Unorganised manufacturing sector in the national economy and Gujarat state: an analysis of its growth dynamics and contribution to national income

In the Indian National Accounts Statistics, those units which are not registered under Section 2m (i) and (ii) of the Indian Factories Act 1948, constitute the Unorganised Manufacturing Sector (UMS) and India is one of the few countries in the world where systematic efforts are made to collect information on employment and contribution to national income by the unorganised sector. This study, mainly relying on the various NSS Rounds, beginning with 1978-79 analysed the growth pattern of the UMS at the all India level and of the state of Gujarat.

During the entire study period 1978-95, UMS at all India and in Gujarat grew in terms of units, employment and value addition. However, in the different sub-periods, the growth pattern is not the same in all India and Gujarat. While 1978-85 is the buoyant period for the UMS at national level, in Gujarat, employment decreased in most of the sectors. In the 90s, units and employment have declined in the UMS. Mostly, growth in units and employment in the UMS are induced by economic circumstances prevailing then, like availability of working capital, naw material or factors that determine the day-to-day functioning of the unit. Importantly, increase in employment does not lead to increase in the value addition of the same magnitude, implying that at least a certain proportion of the work force is in the UMS as a survival strategy because the entry into the organised sector is also restricted. However, some of the dynamic units respond positively to the changes in demand and these units require more labour, fixed and working capital, funds, etc.

This study observed a reduction in the number of female workers also. While under-reporting of female workers could be one of the reasons for such a decline, a fall in the demand for female workers can also not be ruled out. Generally, female workers were concentrated in traditional industrial sectors. This study emphasises the need to provide economic or employment security to the UMS workers since a large number of workers are engaged in the UMS as unpaid workers and the number of casual workers is also increasing.