Representative image. Women in Assam’s Dhalpur returning home from daily labour work. Photo: Aditi Mukherjee
The USEs are also a significant source of employment for women. Almost 26% of all workers in the USEs are female, 31% of workers in OAEs and 17% of workers in HWEs. In terms of ownership of enterprises, as expected women are grossly under-represented.
While 94.7% of all establishments are proprietary in nature, 71.8% have male proprietors and 22.9% are female. Almost 4% of the establishments are owned by SHGs, majority of which can be expected to be women SHGs. The sectors in which women workers are concentrated are ‘wearing apparel’, ‘other retail trade’, ‘education’ and ‘manufacture of tobacco products’. This sort of gender segregation of occupations is observed in the labour force surveys as well.
The survey does not give any information on the access to social security provisions for workers. However, by looking at the worker type, it can be seen that most of the workers in these enterprises are informal workers with no access to social security. Of all the workers in USEs, it is estimated that only 5.2% are in the category of ‘formal hired workers’ while 65.5% are ‘informal hired workers’ and 23.8% are ‘working owners’, with the remaining 5% being ‘unpaid family members’. Therefore, while this sector provides a large number of jobs, the quality of jobs are low paying and with no additional benefits.
The USEs, which represent much of what we call the informal sector, are a significant part of the Indian economy. As shown by the data from the recent ASUSE, they continue to provide employment to a significant part of the labour force. However, compared to a decade ago, the size of this sector as well as its capacity to absorb labour seems to be falling. In the context where not many new jobs are being created in the formal sector either, this represents the distress in the economy and the jobless nature of growth. It is clear that growth has been concentrated in a few areas and has also benefitted only the rich.
The enterprises in the unincorporated sector are labour-intensive in nature, and with support in terms of access to infrastructure and credit as well as to markets, can not only contribute to the national income but could also provide many more jobs. A system to ensure that workers in these enterprises are integrated with a social protection system needs to be brought.
Dipa Sinha is a development economist.
