GROWTH OR DECLINE?

Understanding non-agricultural informal enterprises

- PC MOHANAN & AMITABH KUNDU

Informal sector enterprises have been a defining feature of the Indian economy. While activities like agriculture, fisheries, livestock in the primary sector remain predominantly household-based informal enterprises, a large segment of non-agricultural activities are also in the informal or unorganised sector. It is unfortunate that the official coverage of these enterprises is somewhat patchy and reflects problems of temporal and cross-sectional comparability. Understanding of the size and contribution of these activities is mainly based on nationwide sample surveys of the National Sample Survey Office (NSSO).

In the regular scheme of surveys, these are carried out once every five years. The last two years for which we have survey results are 2010-11 and 201516.The NSSO initiated a programme of annual surveys on unorganised enterprises, called the annual survey of unincorporated sector enterprises (ASUSE), in 2021-22, although there was possibly an earlier attempt in 2019-20 that did not produce any results. The first set of results from this initiative is available for 2021-22 and 2022-23 - first as a fact sheet and then as a full report.

The present report on the unorganised sector covering the years 2021-22 and 2022-23 is an important source of data in the backdrop of the Covid pandemic and its devastating impact on the informal economic activities and their subsequent recovery. Another significant event likely to have impacted this sector is the demonetisation of 86 per cent of the currency in circulation in November 2016.

Implementation of nationwide Goods and Services Tax (GST) from July 2017 has also been mentioned as another factor affecting entrepreneurial activity, although one is not sure on its negative impact on the unorganised sector. It would be useful to keep these as a backdrop while taking a macro overview of the statistics focusing on the unorganised sector.