Economic Census – 10

Distribution of Enterprises by Economic Activities: Trading Activities*

1. Introduction

Trade has been the most prominent economic activity among non-agricultural enterprises with about 35-44 per cent of the non-agricultural enterprises engaged in it as per different Economic Censuses. Fifty-one per cent of own account non-agricultural enterprises and thirty-four per cent of establishment with at least one hired worker has been engaged in these activities.

This note, the tenth in the series of notes dealing in different aspects of data collected through Economic Censuses, mainly deals with information grouped under trading activities.

2. Limitations

1.      Different EC have followed different NIC systems prevalent at the time of each EC for grouping different economic activities. Thus, there can be some differences in the method used for grouping different economic activities of enterprises. However, these differences do not make any difference at the major group level.

2.       Each Economic Census has to be conducted in all states and Uts, but due to some unavoidable circumstances, EC 1980 did not cover Assam , and as EC 1990 was synchronized with the house-listing operation of decennial Population Census 1991which was not done in Jammu and Kashmir , the Economic Census 1990 also did not cover Jammu and Kashmir .

3. Trading Activities: Definitions and Coverage

All information gathered under trading activities have been usually under two categories: wholesale trade and retail trade; the classification depend upon the behavior/volume of their activities.

A broad list of activities under wholesale and retail trade has been presented in Table 1.

4. Growth in the Number of All Trading Enterprises

The number of enterprises engaged in trading activities has multiplied more than two-fold from 6.0 million in 1980 to 15.8 million in 2005. The Fifth Economic Census conducted in 2005 reveals that there have been 15.8 million enterprises spread over in rural and urban India , with 51.6% of total enterprises numbering 8.2 million engaged in their economic activities in rural areas and 7.6 million forming about 48.4% conducting their business activities in urban areas. It can be seen from Table 2 that the annual growth rate (CAGR) was the fastest between 4^{th (1998)} and 5^{th (2005)} Economic Census at 4.8%. It is for this reason that the CAGR almost doubled in case of enterprises in rural areas during 1998-2005 as compared to that between 1990-1998. Urban enterprises have also witnessed some acceleration during 1998-2005 as compared with that in urban areas but at a slower pace as compared to that in rural area. It happened after experiencing some deceleration in growth during the 1990s from that in the 1980s. This deceleration was the sharpest in rural areas. Again, acceleration in the growth after the 1990s has been also the sharpest in rural India . However, overall growth during the 25-year period has been more or less the same in both urban and rural areas. Urban growth rate has been 3.8% during 1998-2005 as compared to 3.5% during 1990-1998. The prominence of trading activities represented by maximum number of enterprises can be gauged from the fact that their share in all non-agricultural activities has formed 44.2 per cent in 2005 with the urban share at 48% and the rural share at 41.1%.

5 Shares of Retail and Wholesale Activities in Total Trade

Trade consists of wholesale and retail trade. However, in terms of the number, the share of wholesale trade has been miniscule at about 5 to 6 per cent according to each Economic Census.

 No doubt the actual wholesale enterprise number has risen from 5.5 million in 1990 to 8.5 million in 2005, an addition of 3.0 million enterprises during the 15-year period ending 2005. On the other hand, addition of as much as 57.0 million enterprises has been witnessed in retail trading enterprises during the period between 1990 and 2005 (Table 3).

6. Distribution of Trading Own-Account Enterprises and Trading Establishment with at least one Hired Worker

In 2005, the shares of own-account trading enterprises and trading establishment with at least one hired worker have been 69.8% and 30.2%, respectively (Table 4).  While the shares of own-account trading enterprises in total trading enterprise have been declining over the years those of trading establishments have registered corresponding increases. Trading enterprises operating from rural and urban areas also recorded the same trend though own-account trading enterprises obviously have a larger presence in rural areas.

7. Own-Account Trading Enterprises

Own-account trading enterprises are enterprises engaged in trading activities either wholesale or retail and normally run by members of the households without hiring any worker on a fairly regular basis. Table 5 shows details of own-account non-agricultural trading enterprises as revealed by different Economic Censuses. The number of own-account enterprises engaged in trading activities more than doubled from 5.0 million in 1980 to 11.0 million in 2005. While own-account trading enterprises in rural areas have increased from 2.8 million in 1980 to 6.4 million in 2005, those in urban areas have risen from 2.2 million in 1980 to 4.6 million in 2005. The share of own-account enterprises conducting trading activities in rural areas after declining from 55.5% in 1980 to 54.3% in 1998 sharply increased to 58.3% in 2005. In urban areas, the number of trading own-account enterprises, after increasing from 44.5% in 1980 to 45.7% in 1998, witnessed a sharp decline to 41.7% in 2005. At this level, the own-account non-agricultural trading enterprises have grown at a CAGR of 3.2% during the 25-year period ending 2005.

While growth rate among rural enterprises has been 3.4% that in urban areas works out to be 2.9% during the 25-year period. However, the growth rate among rural enterprises has been twice as that among urban enterprises. The share of own-account trading agricultural enterprises in total non-agricultural enterprises after registering an increase from 29.6 per cent in 1980 to 32.7 per cent in 1998, witnessed a decline to 30.9 per cent in 2005. This trend has been seen both in rural and urban enterprises. However, the share of own-account trading enterprises in total own-account non- agricultural enterprises has been registering continuous increase over the years (Table 5).

8. Trading Establishment With at Least One Hired Worker

Trading enterprises run by employing at least one hired worker on a fairly regular basis is termed as trading establishments with at least one hired worker for the purpose of Economic Censuses. Table 6 shows the details of such trading non-agricultural establishments with hired workers according to different Economic Censuses. The number of trading establishments with at least one hired worker (hereafter trading establishments.) has risen almost five-fold in the 25-year period i.e., from 1.0 million in 1980 to 4.8 million in 2005.While in rural areas, it has risen from 0.3 million in 1980 to 1.7 million in 2005, that in urban areas has expanded from 0.7 million in 1980 to 3.0 million in 2005.

However, the share of trading establishments conducting their activities from rural areas initially declined from 29.0% to 27.0 % in 1990, but thereafter it has increased to 28.4% in 1998 and spurted up to 36.2% in 2005. Contrariwise, urban trading establishments after increasing to 73.0% in 1990 from 70.9% in 1980, lost out in proportions; they fell to 71.6% in 1998-2005 in the next seven years fell to 63.8% in 2005. The overall CAGR during the 25-year period works out to 6.3%, with 1998-2005 period witnessing an unprecedented growth rate of 8.8% with a still sharper growth of 12.7% in rural trading establishments.

  The share of trading   establishments in the total non-agricultural activities steadily increased from 6.1% in 1980 to 13.3% in 2005. The establishments, both in rural and urban areas, have exhibited the same trend. Table 6 also throws some light on the share of trading establishments in all non-agricultural establishments with hired workers It can be seen therefrom , that the share has been steadily increasing, with both rural and urban trading establishments exhibiting the increasing trend.

9. Directory and Non-Directory Trading Establishments

Out of 4.8 million establishments with hired workers, 4.5 million (94.2%) were non-directory establishments with less than six hired workers; the number of directory trading establishments with six hired workers or more was only 0.3 million in 2005 (Table 7). Within the establishments also, the share of trading establishments has gone up from 21.8 % to 34.2 (Table 7). Within them again, the expansion in share of smaller non-directory establishments has been sharper. The number of such small non-directory establishments growth in rural areas as well as in urban areas added about one million trading establishments each between 1998 and 2005. Impressive annual growth rate in non-directory trading establishments as compared to directory establishments were witnessed between 1998 and 2005. The growth rate among rural non-directory trading establishments at 8.93% was sharper than that among urban trading establishments (7.38%) between 1998 and 2005.

10. Selected Characteristics of Own Account Trading Enterprises

It has been observed that there were 0.93 million seasonal own-account non-agricultural enterprises in 2005. Out of these, 0.39 million own-account trading enterprises were seasonal in 2005, which formed about 42.1% of the total seasonal own- account non-agricultural enterprises or 3.5% of trading own-account enterprises. These enterprises, after raising from 0.84 million in 1990 to 1.1 million in 1998, registered a fall in the next eight years to reach 0.93 million in 2005.

On the other hand, perennial own-account trading enterprises, which formed about 51.0% of total own-account non-agricultural enterprises (20.9 million) in 2005, recorded continuous increases from 14.8 million in 1990. Among own-account trading enterprises, perennial enterprises formed about 95.0 per cent as per different Economic Censuses.

According to EC-2005, there were 4.8 million own-account non-agricultural enterprises operating without premises, out of which 2.5 million enterprises forming about 51.2% were engaged   in trading activities. It can be seen from Table 8, that own-account trading enterprises operating without premises increased from 1.6 million in 1990 to 2.5 million in 2005, an addition of 0.9 million during the 15-year period. Among own-account trading enterprises that were operating without premises formed about 22.4% in 2005.

Own-account enterprises conducting their activities without power have been 16.9 million in 2005, of which 9.7 million (57.5%) were engaged in trading activities. In 1990 out of 13.0 million total own account enterprises conducting their business without power, there were 6.9 million own-account trading enterprises. Though there has been an increase of 2.8 million own-account trading enterprises that conduct their business without power it has been observed that their share in total own account trading enterprises came down from 96.8% in 1990 to 88.2% in 2005.  

11. Selected Characteristics of Trading Establishments with Hired Workers

There were 13.9 million non-agricultural establishments with hired workers in 2005, out of which 4.8 million establishments with hired workers had been engaged in trading activities. It has also been observed that there were 0.49 million seasonal non-agricultural establishments, out of which 0.12 million forming about 25.3% were engaged in trading activities. Such seasonal trading enterprises have risen from 40,000 in 1990 to 122,000 in 2005, an addition of 82,000 establishments within a 15-year period.

Perennial establishments numbering 13.5 million formed 96.5% of the total non-agricultural establishment as per EC-2005. Out of these, 4.6 million establishments with hired workers accounting for 34.5% have been perennial trading establishments with hired workers in 2005. Such trading establishments more than doubled during the 15-year period from 0.17 million in 1990 to 0.46 million in 2005.

There were 1.4 million non-agricultural establishments with hired workers forming about 10.0 per cent of the total working without premises in 2005. Among them, 0.5 million establishments forming 39.1% were engaged in trading activities. As against this, in 1990,there have been 0.08 million trading establishments working without premises.

About 41% of the establishments with hired workers, who have been doing their business without using power in 2005, were engaged in trading activities as compared to 31.0% in 1990.

12. Social Group Ownership –Own-Account Trading Enterprises