It is unfortunate that the Fifth Economic Census of individual enterprises in the country does not report data on their output. In the absence of this critical parameter, it is difficult to come to meaningful conclusions on key parameters""and any assertions made should therefore be strictly tentative and qualified. The average annual growth in the number of such enterprises between 1998 and 2005, for instance, is reported to be around 4.8 per cent""which is a handsome rate of growth. But this number has limited utility, and what matters more is output, and of course profitability. That output may not have grown at the same pace is suggested by the rate of growth of employment in these 42 million enterprises, this being only half the rate of growth of the number of enterprises. What this says is that the average employment/size of an enterprise has shrunk, and it is a plausible argument therefore that output growth has not been very rapid. Viewed against the backdrop of fairly rapid industrial growth during this seven-year period, the picture that is presented by the Census is not a very cheerful one. | |
| The growth in employment by these enterprises, while it may not have matched the growth in the number of enterprises, is a healthy 2.49 per cent per annum""much better than it has been for organised industry during the same period. To a certain extent, this should put to rest the view that the country has been experiencing jobless growth. For, this rapid growth in employment, insofar as it is significantly faster than the rate of population growth, and in a segment that accounts for a fourth of the total work force, paints a promising picture. The quality of such jobs, though, must be an issue of concern. |
| |
| The other important conclusion that can be arrived at, based on the Census, is that it is incorrect to assume that rural India is only about agriculture. The commonly-held perception that 60 per cent of the population live off agriculture (which accounts for less than 20 per cent of GDP) is clearly wrong; a substantial chunk of the rural population is engaged in non-agricultural pursuits, even though they may be related to or supporting agriculture (like trade in agro-products). In other words, a drought does not automatically imply that rural India is on the verge of collapse. Over 60 per cent of the enterprises, the Census finds, are located in rural India and these have been growing at a faster rate than their counterparts in urban areas, and 85 per cent of all the enterprises are engaged in non-agricultural activities. The economist Omkar Goswami has argued that agriculture accounted for just 46 per cent of rural India's income in 2000-01, while industry took up another 21 per cent and services the remaining 33 per cent. That would explain why, while agriculture grew quite slowly between 1993-94 and 2000-01, rural incomes grew by 6.2 per cent per year in real terms. |
| |
| It is also a mistake to draw straight inter-state comparisons on the basis of the Census. Given the tiny size of most of the enterprises, it is logical that the more populous states will report more enterprises than smaller states like Gujarat. This is to be expected, and should not be confused with the level of industrial activity in any state""which is better reflected by the development of the organised sector. |
| |
|
| |
