Gujarat unincorporated sector enterprises (USE) are not the only ones in which the entrepreneurial spirit is rampant; it also applies to its businesses as well as start-ups. State-wise data from Union Ministry of Statistics and Program Implementation (MoSPI) revealed that Gujarat has about 3.49 million user units employing around 6.88 million persons. India’s ‘informal sector’ consisting of small and medium enterprises, family owned/partnership firms plays a crucial role and accounts for almost half of the country’s GDP.
Between 2015-16 to 2022-23 while many states lost 16.45 lakh jobs in the unorganized sector, Gujarat showed resilience by adding up to 762,000 jobs to its workforce during this period and increasing state employment from 6.11 million to 6.88 million.
It is important to note that NSSO conducted the survey under review for year ending March, 2016”. According to estimates given by ASUSE, USE employs approximately one-tenth of Gujarat’s population of six hundred fifty millions meaning that there is one USE for every eighteen Gujaratis.
“Entrepreneurship comes naturally to people in Gujarat whether they are industrialist or small business owners or even women entrepreneurs running home based businesses,” according to Jayendra Tanna, president of GTF — Gujarat Traders Federation. “The unorganized sector has been key in keeping the unemployment rate low in our state since small manufacturers market and sell their own products,” he added.
In trade business activity engages rural and urban areas with users making up about thirty-four percent followed by manufacturing at a lower percentage of between thirty-one and thirty percent. Speaking recently in Ahmedabad Dr Sunil Shukla Director Entrepreneurship Development Institute of India (EDII) said “Many big industrialists started from a small scale.” The future businesses are built on these small businesses being laid down.. In recent times, apart from manufacturing, the services sector has also been affected More and more attention.
According to an industry source, this informal sector is critical for generating employment opportunities for semi-skilled and unskilled workers who are: “Crucial in driving the state’s economy; providing job opportunities to those with basic skills. Gujarat has a range of industries such as textiles, apparel, gems and jewelery, logistics , engineered products and ceramics that depend heavily on labour and supply chain needs. It will not take long before these industries can easily affect the informal sector if anything happens to them.
For instance during Covid-19 pandemic when supply chains were disrupted and demand plunged the hardest hit were the informal workers who lost their livelihoods as well as their being threatened. During this period ASUS carried out yet another survey after a five year gap covering approximately 20 thousand companies in Gujarat. The last surveys are for 2021-22 and 2022-23 which have come out recently.
The state ranks second with its GVA at 14% after Delhi
Gujarat essentially acts as India’s as well as world’s manufacturing hub since it houses numerous specialized manufacturing clusters where products such as pharmaceuticals fabrics garments ceramics are produced. Even though SMEs have played a significant role in enhancing value addition in its manufacturing processes thereby increasing their cost competitiveness vis-a-vis larger corporations within the state.
The ASUS survey results for 2022-23 show that among various other sectors having high Gross Value Added (GVA), manufacturing use based in Gujarat stands at 14% which is simply superb”. In terms of average GVA per unit which works out to Rs 3.60 lakh p.a., Gujarat comes second only to Delhi (Rs4 .50 lakh) but ahead Haryana (Rs3 .30 lakh) (Fig:3). The national average GVA per annum per user units in India is seen as Rs 2.38 lakh.
GVA at basic prices is calculated as total output minus total inputs, including trade profits, product taxes and distribution expenses.
State ranks sixth among female-owned USEs
In seven major states including Gujarat women run or own more than 25% of businesses i.e. a quarter of the total businesses (Asus). Amongst these states, Telangana has the highest number of such enterprises (43%), followed by West Bengal (33%), Karnataka (31%), Andhra Pradesh (28%), Tamil Nadu ( 28%) and Kerala (27%).
For instance, in Gujarat state for women-led-businesses, 56 per cent work in manufacturing , 18 per cent in services while 10 per cent in trading. The rest are distributed among other sectors representing16%.
On employment terms, ladies make up 34% of the total labour force working in manufacturing industry compared to that amounting to 20% for services industry and only12% for trading sector.
Gujarat is unique because it encourages economic activities like participating women and many self-help groups have emerged that market everything from khakhras to farsan etc. Products”, Naveen Patidar CEO Aga Khan Rural Support Programme AKRSP.
According to Reema Nanavaty SEWA Director “The survey focused on middle-income bracket women running their own small or medium-sized enterprises – but beyond that there’s a large component; whether nano- micro- entrepreneurs and their businesses which form part of our informal economy. Thousands upon thousands of these micro-enterprises help support the families they belong to making ‘a major contribution towards the economy.’ “It added that ‘the COVID-19 era has forced many women start home or cottage businesses Recognising and supporting these enterprises is equally important for economic growth’.
The industry needs financial and policy support
Informal labor dominates usage in India. According to the survey data available, out of the population of Gujarat which stands at 6.88 million, 2.068 million are informal workers, representing 30% of the workforce which has no documentary proof of employment or employment benefits.
Most work year-round: only 4% of these laborers are part-time (GTF’s Tanna). “Banks should give unsecured finances to small entrepreneurs for business expansion. Government schemes and aid should be at this level,” he said.
Informal workers receive lower wages
There is wage disparity between formal and informal labour in Gujarat state as a key issue. For instance, annual income of formal workers in manufacturing in rural areas is Rs 2.25 lakh compared to that of informal workers at Rs 1.10 lakh p.a. The gap widens further in urban areas where the former gets Rs 3.78 lakh while the latter earns Rs 1.36 lakhs per annum (Parag Dave & Niyati Parikh). Also, the yearly salary for formal employees working in rural Gujarat’s manufacturing sector is risen by half to stand at Rs 1.5 lakh while that for their informal counterparts remains stagnant at only Rs 1.03 thousands i.e., it has seen an increase of just seven percent. Though they maintain that skills’ training programs can increase incomes.
“Training rural youth can significantly increase their earning potential,” said Dr Sunil Shukla from EDII.
— Comments from Parag Dave and Niyati Parikh
