(Sample Materials) Economic Survey & Government’s Plan, Programme & Policies - "Industry"

Contents of the Chapter:

• Significance of Industrial Sector
• State wise Comparison : Employment & GVA
• Index of Industrial Protection
• Industry wise Comparison : Employment & GVA
• Annual Surveys of Industries
• Micro, Small and Medium Enterprises (MSMEs)

SIGNIFICANCE OF INDUSTRIAL SECTOR

Industrial growth in the country has, in terms of long run trend, remained aligned with the growth rate of gross domestic product (GDP). The long-term average annual growth of industries comprising mining, manufacturing, and electricity, during the post-reform period between 1991-2 and 2011-12, averaged 6.7 per cent as against GDP growth of 6.9 per cent. Inclusion of construction in industry raises this growth to 7.0 per cent. The share of industry, including construction, in GDP remained generally stable at around 28 per cent in the post-reform period. Standard deviation of the average share was very small and the coefficient of variation under 5 per cent validates this stability. The share of manufacturing, which is the most dominant sector within industry, also remained in the 14-16 per cent range during this period. The share is modest when compared to that of China (above 40 per cent) and some of the East Asian countries (above 30 per cent).

Employment in the industrial sector increased from 64.6 million persons in 1999-2000 to 100.7 million persons in 2009-10. The share of industry in total employment increased from 16.2 per cent in 1999- 2000 to 21.9 per cent in 2009-10. However, the increase was largely on account of expansion of employment opportunities in the construction sector, from 17.5 million in 1999-2000 to 44.2 million in 2009-10.

INDEX OF INDUSTRIAL PRODUCTION

The index of industrial production (IIP), released each month by CSO, MOSPI , is the key indicator of industrial performance. The new IIP series with 2004-5 as base was released in June 2011 replacing the earlier IIP series with base 1993-4. Recent industrial growth, measured in terms of IIP, shows fluctuating trends. Growth had reached 15.5 per cent in 2007-8 and then started decelerating. Initial deceleration in industrial growth was largely on account of the global economic meltdown.

ANNUAL SURVEY OF INDUSTRIES

The Annual Survey of Industries (ASI) is the principal source of organized manufacturing statistics in India. It provides statistical information to assess and evaluate, objectively and realistically, the changes in the growth, composition and structure of organised manufacturing sector comprising activities related to manufacturing processes, repair services, gas and water supply and cold storage. The Survey is conducted annually under the statutory provisions of the Collection of Statistics Act 1953, and the Rules framed there-under in 1959, except in the State of Jammu & Kashmir where it is conducted under the State Collection of Statistics Act, 1961 and the rules framed there-under in 1964. The ASI extends to the entire country except the States of Arunachal Pradesh, Mizoram, Sikkim and Union Territory of Lakshadweep. It covers all factories registered under sections 2m (i) and 2m (ii) of the Factory Act, 1948. The survey also covers bidi and cigar manufacturing establishments registered under Bidi and Cigar Workers (Condition of Employment) Act, 1966 and employing 10 or more workers using power and 20 or more workers not using power. Although the scope of the ASI was extended to all registered manufacturing establishments in the country, establishments under the control of the Defence Ministry, oil storage and distribution units, restaurants and cafes and technical training institutions not producing anything for sale or exchange were kept outside the coverage of the ASI. The latest available results of ASI pertains to year 2009- 10 , field work for which was carried out during 2010-11.

STATEWISE COMPARISON : EMPLOYMENT & GVA

The top five States in terms of employing persons in the factory setor were Tamil Nadu, Maharashtra, Gujarat, Andhra Pradesh and Karnataka respectively engaging about 18.9 lakh, 15.1 lakh, 11.6 lakh , 11.3 lakh and 8.9 lakh persons. These five States together had engaged more than half (55.8%) of total manpower engaged by the factory sector of the country. The same five States were also the major ones in terms of their percentage shares in aggregate GVA – although their relative positions were different. Maharashtra topped in terms of its percentage share (19.4%) in aggregate GVA, which was followed by Gujarat (15.5%), Tamil Nadu (10.3%), Andhra Pradesh (7.1%), and Karnataka (6.2%).

INDUSTRY WISE COMPARISON : EMPLOYMENT & GVA

Out of 28 industries in terms of National Industrial Classification (NIC) 2-digit codes under the coverage of the survey, major employment providing industries in terms of percent share in overall employment in factory sector were Food products (12%), Textiles (12%), Basic Metals (8%), Wearing Apparel (7%), Other Non-Metallic Mineral Products (7%), Motor Vehicles, Trailers & Semi-Trailers (5%), Chemicals & chemical Products (5%), Machinery & Equipment Not Elsewhere Classified (5%), Fabricated Metal Products Except Machinery & Equipment (5%), Rubber & Plastic Products (4%), Electrical Equipment (4%), and Tobacco Products (3%).

Top six industries in terms of their percentage share in aggregate GVA were Basic Metals, Coke and Refined Petroleum Products, Chemicals and Chemical Products, Other Non-Metallic Mineral Products, Machinery and Equipment Not Elsewhere Classified, and Food Products. They respectively had share of about 13.0%, 10.1%, 9.2%, 6.6%, 6.4% and 6.2% in aggregate GVA.

MICRO, SMALL, AND MEDIUM ENTERPRISES (MSMES)

Worldwide, the micro small and medium enterprises (MSMEs) have been accepted as the engine of economic growth and for promoting equitable development. The major advantage of the sector is its employment potential at low capital cost. The labour intensity of the MSME sector is much higher than that of the large enterprises. The MSMEs constitute over 90% of total enterprises in most of the economies and are credited with generating the highest rates of employment growth and account for a major share of industrial production and exports. In India too, the MSMEs play a pivotal role in the overall industrial economy of the country. In recent years the MSME sector has consistently registered higher growth rate compared to the overall industrial sector. With its agility and dynamism, the sector has shown admirable innovativeness and adaptability to survive the recent economic downturn and recession. The MSME sector in India constitutes enterprises with investment in Plant & Machinery less than Rs ten Crore in case of manufacturing & less than Rs five Crore in case of services sector.

As per available statistics (4th Census of MSME Sector 2006-07 ), this sector employs an estimated 59.7 million persons spread over 26.1 million enterprises. It is estimated that in terms of value, MSME sector accounts for about 45% of the manufacturing output and around 40% of the total export of the country. With respect to MSMEs have been collected/compiled for the first time in 2006-07 and hence include both the manufacturing and service sectors.