Rebuilding India 9

Nurture Self - employment Sector

A unique feature of the Indian economy is the self-employment sector. It plays a very significant role, providing livelihood to larger sections of the society in different parts of the country. Indians by nature prefer self-employment, as their traditions encourage it above all other forms.

Self-employment provides the necessary freedom and opportunities to lead independent lives. Besides, there are ample scope for people with original ideas to take up new initiatives. It is an ideal system as both the capitalist and socialist models have serious limitations.

While the non-corporate activities occupies the largest space in the Indian economy, the self–employment sector has a higher share in it. It has very high presence with shares of about three-fourth or more in   the fastest growing service areas such as trade, transports, construction, hotels and restaurants. Besides many service providers such as doctors, lawyers and a variety of others belong to this category.

Details show that the largest number of work force in the country is involved in this sector. Table 1 presents figures relating to the distribution of workforce by the categories of employment from 1983 to 1999-2000 based on the different rounds of data of the National Sample Survey Organisation.

Table 1 Distribution of workforce by category of employment

Year	Self-employment	Regular Salaried Employment	Wage Employment
1983	57.4	13.9	28.7
1987-88	56.0	14.4	29.6
1993-94	54.8	13.2	32.0
1999-00	52.9	13.9	33.2

The figures reveal that the self-employment sector has continued to provide employment for more than half of the work force. At the same time it is relevant to note that the employment opportunities have been slowly declining.

People engaged in self-employment activities remain higher in the country. Table 2 presents the number of persons in self-employment and the labour market (per 1000 distribution of population by household type) in rural areas between 1993-94 and 2009-10.

Table 2

Self-employment and Labour per 1000 distribution of population by household type- Rural

	1993-94	1999-2000	2004-05	2009-10
Self- employment
Agriculture	424	371	398	355
Non- agriculture	131	139	167	164
Total	554	509	565	519
Labour
Agricultural labour	275	301	241	238
Other labour	75	76	106	148
Rural labour	350	376	346	387

Source: National Statistical Organisation, Govt. of India, 2011

The figures show that self-employment sector was accommodating a very high proportion of the population (90.4 per cent) in the rural areas during 1993-94.  Out of every 1000 persons, 554 (55.4 percent) were engaged in self-employment activities. Besides, the sector provided employment to 35 per cent of population as labourers.

Agriculture accounted for more than three fourth of the self-employed population. Besides, it provided opportunities for nearly 80 percent of the labour force. As a result more than 77 percent of the rural population was   dependent on agriculture during 1993-94. At the same time, 13.1 percent of people were engaged in on non-agricultural self-employment activities. About 21 percent of the rural population was depending on non-agricultural activities for their livelihood.

It is important to note that after sixteen years, during 2009-10, the percentage of self-employed population in rural areas had come down to 51.9 per cent, showing a decline of 3. 5 percent. It is due to the steep decline in agriculture, from 42.4 to 35.5 percent. Self-employment in non-agricultural activities had increased by more than three percent during the same period, indicating that about half of the people who left agriculture had shifted to other activities in their own areas.

The percentage of rural labour was 38.7 per cent of the population during 2009-10, showing that it had increased by nearly four percent during sixteen years. One important reason for this is the decline of agriculture leading to huge loss of employment. Meanwhile, the category of other labour increased almost by hundred percent during the above period.

Table 3 presents the number of persons (per 1000 distribution of population by household type) in the self-employed, regular wage/salaried, casual labour and other categories in urban areas from 1993-94 to 2009-10.

Table 3 Self-employment per 1000 distribution of population by household type- Urban

	1993-94	1999-2000	2004-05	2009-10
Self-employed	388	393	433	406
Regular Wage/ Salaried	428	402	396	385
Casual Labour	129	141	118	142
Others	55	63	52	66

Source: National Statistical Organisation, Govt. of India, 2011

The above figures show that 38.8 percent of the population in urban areas was engaged in self-employment activities during 1993-94. A higher proportion of people (42.8 percent) belonged to the regular wage/ salaried classes, while about 13 per cent was identified as   casual labour.

The figures for 2009-10 reveal that over a period of sixteen years, the share of the self-employed population in urban areas had increased by about two percent. At the same time, the proportion of the regular wage/salaried classes had declined by more than four percent, while the percentage of causal labour had increased.

Self-employment remains the major activity of the households in different parts of the country.  Its shares in the rural areas remained   higher with 66 per cent in Assam, 65 per cent in Rajasthan and 61 per cent in Uttar Pradesh. The percentage of the self-employed households is higher in the urban areas in some of the major states of the country. The shares were 50 per cent in Bihar, 44 per cent in Uttar Pradesh and 41 per cent in Rajasthan. It is important to note that the self-employment activities remain critical for the major states of the country.

The figures between 1993-94 and 2009-10 reveal that the proportion of population depending on self-employment in the country had been coming down. The decline is more in the rural areas, due to the problems in the agricultural sector. As a result, the proportion of people belonging to the rural labour and urban casual labour had increased. At the same time the share in the wage/salaried segment had decreased leading to loss of secured jobs.

The above developments reveal that the failure of agriculture in rural areas have been pushing more people out of it. As a result, the other related self-employment activities in the rural areas get affected.  It has led to an increasing number of people joining the casual labour market, both in the rural and urban areas.

The self-employed sector is a self-made one that does not depend on the governments. Moreover this sector is the breeding ground for the many of the bigger enterprises in future. The major business and industrial centres of the country today were once the initiatives of a few entrepreneurs from this category. This sector has played a crucial role in laying the foundation for the growth of Indian economy after independence. Besides, the economic development of different regions over the years has been largely driven by the self- employed sections.

In spite of its enormous significance, this sector has been facing problems over the years. Their difficulties got aggravated during the recent years. Further weakening of this sector would affect the sustainability of our economic system. It is time that we took immediate steps to nurture them, as they remain the strong foundation of the Indian economy.  

Reference:

National Sample Survey Organization Reports, Govt. of India

National Statistical Organization, Government of India

( Yuva Bharathi, Vol.42, No.2, Sept.2014)