Key Findings of the ASUSE 2022-23

Source: The post Key Findings of the ASUSE 2022-23 has been created, based on the article “The unorganized sector needs a revival to tackle unemployment” published in “Live mints” on 12th July 2024

UPSC Syllabus Topic: GS Paper3- Indian Economy- Issues relating to growth, development and employment.

Context: The article discusses the challenges faced by India’s informal sector, based on data from the Annual Survey of Unincorporated Sector Enterprises (ASUSE). It shows that the sector hasn’t grown in terms of business size or worker count and has seen declining income and worker earnings.

For detailed information on India’s informal sector read this article here

What is the Annual Survey of Unincorporated Sector Enterprises (ASUSE)?

1. The ASUSE is conducted by the National Statistical Office (NSO).
2. It provides data on the unorganized sector.
3. It used to be done every five years but is now an annual survey. The recent surveys are for 2021-22 and 2022-23.

What are the Key Findings of the ASUSE 2022-23?

1. Total Enterprises: The number of informal enterprises increased slightly from 63.4 million in 2015-16 to 65 million in 2022-23.
2. Composition of Enterprises: Approximately 85% of these enterprises are own-account enterprises (OAEs), indicating a majority are operated by the owners without additional employees.
3. Employment Trends: There was a decline in the number of workers in the unorganized sector, dropping from 111.3 million in 2015-16 to 110 million in 2022-23.
4. Economic Contribution: The Gross Value Added (GVA) by the sector declined at 0.5% annually between 2015-16 and 2022-23, indicating a reduction in economic productivity.
5. Income Levels: GVA per enterprise was ₹238,168 in 2022-23, with OAEs generating just ₹127,073 per unit, highlighting low-income generation in this sector. GVA per enterprise and GVA per worker both saw declines in this period.

What are the challenges faced by India’s informal sector?

1. Economic Shocks: The informal sector was heavily impacted by demonetization and the GST rollout, which disproportionately affected smaller, unorganized businesses compared to the formal sector.
2. COVID-19 Impact: The pandemic further stressed the sector, especially evident in the 2021-22 survey results.
3. Limited Technology Use: Only 6% of enterprises reported using computers in 2022-23, marginally up from 5% in 2015-16, showing slow technological adoption.
4. Access to Capital: The sector struggles with obtaining credit, staying largely outside the scope of government financial assistance programs.

Way forward

The informal sector is lagging behind the formal sector. Economic shocks and long-term policies have worsened their prospects. Reviving this sector is essential for improving incomes, demand, and employment in the economy.

Question for practice:

Discuss the challenges faced by India’s informal sector as highlighted in the ASUSE 2022-23 findings.