Unorganised Manufacturing Sector in India Its Size, Employment and Some Key Estimates

Report No. 433(51/2.2/1) Unorganised Manufacturing Sector in India Its Size, Employment and Some Key Estimates NSS Fifty-first round July 1994 - June 1995 National Sample Survey Organisation Department of Statistics Government of India August 1998

(i) P R E F A C E The National Sample Survey Organisation (NSSO) conducted the survey of the units engaged in manufacturing and repair activities in its fifty-first round : July 1994 - June 1995. This integrated survey was conducted using the list of enterprises and establishments in the unorganised sector, obtained from the Economic Census 1990. The 51st round survey covered directory manufacturing establishments in addition to own-account manufacturing enterprises and non-directory manufacturing establishments which were earlier covered in 40th & 45th rounds. Results obtained from this enquiry are being presented in three reports. The present report is the first in the series. It contains the number of unorganised manufacturing and repairing enterprises, persons employed therein and value added by these enterprises. Tables containing detailed results for the country are appended to this report. While the field work of the survey was done by the Field Operations Division of the NSSO, collected data were processed and tabulated by the Data Processing Division of the NSSO, Calcutta. I am grateful to the Governing Council members and officers of the Department of Statistics for their suggestions which have improved the quality of the report. Finally, I wish to put on record my appreciation for the team of SDRD officers for planning and designing of the survey, undertaking analysis of the tabulated data, preparing the draft report and then revising it, based on the comments received. I hope the report will be useful to planners and policy makers. Comments/suggestions for improvement will be most welcome. New Delhi August 17, 1998 S. Ray Chief Executive Officer National Sample Survey Organisation

(ii) Highlights* Out of about 1.2 lakhs enterprises surveyed in villages, only 6 per thousand maintained usable books of accounts. In urban areas, only 19 per thousand of the total of about 0.7 lakh surveyed enterprises maintained usable books of accounts. The estimated number of unorganised manufacturing and repair enterprises in India during 1994-1995 was about 145 lakhs. Of the total estimated enterprises, about 72 per cent were located in rural areas and the rest in urban areas. About 84 per cent (91 per cent for rural and 68 per cent for urban) of the total number of enterprises in the country operated usually with the help of unpaid household labour only. The remaining 16 per cent enterprises employed at least one hired worker (including paid household workers) on a fairly regular basis during the reference period of one year. About 78 per cent of the total enterprises which managed without engaging any hired worker were in the rural areas and the rest in urban areas. Out of the total establishments (each of which employed at least one hired or paid household worker), in about 71 per cent establishments, total number of workers was 5 or less each. Among the states, Uttar Pradesh had the highest number of enterprises both in rural and urban areas. Among various activities, manufacture of wood and wood products, furniture & fixtures was found to be the major activity in rural India. On the other hand, repair service was the major activity among the enterprises located in urban areas of the country. About 23 per cent of the enterprises of rural / urban India were engaged in the activities, noted above. About 99 per cent of the enterprises in rural India and 95 per cent of the enterprises in urban India were proprietary in nature (i.e. ownership vested with one person only). Partnership enterprises had a share of 1 per cent in total number of enterprises in rural India and a share of 4 per cent in urban India. Most of the enterprises (rural: 94 per cent, urban: 75 per cent) were not registered with any agency. About 66 per cent of the enterprises in rural India and about 52 per cent of the enterprises in urban India did not use any energy in their manufacturing process. The major sources of energy used by the enterprises in the manufacturing process were: electricity (rural: 8 per cent of the enterprises, urban: 30 per cent), firewood (rural: 10 per cent, urban: 3 per cent), coal/coal gas (rural: 2 per cent, urban: 3 per cent), charcoal (rural & urban: 2 per cent each) and diesel oil (rural: 4 per cent, urban: 1 per cent). * Results based on unorganised manufacturing enterprise survey (Sch. 2.2, 51st round) are resented in three reports viz. 433(51/2.2/1), 434(51/2.2/2) & 435(51/2.2/3). However, for convenience of the users, a combined set of summary statistics is presented in each of the three reports.

(iii) In rural India, about 93 per cent of the enterprises were perennial (i.e. operating almost throughout the year) and 6 per cent were seasonal. In urban India, their share was about 98 per cent and 2 per cent respectively. Of the household enterprises (i.e. those run on either proprietary or partnership basis), about 6 per cent in rural India and 4 per cent in urban India operated without any fixed premises. About 76 per cent of the enterprises in rural India and 46 per cent of the enterprises in urban India used the residences of the owners for their activity. Of the household enterprises, about 12 per cent were owned by ST's and 23 per cent by SC's in rural areas. In urban areas, they respectively owned about 2 per cent and 12 per cent of the household enterprises. The estimate of total number of persons employed in the unorganised manufacturing and repair enterprises in India was about 332 lakhs. Out of the total workers employed, about 67 per cent were engaged in enterprises located in the Indian villages and the rest in urban blocks. About 68 per cent of the total employed were engaged in enterprises operated without engaging any hired worker (including paid household worker). Nearly 31 per cent of the total workers employed were females and the rest males. Female participation in unorganised manufacturing and repair enterprises was much more in rural areas than in urban areas. There were 378 females per thousand of total employed in rural areas, as against only 175 females in urban areas. Around 56 per cent (53 per cent in rural India and 62 per cent in urban India) of the total employed were directly involved in or associated with the manufacturing process and the rest were other workers. Among those directly linked with the manufacturing process, about 23 per cent in rural India and 60 per cent in urban India were hired workers. About 9 per cent of the workers (rural: 10 per cent, urban: 9 per cent) were children. Among the child workers, percentage share of girls was about 46 per cent in rural India and 23 per cent in urban India. The average gross value added (during the reference period of last one year) was estimated as Rs. 12616 for a rural enterprise and Rs. 47496 for an urban enterprise. Contribution of the unorganised manufacturing sector, in terms of value added, to the national economy was Rs. 32275 crores, out of which little less than 41 per cent was from enterprises located in the rural areas and the rest from urban areas. Manufacture of food products industry (NIC 20 & 21 taken together) alone covered more than one-fifth (about 22 per cent) of the total value added in rural India and little more than 10 per cent in urban India. The share of Uttar Pradesh in value added in the total rural sector was about one-fifth, while Maharashtra contributed little less than one-fifth of value added in the total urban sector.

(iv) Average values of fixed assets owned, working capital (closing balance) and outstanding loan for a rural enterprise were Rs. 13406, Rs. 1787 and Rs. 1185 respectively. The same for an urban enterprise were Rs. 58957, Rs. 15939 and Rs. 8600 respectively. The total value of the fixed assets owned was about Rs. 37696 crores, of which 37 per cent was from the enterprises located in the rural areas and the rest in the urban areas. Manufacture of food products (NIC 20) had the highest share (about 16 per cent) in the total fixed assets owned. Per enterprise estimate of fixed assets owned was more in urban areas than in rural areas in each of OAMEs, NDMEs and DMEs. More than 50 per cent of the total fixed assets owned were accounted for by land and building. Besides other, plant & machinery was the only other item having noteworthy share. Much of the net additions to the fixed assets of the type owned was made for the items building and plant & machinery in each of OAMEs, NDMEs and DMEs in both rural and urban areas. For all enterprises taken together, the fixed assets hired per enterprise added up to Rs. 10122. Value of fixed assets hired per enterprise was much higher in urban areas(rs. 31915) than in rural areas(rs. 1803). The total working capital (net of opening balance and closing balance) was estimated as about Rs. 1614 crores, of which 34 per cent was in the rural areas and the rest in urban areas. The estimate of rent per enterprise was much higher in urban enterprises (Rs. 1762) than the rent in rural enterprises (Rs. 110). Loans taken by the unorganised manufacturing enterprises outstanding at the end of the reference year were estimated as about Rs. 4689 crores, of which 27 per cent was for the enterprises located in rural areas and the rest in urban areas. Mainly the public sector banks, regional rural banks and other commercial banks provided loans to the unorganised manufacturing and repairing enterprises both in rural and urban areas. Loans taken from the money lenders were also significant. Ratio of value added to output was in general higher in rural areas than in the urban areas in different industries. For all industries taken together, the ratio was 0.45 in rural areas, as against 0.38 in urban areas. Ratio of value added to fixed assets was higher in rural areas (0.83) than in urban areas (0.52) for all industries taken together.

(v) LIST OF DETAILED STATISTICAL TABLES TABLE NO. D E S C R I P T I O N PAGE NO. (1) (2) (3 ) 1 Estimated number of enterprises and persons employed therein by nature of employment, industry ( group / division ) and enterprise type separately for rural and urban areas A1 - A36 (i) Rural A1 - A18 (ii) Urban A19 - A36 2 Estimated number of persons employed by sex, type of workers, industry (group / division) and enterprise type separately for rural and urban areas A37 - A72 (i) Rural A37 - A54 (ii) Urban A55 - A72 3 Distribution of estimated enterprises by number of persons employed for each industry (group / division) separately for OAMEs and NDMEs in each of rural and urban areas A73 - A95 (i) Rural A73 - A83 (ii) Urban A84 - A95 4 Distribution of estimated directory manufacturing establishments by number of persons employed in different industry (group / division) separately for rural and urban areas A96 - A106 (i) Rural A96 - A100 (ii) Urban A101 - A106 5 Estimates of some important characteristics per enterprise by industry (group / division) and enterprise type separately for rural and urban areas A107 - A154 (i) Rural A107 - A130 (ii) Urban A131 - A155

(vi) TABLE NO. D E S C R I P T I O N PAGE NO. (1) (2) (3 ) 6 Per enterprise estimated value of yearly input by items of input, industry (group / division) and enterprise type separately for rural and urban areas A156 - A191 (i) Rural A156 - A173 (ii) Urban A174 - A191 7 Per enterprise estimated value of yearly output by items of output, industry (group / division) and enterprise type separately for rural and urban areas A192 - A226 (i) Rural A192- A208 (ii) Urban A209 - A226

CHAPTER ONE Introduction 1.0 The unorganised sector holds the key to understanding the economic situation in developing countries such as India. The importance of this sector had been realised by the Indian planners and policy makers in the 1950s. The need for statistical information about it was also widely recognised. The household-based nonagricultural activities had been covered by the National Sample Survey Organisation (NSSO) since 1950. In all the surveys, the relevant activities of a sample of households were covered irrespective of their scale of operations except the manufacturing activities carried out by the enterprises registered under the Factories Act, 1948. 1.1 In the early 1970s, at the time of formulation of the Fifth Five Year Plan, the Planning Commission was concerned about the employment and earnings of the selfemployed in non-agricultural activities. The NSSO therefore devoted the 29th round (1974-75) mainly to a survey of selfemployed own account workers engaged in non-agricultural enterprises in different sectors in rural as well as urban areas. The household enterprises covered by the survey were those operated by own account workers(i.e., those not employing any hired worker) and those household enterprises which did not usually employ more than 5 hired workers. However, units engaged in manufacturing and repairing services registered under Factories Act were excluded from the survey. 1.2 The household approach of identifying the units excluded the nonhousehold based units in the unorganised sector. Further, a review of the surveys indicated that a better sampling frame was necessary to generate reasonably useful statistics on unorganised sector. The need for identifying areas with a concentration of enterprises was, therefore, felt for ensuring an efficient sampling for the future surveys. A country-wide economic census, the first of its kind, was undertaken in 1977 under the auspices of the Central Statistical Organisation (CSO) to provide a good frame and background information needed for formulating an efficient sampling design. 1.3 The scope of the 1977 economic census was limited to non-agricultural enterprises employing at least one hired worker on a fairly regular basis. The enterprises employing at least one hired worker are called 'establishments'. Following this census, small establishments and enterprises not employing any hired worker on a fairly regular basis (these units are called own account enterprises (OAEs)) engaged in manufacturing and repairing activities were surveyed in 33rd round of NSS during 1978-79. 1.4 The second economic census was undertaken in 1980 along with the houselisting operations of the 1981 population census. The scope and coverage of the second economic census was enlarged to include the own account enterprises (OAEs) engaged in activities other than crop production and plantation. The establishments were divided into two categories as (i) Directory Establishments (DEs) and (ii) Non-Directory Establishments (NDEs), the difference being that the former employed a total of six or more workers, while the latter employed a total of five or less workers. Thus, in all, three types of enterprises were formed, viz., (i) OAEs, (ii) NDEs and (iii) DEs in the second economic census. As a follow-up to the second economic census, OAEs and NDEs engaged in manufacturing and repairing activities (i.e., OAMEs and NDMEs respectively) were surveyed in the 40th and 45th rounds of NSS during July 1

1984-June 1985 and July 1989-June 1990 respectively. The Directory Manufacturing Establishments (DMEs) were surveyed during October 1984-September 1985 and October 1989 to September 1990 by field staff of NSSO under the technical guidance of CSO. 1.5 A third economic census was conducted in 1990 along with the house listing operations of the 1991 population census. As a follow-up to the third economic census, the first integrated survey on unorganised manufacture covering own account manufacturing and repairing enterprises(oames), Non-Directory manufacturing and repairing establishments (NDMEs) and Directory manufacturing and repairing establishments (DMEs) were undertaken during the 51st round (July 1994-June 1995) under the technical guidance of NSSO. 1.6 In the 51st round all manufacturing and repairing enterprises covered by the two-digit codes (called divisions) 20 to 39 and 97 under the revised National Industrial Classification of different economic activities, 1987 (henceforth in this report termed NIC, 1987) were considered for survey purpose. Hereafter in this report, the term enterprises will mean manufacturing and repairing enterprises or establishments as the case may be. 1.7 Enterprises which were registered under Sections 2m(i) and 2m(ii) of the Factories Act, 1948 (i.e., enterprises employing 10 or more workers using power and those employing 20 or more workers without power) and bidi and cigar manufacturing enterprises registered under bidi and cigar workers (condition of employment) Act, 1966 were not covered in this survey. These enterprises, not covered in the 51st round survey, were covered in the Annual Survey of Industries undertaken by CSO. 1.8 The 51st round survey of unorganised manufacturing and repairing enterprises covered, in the central sample, the whole of the Indian Union except (i) Ladakh, Kargil, Anantnag, Pulwara, Srinagar, Badgam, Baramulla and Kupwara districts of Jammu & Kashmir, (ii) 768 interior villages of Nagaland (out of a total of 1232 villages) situated beyond five kilometers of the bus route and (iii) 195 villages of Andaman & Nicobar Islands (out of a total of 549 villages) which remained inaccessible throughout the year. Thus the corresponding State/U.T. level estimates and the All-India results presented in this report are based on the areas other than those left out from the survey coverage. 1.9 In the case of central sample, 8214 villages were surveyed in rural areas and 5258 enumeration blocks/urban-framesurvey blocks were surveyed in urban areas (villages/urban blocks with no manufacturing unit surveyed, in spite of having some enterprises in these villages/urban blocks, are excluded from this count). Detailed information was collected from each of the selected enterprises of the sample villages and blocks. 1.10 A note on sample design and estimation procedure followed in the 51st round survey is given in Chapter Three. One salient feature of the sample design followed is that two different sampling schemes were used for selection of sample units from the central sample. While 50% of the sample first stage units(fsu) of each state/ut were selected according to a particular sampling scheme, the remaining 50% were selected following a different sampling scheme. In one half of the sample FSUs, a sample of maximum 16 enterprises(oames, NDMEs and DMEs taken together) were selected from each FSU for detailed enquiry. In the other half of the sample FSUs, all eligible manufacturing and repair enterprises available in the selected FSU (or part of FSU in case of hamlet-group/sub-block formation) were surveyed without resorting to any sample selection. The pooled estimates based on these two sampling schemes are discussed in this report. 1.11 The number of sample villages and blocks allotted for survey and actually surveyed in different states was as given in Statement 0. 2

1.12 The listing schedule was used for listing the manufacturing and repairing enterprises mainly for preparing the frame for drawing the required number of sample enterprises for collection of detailed information in each selected village/block. Information collected through listing schedule was used for calculating multipliers for estimation purpose. The enterprise schedule was canvassed in the selected sample enterprises for collecting the basic information, such as employment, fixed assets, working capital, borrowings, input, output and value added of the sampled enterprise. 1.13 The present report, the first of the series of reports being released on unorganised manufacture based on the data collected through schedule 2.2 in NSS 51st round, discusses size of the unorganised manufacturing sector in India, number of persons employed and yearly gross value added in details. Besides, some other key estimates like fixed capital, working capital and borrowings are also discussed in brief. The distribution of unorganised manufacturing and repairing enterprises and their employment mainly by ownership type, source of energy used, agency of registration, nature of operation, location of premises and social group of the owner in the second report( No. 434 ) on unorganised manufacture. Proportion of child labourers engaged in different activities is also included in this report. Assets and borrowings of the unorganised manufacturing and repairing enterprises are discussed in another report (No. 435). 1.14 Concepts and definitions of a few important items relevant to the present report adopted in the survey are explained in Chapter Two, while Chapter Three gives a note on sample design and estimation procedure. Major findings based on the survey data are discussed in summary form in Chapter Four. Industry division / group codes and the corresponding industrial activities are given in Chapter Five. The detailed statistical tables are given in APPENDIX. 3

Statement 0 : Distribution of number of FSUs allotted and actually surveyed in different states number of FSUs allotted number of FSUs surveyed STATE Rural Urban Total Rural Urban Total (1) (2) (3) (4) (5) (6) (7) Andhra Pradesh 568 424 992 568 420 988 Arunachal Pradesh 144 32 176 118 32 150 Assam 392 96 488 383 89 472 Bihar 824 256 1080 812 250 1062 Goa 24 32 56 23 31 54 Gujarat 272 280 552 272 278 550 Haryana 128 80 208 128 80 208 Himachal Pradesh 240 48 288 239 48 287 Jammu & Kashmir 304 192 496 95 55 150 Karnataka 304 272 576 304 272 576 Kerala 320 224 544 320 224 544 Madhya Pradesh 592 360 952 591 356 947 Maharashtra 468 608 1076 488 523 1011 Manipur 112 80 192 111 80 191 Meghalaya 128 64 192 128 64 192 Mizoram 64 112 176 64 112 176 Nagaland 112 48 160 112 39 151 Orissa 384 120 504 383 120 503 Punjab 248 216 464 247 216 463 Rajasthan 360 216 576 360 216 576 Sikkim 136 24 160 136 24 160 Tamil Nadu 488 512 1000 488 511 999 Tripura 208 80 288 151 79 230 Uttar Pradesh 1048 520 1568 1046 517 1563 West Bengal 520 400 920 519 386 905 Andaman & Nicobar Is 72 48 120 72 48 120 Chandigarh 8 16 24 8 16 24 Dadra & Nagar Haveli 16 8 24 16 8 24 Daman & Diu 8 8 16 8 8 16 Delhi 8 136 144 8 132 140 Lakshadweep 8 8 16 8 8 16 Pondicherry 8 16 24 8 16 24 All 8536 5536 14072 8214 5258 13472 4

CHAPTER TWO Concepts and definitions 2.0 The concepts and definitions as followed in the survey of unorganised manufacturing and repairing enterprises during 51st round (July 1994 - June 1995) was broadly on the lines of recent past rounds on unorganised manufacturing and repairing enterprises. A few of the important items relevant to this report are discussed below to facilitate understanding of the report. 2.1 Enterprise : An undertaking engaged in the production and/or distribution of some goods and/or services meant mainly for the purpose of sale, whether fully or partly, is termed as an enterprise. An enterprise may be owned and operated by a single household or by several households jointly on a partnership basis, or by an institutional body. The activities of an enterprise may be carried out by household members and/or by hiring outside labourer on a fairly regular basis. 2.2 Own-account enterprise : An enterprise which is run without any hired worker employed on a fairly regular basis is termed an own account enterprise. If such an enterprise is engaged in manufacturing and/or repairing activities, it is termed an own account manufacturing enterprise(oame). 2.3 Establishment : An enterprise which is employing at least one hired worker on a fairly regular basis is termed establishment. 2.4 Non-directory establishment : An establishment employing less than six workers (household and hired workers taken together) is termed non-directory establishment. If such an establishment is engaged in manufacturing and/or repairing activities, it is termed non-directory manufacturing establishment (NDME). 2.5 Directory establishment : A directory establishment is an establishment which has employed six or more workers (household and hired workers taken together). If such an establishment is engaged in manufacturing and/or repairing activities, it is termed directory manufacturing establishment (DME). 2.6 Workers : All persons, household and non-household, paid or unpaid, those who are directly or indirectly associated with or incidental to manufacturing and/or repairing activities of an enterprise are workers. Parttime workers are also taken as workers of the enterprise so long as they are engaged on a fairly regular basis. The workers who are directly engaged in or incidental to manufacturing and/or repairing activities of an enterprise have been divided into three different categories, namely, (i) hired workers (other than household workers), (ii) paid household workers and (iii) unpaid household workers. The remaining workers i.e., the workers who are indirectly associated with or incidental to manufacturing process are classified as "other workers". 2.6 (i) Hired workers : A hired worker is a person employed directly or through any agency on payment of regular wage or salary. Apprentices, paid or unpaid, are taken as hired workers. Paid household workers, servants and resident workers working in an enterprise are also considered as hired workers. But in this report "paid household workers" and (other than household) hired workers are shown separately. 2.6(ii) Unpaid household workers : All persons belonging to the household of the proprietor or households of the partners who work in or for an enterprise without regular salary or wages are unpaid household workers. 5

2.6 (iii) Other workers : All persons who are indirectly associated with or incidental to the manufacturing process of a manufacturing and/or repairing enterprise. This category of workers include persons holding the position of supervision and management, clerks, store-keepers, sweepers, darwans etc. 2.7 Fairly regular basis : The term "fairly regular basis" means the major part of the time when operation(s) of an enterprise are carried out during a reference period. 2.8 Fixed assets : Fixed assets mean assets of an enterprise in the form of land, building, and other construction, plant & machinery, transport equipment, tools and other fixed assets (new or used) that have a normal economic life of more than one year from the date of acquisition i.e., through outright purchase / hire purchase/loan/mortgage and/ or construction, irrespective of their use at the time of survey. Market value of the fixed assets owned by the enterprise as on last day of reference year has been considered for the purpose of this report. The hired component of fixed assets is present market value of the assets used by an enterprise but not owned by it. 2.9 Working capital : Working capital refers to the physical and financial resources used by an enterprise for its day-to-day activities. It is therefore a constantly changing entity, since resources available at a particular point of time undergo change from day to day as the enterprise functions-a part of the resources getting used up in the manufacturing process or other connected activities and replenishments being made from time to time. Physical part of the working capital includes raw materials, stores, fuel, lubricants, semi-finished products and finished products & by- products. Financial part comprises cash in hand & at bank and net balance of amounts receivable and payable. 2.10 Loan : Any borrowing in cash but subsequently repaid or contracted to be repaid in cash or kind is considered as loan. Total of loans outstanding at the end of the reference year is presented here. 2.11 Input : The total of values of raw materials, electricity, fuel, lubricants and auxiliary materials consumed; cost of maintenance, services purchased; distributive expenses and other expenses incurred during the reference year by an enterprise is considered as total value of input. 2.12 Output : The sale value of products and by-products manufactured by an enterprise together with the value of services rendered to other concerns and other receipts incidental to entrepreneurial activities are considered as total value of output. 2.13 Gross value added : Value added represents that part of production which is the actual contribution of an enterprise to the economy. Value added is calculated by deducting total value of input from the total value of output during a reference period. 2.14 Reference year : In many cases small manufacturing and repair enterprises do not maintain usable books of account. In such a situation, for an enterprise maintaining books of account, reference year is the accounting year ending on a date lying within the period of 365 days prior to the date of survey. In all other cases where it is not possible to choose an accounting year as reference year, the period of 365 days immediately preceding the date of survey is taken as reference year. 6

CHAPTER THREE Sample Design and Estimation Procedure 1 General In 51st round the total number of villages and block surveyed at the national level was 13690 for the central sample. These samples were classified into two categories as "Sample-1" an "Sample-2" in both rural and urban areas. The samples of sample-1 were distributed over the four sub-rounds in equal numbers, whereas for sample-2, there was no sub-round restriction. The survey period of 51st round was July 1994 - June 1995 and the same for the four sub-rounds of sample-1 was as follows : Sub-round 1 : July - September, 1994 Sub-round 2 : October - December, 1994 Sub-round 3 : January - March, 1995 Sub-round 4 : April - June, 1995 A stratified two-stage sampling design was adopted. The first stage units (FSUs) were the villages (panchayat wards in Kerala) in rural areas and urban blocks in urban areas. In particular, for the urban areas, enumeration blocks (EBs) were taken as FSUs where 1990 economic census (EC - 90) frame was used and NSSO urban frame survey (UFS) blocks otherwise. The second stage units (SSUs) were the manufacturing and repairing enterprises in the selected FSUs. 2 Allocation of sample FSUs between rural and urban areas State/UT level total sample size (i.e., total number of villages and blocks to be surveyed) was allocated between rural and urban areas in proportion to population as per 1991 population census with double weightage to the urban areas. The total sample size for both rural and urban areas, as mentioned above, was equally divided into two sample types, namely Sample-1 and Sample-2. 3 Sampling frame For rural areas, list of villages showing number of OAMEs, NDMEs and DMEs as per 1990 economic census was used as the sampling frame for selection of FSUs, for both the sample types, in different States/UTs except Jammu & Kashmir(J & K), Arunachal Pradesh and Nicobar district of Andaman & Nicobar Islands. For the state of Kerala, however, list of Panchayat wards, giving count of OAMEs, NDMEs and DMEs at panchayat level as per 1990 economic census, was used. For Jammu & Kashmir, list of 1981 population census villages, while for Nicobar district of Andaman & Nicobar Islands, list of 1991 population census villages was used. In Arunachal Pradesh, list of villages as per 1991 population census was used as the sampling frame for selection of sample "nucleus" villages around which clusters were formed. In urban areas, list of EBs as per 1990 economic census constituted the sampling frame for Class 1 towns (except in Jammu & Kashmir) of sample type 1 and for all towns (except J & K) of sample type 2. The list of UFS blocks was used as the sampling frame for all towns of Jammu & Kashmir and other than class 1 towns of the other states for sample type 1, and for all towns of Jammu & Kashmir only in the case of sample type 2. 4 Stratification In rural areas, for samples of type 1 each district generally formed a separate 7

stratum. However for the state of Gujarat, where NSS regions cut across some district boundaries, parts (viz., groups of taluks) of each such district belonging to different NSS regions formed separate strata. If any district (or part thereof falling in an NSS region in case of Gujarat) had a smaller number of manufacturing enterprises, it was clubbed with the neighbouring district within the same NSS region to form a separate stratum to ensure a minimum allocation of 8 villages at the stratum level. Each district as a whole was always taken as a separate stratum for samples of type 2. In the case of urban areas for samples of type 1, strata were formed within each NSS region by grouping cities/towns according to the population of the cities/towns viz., p<=0.5, 0.5<=p<1, 1<=p<5, 5<=p<10 and p>=10 (where p stands for 1991 census population of the town in lakhs). Each city with population 10 lakhs or more formed a separate stratum. For samples of type 2, strata were formed within each district by grouping cities/towns according to the population, viz., p<1, 1<=p<5, 5<=p<10 and each city with p>=10. However, no grouping of towns was made for the states of Assam, Haryana and Pondicherry. 5 Sub-stratification For rural samples of type 1, where 1990 EC frame was used, the FSUs in a stratum were grouped into 3 sub-strata as detailed below. (a) sub-stratum 1 consisting of FSUs having at least one DME; (b) sub-stratum 2 consisting of those of the remaining FSUs which had at least one NDME; and (c) sub-stratum 3 consisting of all th residual FSUs in the stratum. There was no sub-stratification at the stratum level for the States/UTs where population census frame was used for selection of FSUs. For these States/UTs, all FSUs in a stratum were identified with substratum 3 for operational convenience. In urban areas for samples of type 1 three sub-strata were formed in class 1 towns (except for J & K) as follows :- (i) sub-stratum 1 consisting of EBs having at least one DME; (ii) sub-stratum 2 consisting of those of the remaining EBs in the stratum having at least one NDME; and (iii)sub-stratum 3 consisting of all the remaining FSUs in the stratum. For other towns, includiing all towns of Jammu & Kashmir, two sub-strata were formed, where sub-stratum 1 consisted of all UFS blocks identified as Industrial area (IA) and the remaining UFS blocks in the stratum constituted sub-stratum 2. For samples of type 2 stratum level substratification was not done in both rural and urban areas. 6 Allocation of sample FSUs among strata and sub-strata The total rural samples of type 1 for a State/UT were allocated to the constituent strata/sub-strata in proportion to weighted sum of the number of manufacturing enterprises of different types, as available from EC 1990, the weights being 16, 4 & 1 for DME, NDME and OAME respectively. A minimum allocation of one sample was ensured at sub-stratum level and efforts were made to make the stratum level allocations as multiples of 4 to allocate equal number of samples in each of the four sub-rounds. However, the total rural samples of type 2 for a State/UT were allocated to the constituent strata in proportion to their total number of manufacturing enterprises (weights being equal for DME, NDME & OAME) as available from EC 1990. A minimum allocation of 2 FSUs was done for each stratum. In urban areas, for samples of type 1, allocated sample size of FSUs for a State/UT was further allocated to the 8

constituent strata in proportion to weighted sum of the manufacturing enterprises (in proportion to population for J & K) as was done in the rural areas. For class 1 towns (except for J & K), the stratum level FSUs were further allocated to three sub-strata again in proportion to weighted sum of the number of manufacturing enterprises in the ratio 16 : 4 : 1. The allocation at the substratum level had been kept at a minimum of 2 FSUs. For other towns (including all towns of J & K) the UFS blocks of substratum 1 were completely selected for survey, subject to a maximum of half of the stratum allocation of samples of a particular type; and the rest to sub-stratum 2. The total urban samples of type 2 for a State/UT (except for J & K) was allocated to the constituent strata in proportion to their total number of manufacturing enterprises. For the state of Jammu & Kashmir stratum level allocation was done in proportion to 1981 census population. 7 Selection of first stage units (FSUs) The sample FSUs for rural samples of type 1, at stratum x sub-stratum level, were selected with probability proportioned to size (PPS), size being the number of enterprises/population as detailed below :- (A) For States/UT where 1990 EC frame was used, size was number of DMEs, NDMEs and OAMEs in the FSU belonging to sub-stratum 1, 2 and 3 respectively. (B) For other States/UTs viz., (i) Arunachal Pradesh, size = 1 for each FSU (ii) Jammu & Kashmir, size = population in the FSU as per 1981 census; (iii) Nicobar district of Andaman & Nicobar, size = population in the FSU as per 1991 census. The stratum x sub-stratum level rural samples of type 2 were selected by PPS with replacement, size being the total number of manufacturing enterprises (i.e. total of DMEs, NDMEs and OAMEs) in the FSU for the States/UTs where 1990 EC frame was used and for other States/UTs where 1990 EC frame was not used size was same as in rural samples of type 1. In urban areas sample blocks of type 1 were selected from each sub-stratum of class 1 towns (except for J & K) with PPS with replacement taking number of DMEs, NDMEs and OAMEs in the FSU as size for sub-stratum 1, 2 & 3 respectively. For other towns (including all towns of J & K) the sample blocks from each sub-stratum were selected circular systematically with equal probability. Sample blocks of type 2 were selected with PPS with replacement, size being the total number of OAMEs, NDMEs and DMEs for all the Sates/UTs except J & K for which simple random sampling without replacement technique was followed for selection of sample blocks. Both in rural and urban areas, for samples of type 1, size of an FSU of substratum 3 was taken as 1 if there was no OAME or no information about number of enterprises due to incompleteness of the frame. The FSUs of sample type 2 having no manufacturing enterprises or no information about them were also considered as FSUs of size 1. 8 Hamlet-group/sub-block formation : Large villages/blocks having approximate present (at the time of survey) population 1200 or more (600 or more for rural areas of Himachal Pradesh, Sikkim and Poonch, Rajouri, Udhampur & Doda districts of J & K) and/or approximate present number of non-agricultural enterprises more than 200 were divided into a suitable number (say,d) of hamlet-groups (h.g.)/sub-blocks (s.b.). The survey was conducted in two h.g.s/s.b.s selected from D hamlet-groups/sub-blocks in the following manner. The h.g./s.b. having maximum number of manufacturing and repairing enterprises (OAMEs, NDMEs and DMEs taken together) was always selected and allotted a serial number '0'. From the remaining h.g.s/s.b.s, one more h.g./s.b. was selected at random and allotted a serial number '1'. In case there was not even a single manufacturing or repairing enterprise in a large village/block, the h.g./s.b. having maximum population was selected and allotted serial number '0' and 9

from the remaining h.g.s/s.b.s another was selected at random and allotted serial number '1'. In the case of a small village/block not requiring h.g./s.b. formation, the whole village/block was treated as a h.g./s.b. bearing serial number '0'. The minimum number of h.g./s.b. formed in large villages/blocks was 4. 9 Sampling of enterprises All OAMEs, NDMEs and DMEs which operated for at least 30 days (15 days in case of seasonal enterprises) during the last 365 days were considered for sampling. The enterprises registered under Factories Act, 1948 and Bidi and Cigar workers (condition of Employment) Act, 1966 were not considered for survey purpose. For FSUs of sample type 2, all the eligible manufacturing and repairing enterpriseslisted in the village / block /h.g. /s.b. were taken up for detailed survey. However, for samples of type-1, a maximum of 16 enterprises were selected for detailed enquiry. All eligible manufacturing and repairing enterprises of different types were separately arranged by broad industry division (2-digit) codes as per NIC, 1987. This grouping of enterprises by NIC codes was done independently for each of the two selected hamlet-groups/sub-blocks for FSUs requiring hamlet-group/sub-block formation. The required number of sample enterprises were then selected circular systematically from the rearranged frame, separately for OAMEs, NDMEs and DMEs. 10 Estimation Procedure Since the method of formation of strata for the two types of samples is different, no combined estimate can be formed at the stratum level. Sample typewise estimates can be generated at region or state or national level. The combined estimates at the level of region or state or nation are obtained for the purpose of this report by taking a simple average of the two sets of aggregate estimates at the desired level. Ratios of the type Y/X are obtained at the last stage of estimation. The following notations are used in the formulae for estimation : s = subscript for s-th stratum t = subscript for t-th stratum i = subscript for i-th sample village/block (FSU) j = subscript for j-th enterprise type ( j = 1 for OAME; 2 for NDME; 3 for DME ) k = subscript for k-th sample enterprise of a particular enterprise type D= total number of hamlet-groups / subblocks formed in a sample FSU Z= total size of a sub-stratum within a stratum ( or total size of a stratum when no sub-stratification is made) z = FSU size used for selection n = number of sample FSUs surveyed for a particular sample type E = total number of enterprises listed for a particular enterprise type in hamletgroup / sub-block selected e = total number of enterprises surveyed for a particular enterprise type in the hamletgroup / sub-block 0/1 = subscript for hamlet-group / sub-block number( 0` or 1` as the case may be) y = sample value of any character under estimation Y = estimate of population total of the character y at the desired level of aggregation. The formula for rural samples of type 1 for all the States/UTs except for Jammu & Kashmir, Arunachal Pradesh and Nicobar district of Andaman & Nicobar Islands is as follows : 10

nst 1 3 e 1 E sti 0 j e sti j E sti 1 j 0 sti 1 j Y = [ ( ) s t Zst ysti0jk + Dsti 1 ysti1 jk ]...(1) i= 1 zsti j= 1 n stij e sti0 j k= 1 e sti1 j k= 1 The formula (1) holds good for urban samples of type 1 for class 1 towns of all the States/UTs except for Jammu & Kashmir. For other towns of all States/UTs and for all towns of Jammu & Kashmir in the case of samples of type 1 formula (1) is used where z sti = 1 for all I = 1, 2,...,n s. The formula used for estimation from the samples of type 2 for all the States/UTs ( except for urban samples of J & K ) is as follows : ns 1 3 e 1 E si 0 j e si j E si 1 j 0 si 1 j Y = [ ( ) s Zs ysi0jk + Dsi 1 ysi1 jk ]...(2) i= 1 zsi j= 1 n sij e si0 j k= 1 e si1 j k= 1 Formula (2) is also used for rural samples of type for Jammu & Kashmir and Nicobar district of Andaman & Nicobar Islands. It may be noted that if E = e as planned for sample FSUs of sample type 2, the formula(2) reduces to : ns 1 3 e 1 si 0 j e si 1 j Y = [ ( ) s Zs ysi0jk + Dsi 1 ysi1 jk ]...(3) i= 1 zsi j= 1 nsij k= 1 k= 1 The formula for rural areas of Arunachal Pradesh is as follows : ns 1 3 e E si 0 j si 0 j Y =...( ) s Zs ysi0jk 4 i= 1 nsij j= 1 e si0 j k= 1 10

CHAPTER FOUR Summary of findings 4.0 : As already mentioned in Chapter One, in NSS 51st round survey attempts were made to estimate the number of enterprises, size of employment and some important characteristics, like fixed assets, working capital, loan and gross value added of the manufacturing and repairing enterprises in the unorganised sector. For this purpose, 8214 villages were surveyed in the rural areas and 5258 enumeration blocks/ufs blocks were surveyed in the urban areas. From these villages and urban blocks detailed data were collected from a total of more than 1.9 lakhs sample manufacturing and repairing enterprises, of which 1.2 lakhs(i.e., 63%) were from villages and 0.7 lakh from urban blocks. Out of the total number of sampled enterprises, a little less than 1.5 lakhs (about 76%) were Own Account Manufacturing Enterprises (OAMEs), about 0.3 lakh (i.e., 16%) Non-Directory Manufacturing Establishments (NDMEs) and the rest Directory Manufacturing Establishment(DMEs). 4.1 Out of a total of about 1.2 lakhs rural sample enterprises, 83% were OAMEs, about 10% NDMEs and the rest DMEs. In the case of urban samples 64% were OAMEs, 25% NDMEs and the remaining DMEs. Statements 1R & 1U give state-wise number of sample enterprises by enterprise type separately for rural and urban areas. Statement 1R : Number of sample enterprises in rural areas of different states number of sample enterprises in rural areas STATE OAME NDME DME ALL (1) (2) (3) (4) (5) Andhra Pradesh 8003 1231 1441 10675 Arunachal Pradesh 139 0 1 140 Assam 2885 623 60 3568 Bihar 11102 632 167 11901 Goa 158 21 41 220 Gujarat 2418 331 554 3303 Haryana 1122 234 97 1453 Himachal Pradesh 1635 181 31 1847 Jammu & Kashmir 930 79 10 1019 Karnataka 4284 355 899 5538 Kerala 3070 984 316 4370 Madhya Pradesh 5019 279 205 5503 Maharashtra 4350 620 487 5457 Manipur 1184 21 3 1208 Meghalaya 495 109 25 629 Mizoram 188 9 0 197 Nagaland 755 88 17 860 Orissa 6859 373 67 7299 Punjab 1873 596 106 2575 Rajasthan 3311 298 100 3709 12

Statement 1R(contd.) : Number of sample enterprises in rural areas of different states number of sample enterprises in rural areas STATE OAME NDME DME ALL (1) (2) (3) (4) (5) Sikkim 159 23 7 189 Tamil Nadu 9657 1531 1197 12385 Tripura 1990 259 6 2255 Uttar Pradesh 15624 2157 1071 18852 West Bengal 12838 1219 498 14555 Andaman & Nicobar Is 196 150 51 397 Chandigarh 42 27 12 81 Dadra & Nagar Haveli 95 27 18 140 Daman & Diu 47 18 30 95 Delhi 60 38 22 120 Lakshadweep 10 0 1 11 Pondicherry 42 15 1 58 All 100540 12528 7541 120609 Statement 1U : Number of sample enterprises in urban areas of different states number of sample enterprises STATE OAME NDME DME ALL (1) (2) (3) (4) (5) Andhra Pradesh 5635 1532 555 7722 Arunachal Pradesh 61 105 18 184 Assam 602 396 40 1038 Bihar 2283 796 115 3194 Goa 77 56 44 177 Gujarat 2047 1105 891 4043 Haryana 675 402 151 1228 Himachal Pradesh 352 193 32 577 Jammu & Kashmir 242 150 12 404 Karnataka 2647 782 301 3730 Kerala 1411 584 160 2155 Madhya Pradesh 2007 446 138 2591 Maharashtra 2411 1643 1332 5386 Manipur 644 92 27 763 Meghalaya 65 119 36 220 Mizoram 186 61 17 264 Nagaland 158 115 12 285 Orissa 1114 301 56 1471 Punjab 1617 1137 495 3249 Rajasthan 1797 621 127 2545 Statement 1U(contd.) : Number of sample enterprises in urban areas of 13

different states number of sample enterprises STATE OAME NDME DME ALL (1) (2) (3) (4) (5) Sikkim 61 61 6 128 Tamil Nadu 8660 2338 1465 12463 Tripura 438 205 30 673 Uttar Pradesh 5413 1700 483 7596 West Bengal 4177 1650 508 6335 Andaman & Nicobar Is 139 147 41 327 Chandigarh 112 177 95 384 Dadra & Nagar Haveli 44 37 2 83 Daman & Diu 56 10 2 68 Delhi 617 917 506 2040 Lakshadweep 6 2 2 10 Pondicherry 43 37 7 87 All 45797 17917 7706 71420 Statement 2 : Key estimates of the unorganised manufacturing sector in India during 1994-95 at a glance sl. Description Rural Urban All no. (1) (2) (3) (4) (5) number in lakhs 1. No. of enterprises 105.0 40.1 145.1 1.a O. A. M. E 95.4 27.2 122.6 1.b N. D. M. E 6.7 9.3 16.0 1.c D. M. E. 2.9 3.6 6.5 2. No. of persons employed 221.3 110.8 332.1 2.1 Male 137.5 91.5 229.0 2.2 Female 83.8 19.3 103.1 Rs. in crores 3. Fixed assets owned 14072.1 23624.0 37696.1 4. Working capital(o.b.) 1330.0 5318.6 6648.6 5. Working Capital(C.B.) 1875.9 6386.7 8262.6 6. Net balance 545.9 1068.1 1614.0 7. Loan 1243.4 3445.7 4689.1 8. Input value 15952.2 31660.2 47612.4 9. Output value 29195.8 50691.8 79887.6 10. Gross value added 13243.6 19031.6 32275.2 O. B. : Opening balance C. B. : Closing balance 14

4.2 The summary of findings of the survey on unorganised manufacture based on the data collected from the sampled enterprises are discussed below. Hereafter in this report the word enterprise will mean OAMEs, NDMEs or DMEs as the case may be. Statement 2 presents key estimates at a glance of the unorganised manufacturing sector in India for the period 1994-95. 4.3 Estimate of number of enterpises in unorganised manufacturing sector : 4.3.1 The estimate of total number of enterprises engaged in the manufacturing and repairing activities in unorganised sector, taking OAMEs, NDMEs and DMEs together, in the country during 1994-95 was about 145 lakhs. Of them, nearly 105 lakhs (i.e., about 72%) were in rural areas and the rest in urban areas. Statements 3R & 3U give state-wise estimates of OAMEs, NDMEs and DMEs separately for rural and urban areas. It is seen from these Statements that out of the total estimated enterprises, about 84% were OAMEs, 11% NDMEs and the rest DMEs. It means that about 84% of the total unorganised manufacturing and repairing enterprises in India during 1994-95 did not employ any hired worker on a fairly regular basis and the remaining enterprises employed at least one hired worker on a fairly regular basis during a reference period of one year. In each of about 11% of the total enterprises, there were 5 or less number of workers including at least one hired worker on a fairly regular basis. Each of around 5% of the total enterprises had 6 or more workers including at least one hired worker on a fairly regular basis. Out of the total enterprises employing at least one hired worker on a fairly regular basis( i.e. out of the total establishments), in about 71% cases total number of workers (total of hired and other workers on a fairly regular basis) did not cross 5 each. 4.3.2 For the country as whole, out of a total of about 122 lakhs OAMEs, 78% were in rural areas. Out of a total of about 16 lakhs NDMEs, 42% were in rural areas and the rest in urban areas. 45% of the total of little more than 6 lakhs DMEs in the country were in rural areas and the rest in urban areas. In other words, as expected, the proportion of small manufacturing and repairing enterprises managed without engaging any hired worker on a fairly regular basis was much higher in rural areas than in urban areas. The proportion of relatively larger manufacturing units run with the help of at least one hired worker was less in rural areas than in urban areas. 4.3.3 Among the total of 105 lakhs rural enterprises in the country about 91% were OAMEs, 6% NDMEs and the rest DMEs. 68% of the total enterprises located in the urban areas of the country were OAMEs, 23% NDMEs and 9% DMEs. This shows that about 91% of the rural enterprises, during 1994-95, were run without help of any hired worker and in urban areas the corresponding percentage was 68. 4.3.4 Among the states, Uttar Pradesh had the highest number of rural enterprises followed by West Bengal, Orissa, Bihar. Considering OAMEs, NDMEs and DMEs together, these four states together covered about 55% of the total rural enterprises in the country. In the case of urban areas also Uttar Pradesh had the highest number of enterprises, followed by Tamil Nadu, Maharashtra and Gujarat. These four states together covered about 50% of the total urban enterprises in the country. 4.3.5 In rural areas Karnataka had the highest number of DMEs, followed by Uttar Pradesh, Andhra Pradesh and Tamil Nadu. In urban areas Maharashtra had the highest number of DMEs, followed by Gujarat, Tamil Nadu and Uttar Pradesh. 15