Unorganised manufacturing sector in India during postliberalisation period

Abstract

India is known for its huge geographical spread and magnitude of its population. The major part of its working population is engaged in the informal sector and as a result this sector has remained a matter of discussion among the academicians and policymakers from the beginning. In view of its tremendous importance there is a need to focus efforts and attention to develop a comprehensive understanding about the problems, needs, issues and changes that are taking place in this sector. The unorganized sector has become a perennial source of employment generation and many organized sector industries depend upon informal sector for the supply of raw material. The present study has examined the composition of unorganized manufacturing sector of India; the growth and determinants of wages, employment and productivity and its inter-sectoral inter-regional and gender inequalities during the post liberalization period. It has also examined the need of the policy attention towards this sector. The study is based on the secondary data on unorganized sector provided by NSSO surveys. It is observed that own account enterprises account for maximum number of units and they provide employment to maximum number of persons. This sector is mainly concentrated in the three sub sectors of agro-foods, textiles and wood & wood products. The regional analysis shows that the bigger states have bigger share in enterprises and employment. The share of female workers has increased in the own account enterprises and in part time jobs. They are over represented in the total unpaid workers but under represented in the category of hired workers. The traditional sectors have higher share of female workers as compared to the modern industries. The share of unorganized manufacturing sector in total employment is much higher than its share in net domestic product pointing towards its low productivity. The growth of productivity in this sector has remained positive throughout the period of study and the labour productivity had always remained higher than that of the capital productivity. It is observed that the majority of workers are employed in low productive units and are paid very low wages so they are quite vulnerable to certain contingencies of life and they are often exposed to unhealthy, unsafe and unproductive working environment. They lack access to proper health facilities and old age benefits and are most exposed to shocks and stresses threatening their livelihood.