A Silent Killer? Informal Manufacturing Jobs Are Disappearing in India

Headlines scream "layoffs!" across industries, painting a grim picture of the job market. But what if the real story lies hidden? A closer look reveals a concerning trend in India's informal manufacturing sector – millions of jobs are disappearing, largely unnoticed amidst the reports of corporate downsizing. TICE.News delves into the data behind these vanishing jobs and explores the potential reasons behind this under-reported crisis.

Imagine a bustling marketplace, filled with the hum of activity: family-run workshops crafting intricate goods, small businesses churning out everyday essentials. This vibrant network, known as India's informal manufacturing sector, has long been the backbone of the country's economy, employing millions. But recent whispers suggest a troubling trend – are millions of jobs within this sector simply vanishing?

What factors could be behind such a decline? Has the pandemic delivered a crippling blow to these small businesses? Or are there deeper economic forces at play? Let's delve into the data and uncover the story behind the disappearing jobs in India's informal manufacturing sector.

Jobs in Informal Manufacturing Sector

Digging into the data provided by the National Statistical Office (NSO), a worrying trend emerges. Between July 2015 and October 2022, the informal manufacturing sector shed a staggering 5.4 million jobs. This dramatic decline coincides with a significant drop in the number of unincorporated establishments themselves – a decrease of 1.8 million. These unincorporated businesses, encompassing family-run workshops, sole proprietorships, and small ventures, form the backbone of the informal sector. Their struggles paint a concerning picture for the future of this vital sector.

What is Informal Manufacturing Sector?

For a clearer understanding, let's define the informal sector. These are businesses that operate outside the formal legal framework. They often lack official registration and may not comply with all regulations. Despite this, they play a significant role in the Indian economy, employing a vast workforce.

A Decade of Challenges: Demonetization, GST, and the Pandemic

Experts point to a confluence of factors contributing to the decline in informal manufacturing jobs. The past decade has seen a series of economic events that may have impacted these businesses disproportionately. Pronab Sen, Chairperson of the Standing Committee on Statistics, highlights demonetization, the implementation of the Goods and Services Tax (GST), and the COVID-19 pandemic as potential contributors. These events might have disrupted supply chains, increased compliance burdens, and squeezed cash flow for these smaller businesses.

Job Losses and Survival Strategies

Experts believe that small, micro, and medium enterprises (MSMEs) plays a critical role within the informal sector. MSMEs are major providers of non-farm employment. Policy changes and the pandemic's impact significantly hampered these businesses, leading to the observed decline in both establishments and jobs. 

While informal manufacturing suffers, the NSO report reveals a different story for other sectors. The number of establishments in the trading sector saw a modest decline, with the workforce there showing marginal growth. On the other hand, the "other services" sector witnessed a rise in both establishments and employed workers.

The Road Ahead: Addressing Challenges for Informal Manufacturing

The significant job losses in informal manufacturing raise serious concerns about the sector's future. Understanding the specific challenges faced by these businesses is crucial. Policymakers and stakeholders will need to work together to create a more supportive environment for these informal enterprises. This could involve streamlining regulations, facilitating access to credit, and fostering innovation within the sector. Only then can India's informal manufacturing sector regain its footing and continue to be a vital source of employment and economic dynamism.

Join Our Thriving Entrepreneurial Community

Follow TICE News on Social Media and create a strong community of Talent, Ideas, Capital, and Entrepreneurship. YouTube  | Linkedin | X (Twittrer) | Facebook | News Letters