Informal sector enterprises faced major setback in the second Covid lockdown but recovered subsequently

Amidst the second Covid lockdown, the number of unincorporated enterprises fell to 5.03 million in the April to July 2021 period but recovered over the months to rise to 59.7 million in the year 2021-22. The number of such enterprises further rose by 5.88% to 65 million in 2022-23.

This is one of the key findings of the results of the Annual Survey of Unincorporated Sector Enterprises (ASUSE) for 2021-22 and 2022-23 that was released by the Ministry of Statistics and Programme Implementation on Friday. The surveys assess the number and impact of unincorporated non-agricultural establishments in manufacturing, trade and other services sectors (excluding construction) or the informal sector businesses.

These unincorporated non-agricultural firms play a pivotal role in the Indian economy contributing significantly to employment, gross domestic product and the overall socio-economic landscape.

Prior to this, in the ASUSE 2015-16, which was carried out as part of the NSS 73rd round, there were 63.3 million unincorporated establishments in the country with 111.2 million workers.

“…the first quarter of the survey, that is April-June 2021 has suffered the most due to the pandemic and reported a very less number of establishments and workers. The overall annual estimates also got affected to a great extent due to this. It appears that the unincorporated manufacturing, trade and other service activities were hit by the second wave of the pandemic badly; however, the situation improved gradually from July 2021 onwards,” said an official statement that was released along with the Factsheet of the latest ASUSE results. 

According to the data, the number of workers employed in these small businesses also fell to 8.56 million in the April-July 2021 period before recovering to 97.8 million in the full year 2021-22. The number of workers employed in these firms rose to 109.6 million in 2022-23, but remained below the level of 2015-16.

The gross value added by these establishments was Rs 13.4 lakh crore in 2021-22 and subsequently rose to Rs 15.42 lakh crore in 2022-23. In the 2015-16 survey, the gross value added by these establishments was Rs 11.52 lakh crore.
The maximum annual growth in employment during the period was observed in other services sector (13. 42%) followed by the manufacturing sector (6.34%). Majority of the workers in the non-agricultural unincorporated sector are informal workers. According to the survey, the average annual earnings for informal workers rose to Rs 1,10,982 in 2022-23 from Rs 1,06,381 in 2021-22. 

These are the first reports on such informal sector enterprises to be released since 2015-16 after which the NSSO decided to conduct annual surveys. The NSSO had proposed the first annual ASUSE survey for October 2019 to March 2020 period and another one for the April 2020 - March 2021. While the surveys are conducted annually, the reports had been delayed for some time. The ministry is already in the process of conducting the ASUSE 2023-24 survey.