The number of people employed in India’s informal sector dropped by 1.5 per cent in 2022-23. The number was 11.13 crore in 2015-2016, which fell by 16.45 lakhs to 10.96 crore in 2022-23, says the Annual Survey of Unincorporated Enterprises (ASUSE) for 2021-22 and 2022-23 released by the Ministry of Statistics and Programme Implementation (MoSPI).
Clearly, demonetisation in 2016, introduction of the Goods and Service Tax (GST) in 2017 and the Covid-19 pandemic in 2020, have taken their toll on the growth of unincorporated enterprises, and hence, their capacity to employ people. In fact, 54 lakh jobs were lost in the manufacturing space due to these events.
This data indicates that the manufacturing space is not creating as many jobs as it should to improve the productivity of the sector.
According to India Ratings and Research (Ind-Ra), the cumulative effect of major macroeconomic disruptions in the last few years on the unincorporated sector enterprises (USE) has been 4.3 per cent of the gross domestic product or GDP of the financial year 2023.
The formal manufacturing sector isn’t faring any better, having added only about 86 lakh jobs in the 2015-16 and 2022-23 periods.
The Reserve Bank of India’s KLEMS database, examines 27 important sectors across the Indian economy and delves into government data to reveal that the economy created 12.5 crore jobs between 2015-16 and 2022-23. About 6.9 per cent of these, that is, about 86 lakh jobs were created in the manufacturing sector. The services sector, on the other hand, added 4.9 crore jobs during this period. However, this data focuses more on the formal space.
