Hindu Editorial Analysis : 25-September-2024
The unorganised non-agriculture sector plays a crucial role in creating value and generating employment in India. Understanding this sector’s dynamics is essential for developing inclusive policies that benefit a wide range of workers.
Unorganised Sector in India
Overview
The unorganised non-agriculture sector, often called the informal or household sector, includes various economic activities that operate outside formal regulations. Common activities in this sector include:
- Street vending
- Construction
- Household services
- Small-scale manufacturing
Although this sector lacks formal labour laws and protections, it is vital for India’s economic development.
Key Statistics
- Contribution to GVA: In 2022-23, the unorganised sector contributed 44.25% to India’s total Gross Value Added (GVA).
- Employment: It employs 74.3% of India’s workforce, making it a backbone of the economy.
Sectoral Trends
- Shift Toward Services: The unorganised sector has shifted from manufacturing to services. Currently, the breakdown is as follows:
- Other Services: 38%
- Trade: 35%
- Manufacturing: 27%
- Rural Dominance: Rural areas account for 55% of unorganised establishments, highlighting the sector’s strong presence in villages.
- Productivity: The ‘Other Services’ sector leads in productivity, contributing 41% of total GVA with a GVA per establishment of ₹2.58 lakh.
Challenges Faced by the Unorganised Sector
Despite its significance, the unorganised sector faces several challenges:
- Lack of Formalization and Regulation: Workers do not have formal contracts, social security, or legal protections.
- Job Insecurity: Employment is often unstable, leading to irregular income.
- Low Productivity and Income Levels: Outdated technology and limited access to resources contribute to low productivity.
- Limited Access to Credit and Finance: Informal enterprises struggle to secure funding.
- Gender Disparities: Women face unequal pay and additional household responsibilities.
- Health and Safety Hazards: Workers often encounter unsafe working conditions.
- Skill Gaps and Fragmentation: Limited access to training hampers worker advancement.
- Access to Markets and Technology: Informal businesses find it challenging to compete with larger, organised players.
Related Government Initiatives
To address these issues, the government has implemented several initiatives:
- MGNREGA: Provides wage employment to rural workers, improving income security.
- PMSYM: Offers pensions for unorganised workers, enhancing social security.
- e-Shram Portal: A national database that helps unorganised workers access welfare schemes.
- Expansion of ESI Scheme: Extends health and social security benefits to more unorganised workers.
- Webinars and Cross-Country Perspectives: Initiatives to shape policies for gig and platform workers.
Way Forward
To strengthen the unorganised sector, several steps can be taken:
- Formalisation with Flexibility: Policymakers should simplify regulatory processes to encourage formalisation without burdening small businesses.
- Skill Development: Creating training programs tailored to the sector can enhance worker skills and productivity.
- Financial Inclusion: Improving access to credit through digitization and government schemes will empower businesses.
- Social Security: Expanding coverage for pension schemes, health insurance, and maternity benefits will provide a safety net.
- Enhancing Collective Bargaining: Encouraging informal worker unions can help workers negotiate better conditions and wages.
Why In News
The unorganised non-agriculture sector plays a vital role in value creation and employment generation in India, serving as a lifeline for millions of workers. Understanding its dynamics is essential for shaping inclusive policies that not only support economic growth but also empower vulnerable communities to thrive.
MCQs about The Importance of the Unorganised Non-Agriculture Sector in India
- What percentage of India’s workforce is employed in the unorganised non-agriculture sector?
A. 50.2%
B. 74.3%
C. 35.6%
D. 44.25%
- Which of the following activities is included in the unorganised non-agriculture sector?
A. Large-scale manufacturing
B. Street vending
C. Corporate finance
D. Government services
- What initiative provides wage employment to rural workers in the unorganised sector?
A. PMSYM
B. MGNREGA
C. ESI Scheme
D. e-Shram Portal
- What is one major challenge faced by workers in the unorganised sector?
A. Excessive job security
B. High levels of formal training
C. Lack of formal contracts
D. Abundant access to credit
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