Citing the recent data on the Annual Survey of Industries, the Survey notes that the total number of factory jobs grew annually by 3.6% between FY14 and FY22 or from 1.04 crore to 1.36 crore in absolute numbers. Somewhat more satisfyingly, they grew faster at 4% in factories employing more than a hundred workers than in smaller units with less than 100. The annual growth rate was 1.2%, dismal by any standards and crudely confirms the fact that the informal sector continues to survive the harshness of life’s winter. All on its own.
India doesn’t yet have a corresponding Annual Survey of Services. The lack of availability of timely data on the absolute number of formal and informal jobs created even at annual intervals, let alone at higher frequencies, in various sectors precludes an objective analysis of the labour market situation in the country. Considering the twin shocks of bad loans and the pandemic impact, India’s ability to create jobs isn’t structurally impaired, but going forward, the task is cut out, the Survey admits.
MSMEs – the very pulse of life itself
Meanwhile, it declares that MSMEs are the very pulse of life itself. They account for 45% of manufacturing output and employ over 11 crore and so strengthening MSMEs is central to the next phase growth. But the sector is stuck, rather suspended between what is and what could have been, thanks to the triple shocks of demonetisation, GST rollout and the Covid-19 pandemic. The government did rollout credit guarantee schemes and so on, but the continue to start each new year feeling fragile and on the back foot.
Nageswaran does acknowledge as much and equating them with Mittelstand, which refers to a group of businesses in European countries that have proved successful in enduring economic change and turbulence, he concluded that the sector continues to face extensive regulation, compliance requirements and faces bottlenecks with access to affordable and timely funding. Citing the Lok Sabha Standing Committee on Finance’s April 2022 report, he noted that the credit gap in the MSME sector is estimated to be Rs 20-25 lakh crore.
Highlighting how kind we are to our farmers
Coming to agriculture, the Survey glosses over the attention it showers on the farming community. Sample this: India subsidises their water, power and fertilizers. The former two are provided virtually free. Their incomes are not taxed. The government offers them a minimum support price for 23 selected commodities. Monthly cash support is offered through PM-Kisan scheme. State and central governments write off their loans. In sum, we spend enough resources to look after the farmers well. but need re-orientation of existing and new policies.
That said, Nageswaran suggests that farm sector can be the saviour, given the narrowing scope for countries to squeeze out growth from manufacturing and services.
“A return to roots, as it were, in terms of farming practices and policymaking, can generate higher value addition from agriculture, boost farmer’s income, create opportunities for food processing and exports and make the farm sector fashionable and productive,” he observed.
Household stress
On the issue of household stress, the Survey offers a rare horror-satire moment, when you don’t know whether to fear or laugh. While official data shows that the net household savings declined sharply to Rs 14.16 lakh crore in three years to 2022-23, from Rs 17.12 lakh crore in FY22, and Rs 23.29 lakh crore in FY21, Nageswaran maintained that they are not in distress and in fact investing in financial and physical assets that have gone up from 10.8% in FY21 to 12.9% in FY23.
“Especially in last 4 years the foray of retail investors into stock market through SIPs and mutual funds has been quite prolifically documented. Our national income data do not record this at market prices and that is the reason why there is a feeling financial liabilities have grown faster than financial assets of households,” Nageswaran said.
