Small enterprises in Indian manufacturing and inclusive growth: Search for compensatory mechanisms

Abstract

Employment growth in household and small enterprises in Indian manufacturing in 2000s is analysed in the context of inclusive growth. Analysis is based on the results of establishment surveys of unorganized manufacturing and registered manufacturing for the years 2000-01, 2005-06 and 2010-11.The employment share of household enterprises was found to have declined across industries and across states of India with the exception of Gujarat and Delhi. Employment growth in small enterprises defined as those with less than 50 workers in the non-household segment was observed to be positive but insufficient to compensate for the decline of household employment. The employment share of small enterprises was not found to have improved during the years 2001 to 2011 in the States with higher per capita NSDP. This calls for policy initiatives that encourage new entry and growth of employment in existing small enterprises.