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18th June 2024 (10 Topics)

India’s Informal Economy

Context

Recent findings from the National Sample Survey Organisation’s Annual Survey of Unincorporated Sector Enterprises (ASUSE) for 2021-22 and 2022-23 have shed light on India's informal sector, crucial for policy formulation and economic planning.

Key Findings from ASUSE:

  • Employment Trends: The informal sector in India, represented by unincorporated enterprises, employed 109.6 million workers as of October 2022-September 2023. This figure, although an increase from pandemic lows, remains below pre-pandemic levels.
  • Enterprise Statistics: The number of unincorporated enterprises grew to 65.04 million by October 2022-September 2023, up from approximately 63 million in the previous period (July 2015-June 2016).
    • Economic shocks such as demonetisation, GST implementation, and COVID-19 have hindered sector growth and employment recovery.
  • Economic Inequality: Despite employing two-thirds of the workforce, this sector contributes only one-fourth of India’s GVA.
  • Economic Resilience and Growth: Despite challenges, the gross value added (GVA) by these enterprises increased to Rs 15.42 trillion during October 2022-September 2023, up from Rs 13.4 trillion in April 2021-March 2022.

Challenges:

  • Data Deficiency: The absence of updated data for over a decade has impacted economic planning and policy effectiveness.
  • Inequality and Low Incomes: Highlighted issues beyond agriculture and construction sectors, which are known for providing low-income jobs.
  • Policy Implications: Calls for transparent data release and inclusive consultations to restore credibility to India’s statistical system.

Fact Box: About Annual Survey of Unincorporated Sector Enterprises (ASUSE) 

  • Released by: Ministry of Statistics and Programme Implementation (MoSPI) 
  • Conducted by: National Sample Survey Office (NSSO).
  • It is conducted to gain comprehensive and reliable data on the unincorporated sector firm
  • ASUSE focuses on measuring economic and operational characteristics of unincorporated non-agricultural establishments in manufacturing, trade, and other services (excluding construction).
  • Previously conducted at five-year intervals, ASUSE surveys are now being carried out annually to provide more timely and relevant data.
  • Sector Breakdown: The survey covers manufacturing, trade, and other services but excludes construction.

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