Economic Census – 11

Non-Agricultural Enterprises By Economic Activities – Manufacturing*

1. Introduction

Manufacturing has been the second important economic activity among non-agricultural enterprises with about 21-35 per cent of the non-agricultural enterprises engaged in it as per different Economic Censuses. Sixty one per cent of own-account non-agricultural enterprises and thirty nine per cent of establishment with at least one hired worker have been engaged in these activities. These are in terms of the number of enterprises but in terms of output and other volume parameters the manufacturing sector should be dominant economic activity amongst non-agricultural enterprises.

This note, the eleventh in the series of notes dealing in different aspects of data collected through Economic Censuses, mainly deals with desegregation of enterprises grouped under manufacturing 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 1991 which was not done in Jammu and Kashmir , that Economic Census of 1990 also did not cover Jammu and Kashmir .  

3. Manufacturing Activities: Coverage of Items

All the information gathered under different economic activities identified as belonging to manufacturing activities has been grouped under the said group.

A broad list of economic activities that have been grouped under manufacturing is presented in Table 1.

4 Manufacturing Enterprises: The Growth in Number

It is found that over a longer period, the share of manufacturing enterprises in total non-farm enterprises was declining but it was arrested during the latest period 1998-2005. Secondly, the share of manufacturing enterprises in rural areas has continuously fallen with corresponding increases in urban areas. The number of enterprises engaged in manufacturing activities increased by 2.3 million from 6.0 million in 1980 to 8.3 million in 2005 with an annual growth (CAGR) of 1.3 per cent during the 25-year period. Actually the decadal growth has been uneven; there was a negative annual growth of 1.1 % between EC-1980 and EC-1990 and the growth rate between EC-1990 and EC-1998 was niggardly at 0.4%. But there was a smart pick up between EC-1998 and EC-2005 when the annual growth was perked up to 6.0%. As a result, the share of manufacturing enterprises in all non-agricultural enterprises picked up to 23.3% according to EC-2005, thus arresting the declining trend earlier, from 35.3% in 1980 to 20.6% in 1998.

            During 1998-2005, the number of enterprises in urban areas increased faster with an annual growth of 6.6% and in rural areas the growth was sizeable at 5.6%. The share of rural manufacturing enterprises in total manufacturing enterprises fell from 64.2 % in 1980 to 62.0% and that in urban areas witnessed a corresponding increase. 

5. Distribution of Manufacturing Own-Account Enterprises and Manufacturing Establishments with at least one Hired Worker

Among all manufacturing enterprises, the share of own-account enterprises has witnessed continuous decline over different economic censuses with corresponding increases in the share of establishments. Thus their share of OAEs has came down from about 78 % in 1980 to 61% in 2005 with corresponding increases in the share of establishments from 22.1% to 38%. This trend has been the same among rural and urban manufacturing own-account enterprises as well as establishments. Within the rural areas, the share of OAEs has declined from 85.7% in 1980 to 69.4% in 2005 while that of establishments has risen from 14.3% to 30.6%. Likewise, in urban areas, the share of OAEs has slipped from 63.8% to 47.9% and that of establishments have risen from 36.2% to 52.1%.

6.Trend in the Number of Own-Account Manufacturing Enterprises

An addition of 0.5 million own-account manufacturing enterprises has been witnessed during the 25-year period to reach 5.1 million in 2005. While own-account manufacturing enterprises in rural areas has risen by 0.30 million, that in urban areas has increased by 0.15 million during the 25-year period. The share of own-account manufacturing enterprises conducting their business from both rural and urban areas is more or less the same in 1980 and 2005. The annual growth rate (CAGR) had been miniscule at 0.4 % all along the 25-year period with the period between 1980 and 1990 witnessing a negative growth rate both among rural and urban own-account manufacturing enterprises; even between 1990 and 1998 also the annual growth rate was meager, but the period 1998 to 2005 witnessed an appreciable growth among both rural and urban manufacturing OAEs resulting in the overall annual growth rising to a positive growth of 0.4 per cent. The share of manufacturing OAEs in all own-account non-agricultural enterprises witnessed a decline over the years though there has been a minor pick up between 1998 and 2005. However, its share in all non-agricultural enterprises in rural areas witnessed a continuous decline while that in urban areas there has been a small edging up from 8.6 % in 1998 to 9.5% in 2005.

7.Trend in Manufacturing Establishment with Hired Workers

Manufacturing establishments with hired workers have witnessed a 2.4-fold increase from 1.3 million in 1980 to 3.2 million in 2005; while in rural areas, 1.0 million manufacturing establishments were added, in urban areas 0.9 million establishments has been added during the 25-year period.

            The share of rural manufacturing establishments rose from 41.3% in 1980 to 49.0% in 2005 while that of urban areas fell from 58.6 % in 1980 to 51.0% in 2005. The fastest growth rate (CAGR) of 9.5% between 1998 and 2005 in manufacturing establishments pushed up the over all growth rate to 3.6% between 1980 and 2005. Growth rate in rural areas during 1998-2005 at 11.1% has been the fastest and sharpest between any two different censuses, and that in urban areas at 8.1% has also been substantial, that is, more than the growth rates during 1980-90 and 1990-98. The share of manufacturing establishments in total non-agricultural establishments with hired workers, after witnessing declines from 27.9 % in 1980 to 22.1% in 1990 and then to 19.9% in 1998, picked up to 23.2 % in 2005. The same trend had been witnessed when one considers the share of manufacturing establishments in all non-agricultural enterprises.

8. Directory and Non-Directory Establishments

Among 3.2 million manufacturing establishments with hired workers in 2005, there were 2.7 million (84%) non-directory establishments and 0.6 million  directory establishments. The share of manufacturing enterprises (OAE+Estt) in non-agricultural activity, though picked up somewhat between EC- 1998 and EC-2005, has shown the long term trend of a steep fall from 35.3% in 1980 to 23.2% in 2005; in fact, between 1980 and 1998, the fall was persistent and steeper still, from 35.2 % to 20.6%. Within manufacturing establishments, both own-account enterprises and establishments with hired workers have observed the same long-term trend. But, between 1998 and 2005, a period in which the share of manufacturing establishments has improved, the improvement has only been under non-directory establishments with directory establishments loosing out in their share. These provide clear evidence that in the recent period, it is the number of small manufacturing enterprises that have grown faster in number; especially its CAGR in rural areas during the period 1998-05 was the steepest at 14.1%.

9. Selected Characteristics of Own-Account Manufacturing Enterprises

  As per EC-2005, out of the 0.93 million seasonal non-agricultural enterprises in 2005, 0.25 million forming about 37.4 per cent were own-account manufacturing enterprises.  However, such seasonal enterprises had declined from 0.40 million in 1998 to 0.35 million in 2005.

Contrary to this trend perennial own-account manufacturing enterprises have risen from 3.4 million in 1990 to 4.7 million in 2005. At this level the share of perennial  manufacturing OAEs in total manufacturing OAEs works out to be 93.2 per cent and it was 90.3 per cent in 1990.

There were 4.8 million non-agricultural own-account enterprises which were operating without premises in 2005, out of which 0.61 million own account enterprises were engage in manufacturing activities and they form about 12.6 per cent of the total own account non-agricultural enterprises. In spite of a fall in such enterprises over the years, among all own-account manufacturing enterprises 11.9% enterprises were operating without premises in 2005. 

            As many as 3.6 million own account manufacturing enterprises has been operating without using power or fuel in 2005, an increase of 1.1 million own account manufacturing enterprises from 2.5 million such enterprises in 1990.

10. Selected Characteristics of Manufacturing Establishments with Hired Workers

According to EC-2005, out of 483,000 seasonal non-agricultural establishments, manufacturing seasonal establishments with hired workers at 221,000 forms about 45.8%.  The number of seasonal manufacturing establishments with hired workers has increased from 166,000 in 1980 to 221,000 in 2005 registering a one-half decadal increase of 33.1 per cent. However, the proportion of seasonally operated manufacturing establishments to total manufacturing establishments have dwindled from 58.7 % in 1990 to 45.8 % in 2005. As against this number of manufacturing establishments with hried workers operating through out the year has witnessed an addition of 1.6 million establishments during the period. However, their share in total manufacturing establishments witnessed a long-term up-trend (Table 8).

            While the proportion of manufacturing establishments with hired workers operating without premises to total non-agricultural establishments with hired workers steadily decline from 26.8 % in 1990 to 20.7% in 1998 and then to 17.9% in 2005; their absolute number steadily rose from 0.9 lakh in 1990 to 1.57 lakh in 1998 and then to 2.5 lakh in 2005.

            More than three-fold increase has been witnessed in the number of manufacturing establishments operating without power from 5.17 lakhs in 1990 to 16.57 lakhs in 2005. In 2005, about 51 per cent of total manufacturing establishments with hired workers and 17.9% of total non-agricultural establishments with hired workers were conducting their activities without using power.

11. Social Group Ownership of Own-Account Manufacturing Enterprises