As job growth lagged the rate of economic expansion in the last decade, the government’s sixth economic census shows that the growth in the number of establishments were 41.7% between 2005-06 and 2013-14 while employment grew by 34.4%. This means an annual growth of 5.2% in number of enterprises and 4.25% rise in jobs.
The latest census shows, both in number of firms and employment, the last decade fared better than the previous census period (1998-2005) when the growth in number of firms was an annual 4.8% while employment rose 2.49%.
Provisional results of the latest census, revealed by the government on Wednesday, show India now has 58.47 million establishments — 35.02 million (or 59.9%) in rural and 23.45 million (40.1%) in urban areas — spread across manufacturing and services, excluding farming, public administration, defence and social services. The number of units have grown by 45.57% in urban areas and 39.28% in rural areas since 2005 while employment has risen by 31.59% and 37.46%, respectively.
National Statistical Commission chairman Pronab Sen attributes the trend to growing entrepreneurship among Indians and a spurt in small enterprises. “Basically what it means is higher growth in enterprises at the lower scale of employment or faster growth in smaller establishments. The employment growth of 34% in eight years means an annual average growth of 4.25% which is substantial given that the labour force has risen by 2.5%. Clearly, entrepreneurship is growing,” Sen told FE.
Indeed, going by the census data of total employment at 127.71 million and the total number of establishment at 58.47 million, the average number of workers in an establishment comes to a measly 2.2 per unit.