The Sixth Economic Survey was conducted in 2013-14 and the report was released in March 2016. You can find it here.
On page 13, it says:
Economic Census (EC) is the complete count of all establishments (i.e. units engaged in the production and/or distribution of goods and services not for the purpose of sole consumption) located within the geographical boundaries of the country. The Sixth EC was conducted during January, 2013 to April, 2014 (see Annexure V for details) in all the States and Union Territories of the country in collaboration with State/UT Governments.
All economic activities (agricultural and non-agricultural), except those involved in crop production and plantation, public administration, defense and compulsory social security, related to production and/or distribution of goods and/or services other than for the sole purpose of own consumption were covered.
On page 25, it says:
As per the results of the Sixth Economic Census (Table 2.1), there are 58.50 million
establishments in the country engaged in different economic activities other than crop production, plantation, public administration, defence and compulsory social security services.
Out of which, 34.80 million establishments (59.48%) are in the rural areas and 23.70 million establishments (40.52%) in the urban areas.
But, here is where the confusion arises. Page 13 also states the following:
Based on the frame thrown up by Fifth Economic Census, the following follow-up surveys were carried out:-
(i) National Sample Survey (NSS) 67th round during 2010-11 (Survey on Unincorporated Non-Agricultural Enterprises excluding Construction);
(ii) NSS 73rd round during 2015-16 with the coverage similar to that of NSS 67th round.
The full report of the National Sample Survey Organisation (NSSO) 73rd round is available here. A summary is available here. It shows that India has an estimated 6.34 crore non-agricultural, unincorporated enterprises (same as ‘Establishments’?).
It should be a subset of the overall ‘Establishments Survey’ of the Sixth Economic Census because that survey included agricultural establishments too.
In fact, the introduction to the Report 73rd round of the NSSO brings out the difference between its findings and that of the Sixth Economic Census:
220.127.116.11 While the 6th Economic Census covered all the unincorporated enterprises as included in the coverage of NSS 73rd round, it also covered all other units engaged in various agricultural and non-agricultural activities excluding crop production, plantation, public administration, defence and compulsory social security. While covering these activities, 6th Economic Census considered the following ownership categories for inclusion:
Proprietary and Partnership establishments
Private Corporate Establishments (Companies)
Non-Profit Institutions (NPIs)
Self Help Groups (SHGs)
18.104.22.168 The SHGs, which were formed for engaging in financial intermediary services and later changed into some group based non-financial activity, were also considered as SHGs in 6th EC. However, units formed as an SHG and engaged in non-financial activities were considered as a partnership enterprise with members not all from the same household. All members of SHG who were regularly attending meetings or taking part in decision making procedure like secretary, treasurer, active committee member etc. were treated as working owners in 6th EC. However, they were not considered as working owners (or workers) in NSS 73rd round.
So, the Sixth Economic Census must have included a much larger set than that of the NSSO 73rd Round. But, the number of Establishments, according to the Sixth EC is only 58 million. The 73rd Round already mentions 60.34 million unincorporated enterprises. The Sixth Economic Census is already outdated?
Why use two different words, ‘Enterprise’ and ‘Establishment’? The definition of ‘Establishment’ given above does not seem to indicate that it only covers ‘unincorporated’ Establishments.
India uses the words, ‘small’, ‘unincorporated’, ‘informal’, ‘unorganised’ rather interchangeably. For the most part, they overlap but there could be critical differences. Policy interventions would be more effective if the understanding is clear and common across all stakeholders and decision-makers.
According to this Wikipedia entry, India defines the ‘unorganised’ sector as comprising of
all unincorporated private enterprises owned by individuals or households engaged in the sale or production of goods and services operated on a proprietary or partnership basis and with less than ten total workers.
So, ‘unorganised’ is ‘unincorporated’. Now, let us turn to ‘informal’. C.P. Chandrasekhar, in this article in THE HINDU in September 2014 cites the definition of the NSSO on ‘Informal Sector’:
Proprietary and partnership enterprises (excluding those run by non-corporate entities such as cooperatives, trusts and non-profit institutions), in the non-agricultural sector and in agriculture-related activities excluding crop production (AGEGC).
So, ‘informal’ is also ‘unincorporated’ is also ‘unorganised’.
But, ‘unincorporated’ does not mean ‘unregistered’ because the NSSO 73rd Round Report included ‘Manufacturing enterprises registered under Section 85 of Factories Act, 1948’. It has not included those factories that are covered by the Annual Survey of Industries (ASI) since that survey only includes those Factories that are covered by the definitions as per Section 2(m)(i) and 2(m)(ii) of the Factories Act, 1948.
The NSSO 73rd round has explicitly excluded those, as you can see below:
The survey covered the following broad categories:
(a) Manufacturing enterprises excluding those registered under Sections 2m(i) and 2m(ii) of the Factories Act, 1948
(b) Manufacturing enterprises registered under Section 85 of Factories Act, 1948
(c) Enterprises engaged in cotton ginning, cleaning and baling (code 01632 of NIC-
2008) excluding those registered under Factories Act, 1948
(d) Enterprises manufacturing beedi and cigar excluding those registered under beedi and cigar workers (conditions of employment) Act, 1966
(e) Non captive electric power generation, transmission and distribution by units not
registered with the Central Electricity Authority (CEA)
(f) Trading enterprises
(g) Other Services sector enterprises excluding construction
Categories of enterprises under coverage in (a) to (g) above were:
(a) Proprietary and partnership enterprises [excluding Limited Liability Partnership
(b) Trusts, Self-Help Groups (SHGs), Non-Profit Institutions (NPIs), etc.
Following enterprises were excluded from the coverage:
(a) Enterprises which are incorporated i.e. registered under Companies Act, 1956
(b) The electricity units registered with the Central Electricity Authority (CEA)
(c) Government and public sector enterprises
In other words, these NSSO Surveys cover establishments that are truly unorganised, unincorporated and informal. Whereas Factories covered the ASI are not part of these.
The Economic Census is a different ball game. It is a census of all establishments including incorporated enterprises and government/public sector undertakings.
Therefore, when one is evaluating the productivity of factories covered by the ASI, one is comparing productivity of firms within the so-called ‘formal’ sector except the sizes may vary.
I had to do this blog post just to organise my thoughts in my head clearly and to set the stage for comparing productivity of Factories as covered by the ASI. That is the next blog post.