Annual Survey of Unincorporated Sector Enterprises 2023-24

• 26 Dec 2024

For Prelims: Annual Survey of Unincorporated Sector Enterprises (ASUSE), Unincorporated Non-Agricultural Establishment, Informal Sector, MSMEs, Self-Help Groups (SHGs), Cooperatives, Gross Value Added, Gross Value of Output, Formal Sector, Supply Chain, Minimum Wages, Directive Principles of State Policy. 

For Mains: State of unincorporated sector enterprises in India, Associated challenges and way forward. 

Source: PIB 

Why in News?  

Recently, the Ministry of Statistics and Programme Implementation (MoSPI) has released the results of Annual Survey of Unincorporated Sector Enterprises (ASUSE) for 2023-24 for the reference period October 2023 – September 2024. 

• A reference period is a specific time frame used for collecting and analyzing data or statistics. 

What is ASUSE? 

• About: ASUSE exclusively measures various economic and operational characteristics of unincorporated non-agricultural establishments in manufacturing, trade and other services sector (excluding construction). 
  • Unincorporated non-agricultural establishments are enterprises in the unorganised or informal sector, comprising MSMEs, household units including those with hired workers, and own-account enterprises.  
• Coverage: 
  • Geographic: Rural and urban areas of the whole of India (except the villages in Andaman and Nicobar Islands, which are difficult to access). 
  • Sector Wise: Unincorporated non-agricultural establishments belonging to three sectors viz., Manufacturing, Trade and Other Services. 
  • Ownership: Proprietorship, partnership (excluding Limited Liability Partnerships), Self-Help Groups (SHGs), cooperatives, societies/trusts etc. 
• Survey Timeline: The first full ASUSE was conducted in 2021-22 (April 2021 - March 2022), followed by the 2^nd survey from October 2022 to September 2023. 
  • The current 3^rd survey (ASUSE 2023-24) was conducted from October 2023 to September 2024. 
• Sample Size: In ASUSE 2023-24, data were collected from a total of 4,98,024 establishments (2,73,085 in rural and 2,24,939 in urban) from 16,842 surveyed first stage units (8,523 in rural and 8,319 in urban). 
  • First stage units were census villages in rural areas and blocks in urban areas.  

What are the Key highlights of the ASUSE 2023-24 Results? 

• Growth in Establishments: Total number of establishments increased by 12.84%, from 6.50 crore in 2022-23 to 7.34 crore in 2023-24. 
  • The "Other Services" sector showed the highest growth at 23.55%, followed by the manufacturing sector with a 13% increase. 

 

• GVA Growth: Gross Value Added (GVA) rose by 16.52%, driven largely by a 26.17% growth in the "Other Services" sector. 
  • GVA per worker increased by 5.62%, rising to Rs. 1,49,742 in 2023-24 from Rs. 1,41,769 in 2022-23. 

• Output per Establishment: Gross Value of Output (GVO) per establishment grew by 6.15% from Rs. 4,63,389 to Rs. 4,91,862 in current prices. 
  • GVO refers to the total value of goods and services produced by an establishment during a specific period. 
• Labour Market Performance: The sector employed over 12 crore workers, an increase of more than one crore from 2022-23, signaling robust labour market growth. 
  • "Other Services" sector saw the highest annual growth of 17.86%, followed by manufacturing with 10.03%. 
• Female Entrepreneurship: Female-owned proprietary establishments rose from 22.9% in 2022-23 to 26.2% in 2023-24, indicating a positive trend in women’s business ownership. 

 

• Improvement in Wages: Average emoluments for hired workers increased by 13% in 2023-24, with the highest growth observed in the manufacturing sector (16%). 
• Digital Penetration: Establishments using the internet grew significantly, from 21.1% in 2022-23 to 26.7% in 2023-24, highlighting a strong trend toward digital adoption in business operations. 

 

Key Concepts and Definitions 

• Enterprise: An entity producing goods and services with autonomy in financial and investment decisions, responsible for resource allocation. 
• Unincorporated Non-Agricultural Establishment: They are not incorporated (i.e., neither registered under Companies Act, 1956 nor under Companies Act, 2013). 
• Manufacturing Establishment: Units involved in transforming materials into new products or providing manufacturing services, including maintenance and repair. 
• Emoluments: Regular payments (salary, wages, bonuses) and employer contributions to social security benefits, including in-kind payments like healthcare or recreation. 
• Gross Value Addition (GVA): GVA is the difference between the gross value of output and intermediate consumption (inputs). 
• Hired Worker Establishment (HWE): Establishment employing at least one hired worker regularly. 
• Other Service Establishments: They refer to unincorporated enterprises engaged in various service activities that do not fall in trade and manufacturing categories. 

What is the Importance of Unincorporated Non-agricultural Units in the Indian Economy? 

• Employment Providers: The Economic Survey of 2018-19 reports that 93% of India's workforce is employed in the informal sector, making it the largest employment provider. 
• Regional Balance: Informal enterprises help reduce regional imbalances by industrialising rural areas and providing employment to individuals with limited capital.  
• Entrepreneurship: Small informal firms foster entrepreneurship, particularly for vulnerable groups such as women, youth, and individuals in marginalized communities.  
• Support for the Formal Sector: It provides goods and services to the formal sector that may not be efficiently produced by larger firms, or by supporting the supply chains of formal enterprises. 
• Dynamic Role: The unincorporated sector accounts for 38% of firms in services, 35% in trade (mainly retail), and 27% in manufacturing highlighting the importance of informal enterprises across different sectors. 

What Challenges Related to Unincorporated Non-agricultural Units in India? 

• Gender Disparities: Women make up a significant portion of the informal workforce, yet they face severe disadvantages, including lower wages, income instability, and the absence of social security. 
• Vulnerability to Uncontrollable Factors: During the monsoon season in India, construction activities often come to a halt, leaving migrant workers without steady work. 
• Lack of Employment Protections: Informal employment by nature lacks the protections and benefits associated with formal employment, such as written contracts, minimum wages, paid leave, and regulated working hours. 
• Tax Evasion: Many firms evade taxes by concealing revenue and expenses from the legal system resulting in a substantial loss of government revenue. 
• Challenges in Growth: Long-term stagnation remains a concern, with the sector's growth rate from 2015-2023 showing minimal expansion of only 2%. 
• Absence of Accurate Data: The Economic Survey of 2018-19 states that 93% of India's workforce is informal, while the Niti Aayog's Strategy for New India at 75 estimates it at 85%. 
• 'Report of the Committee on Unorganised Sector Statistics' of the National Statistical Commission (NSC), 2012 claims over 90% of the workforce is informal, though sources are not specified. 

Way Forward 

• Encouraging Formalization: Encourage formalization by simplifying registration processes, reducing taxes for small firms, and providing incentives for businesses to comply with labor and safety standards.  
• SHGs for Empowerment: Establishing self-help groups (SHGs) can provide informal employees with the tools and support they need to improve their working conditions and economic security. 
• Comprehensive Database: Collecting detailed data on the informal economy helps policymakers make informed decisions, design targeted interventions, and assess policy impact. 
• Equal Pay for Equal Work: The government should enforce measures ensuring equal pay for equal work, as per Article 39(d) of the Directive Principles of State Policy. 
• Capacity Development: Offer skill development programs for informal workers, covering trades like carpentry, plumbing, tailoring, food processing, digital literacy, and soft skills. 
  • Introduce apprenticeship and mentoring programs for experienced workers to train newcomers. 

Drishti Mains Question: 

Assess the role of unincorporated non-agricultural establishments in the Indian economy

 UPSC Civil Services Examination Previous Year Question (PYQ) 

Prelims 

 Q. Pradhan Mantri MUDRA Yojana is aimed at (2016)

(a) bringing the small entrepreneurs into formal financial system 

(b) providing loans to poor farmers for cultivating particular crops 

(c) providing pensions to old and destitute persons 

(d) funding the voluntary organizations involved in the promotion of skill development and employment generation 

Ans: (a) 

 Q. Disguised unemployment generally means (2013)

(a) large number of people remain unemployed 

(b) alternative employment is not available 

(c) marginal productivity of labour is zero 

(d) productivity of workers is low 

Ans: (c) 

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  Mains 

Q. Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (2023)