Context: 

The latest data from the Centre for Monitoring Indian Economy (CMIE) suggests that In just three years from January-April 2019 to 2023, India’s workforce experienced a significant expansion, the number of self-employed businesspersons witnessed an impressive increase during this period.

Trends In Employment In India:

• Total Employment: As of January-April 2023, there were 412.9 million employed individuals in India. 
  • This number had increased by 8.6 million compared to the pre-pandemic level in January-April 2019.

• Categories of Employment: 
  • Farmers: The largest employment category in India consists of farmers, who are involved in agricultural activities.
  • Wage Labourers and Small Traders: The second largest category includes wage laborers and small traders.
  • Salaried Class: The third biggest category is the salaried class, which includes individuals working in various organized sectors.
  • Business Class or Entrepreneurs: The fourth biggest category includes individuals engaged in business and entrepreneurship.
• Employment Trajectories: 
  • Business: The “business” category has fully recovered to the pre-pandemic level, with the number of people employed in this sector growing by 8.4 million in the last four years.
  • Salaried Class, Wage Labourers, and Small Traders: These three categories have not yet fully recovered to the pre-pandemic levels, as the number of people employed in these sectors is still below what it was during January-April 2019.

The “business” class in India can be compressed into three main sub-categories:

• Businessmen: Individuals running large businesses, managing fixed premises (offices, shops, factories) using capital and human resources.
• Qualified Self-employed Professionals: People who run their own professional enterprises based on their expertise (e.g., doctors, lawyers, consultants, chartered accountants).
• Self-employed: Entrepreneurs managing their own businesses with limited financial, human, or professional resources (e.g., taxi drivers, barbers, real estate agents, models, astrologers).

Rise of Self-Employment:

• Self-employed entrepreneurs accounted for the largest share, at around 70-80 per cent .
• According to CMIE, the share of businessmen fell substantially and was offset by an equal rise in the share of self-employed entrepreneurs.

Findings on data analysis:

• Decline in Traditional Business Class: The well-to-do entrepreneur class in India is experiencing a secular decline, both in absolute numbers and as a proportion of the population.
• Rise in Self-Employment: Self-employment is on the rise in India, with individuals starting businesses using limited resources and capital.
• Concerns about Real Entrepreneurship: The increase in self-employment raises concerns about genuine entrepreneurship, as it might be driven by limited employment opportunities rather than true entrepreneurial ventures.
• Economic Conditions: The growth in self-employment could indicate economic challenges and limited job opportunities in organized sectors, leading people to opt for self-employment as a means of livelihood.

What should India do?

• Shift from Agriculture: Utilize the existing labour force by shifting a major chunk (45.5%) engaged in agriculture with low productivity to other sectors.
• Labour-Intensive Manufacturing: Focus on labour-intensive sectors like textiles, toys, footwear, auto components, sports goods, and agricultural processing to provide employment opportunities.
• Potential Sectors: Explore sectors like restaurants, hotels, mining, construction, healthcare, and caregiving services for further job creation.
• Infrastructure Development: Accelerate infrastructure development to reduce trade costs, facilitate trade, and support the growth of the manufacturing sector.
• Skilling and Upskilling for Productivity:
  • Skill Development Programs: Utilize initiatives like Jan Shikshan Sansthan, Pradhan Mantri Kaushal Vikas Yojana, and National Apprenticeship Promotion Scheme for enhancing human resource skills.
  • Focus on Unorganized Sector: Address the underpaid employment in the unorganized sector (where 93% of employment lies) by upscaling skills and creating a high-skilled ecosystem.
  • Education and Health Facilities: Invest in quality education and healthcare to ensure a productive and healthy labour force.
• Healthcare Reforms:
  • Ayushman Bharat and Swachh Bharat Mission: Ensure health equity by implementing wide-ranging reforms in healthcare.
  • Accessibility and Affordability: Scale up access to quality healthcare services, make drug prices affordable, and implement the Pradhan Mantri Bhartiya Janaushadhi Pariyojana.
  • Universal Insurance: Work towards providing financial medical protection through universal insurance coverage.
• Quality Education:
  • National Education Policy 2020: Emphasize updating knowledge and creating productive employment opportunities.
  • Inclusive Education: Implement the Samagra Shiksha program for inclusive, equitable, and quality education at all levels.
  • Improve School Education: Focus on delivering quality education up to higher secondary level to build a skilled labor force.

Conclusion: 

India’s next 30 years belong to its potential if reforms are accelerated and flagship programs like Skill India, Make in India, and Start-up India yield desired outcomes. Focusing on labor-intensive manufacturing and human capital can make India a global labor force source.

News Source: The Indian Express