Opinion - News Analysis   

More questions than answers

Sushma Ramchandran

The provisional findings of the fifth economic census paint a curious picture.

THE PROVISIONAL results of the fifth economic census, released on June 12, have thrown up a wealth of data that actually raise more questions than they answer. The census has, however, clearly revealed that both employment levels as well as the number of enterprises in the country are rising faster than ever before. Job creation has risen by 2.49 per cent compared to only 1.7 per cent at the time of the previous census in 1998. Enterprise creation has also speeded up by 4.8 per cent annually over the period from 1988 to 2005 as against 2.36 per cent at the time of the last census.

Besides, it seems to have reaffirmed perceptions that enterprises grow more rapidly in States such as Maharashtra, Tamil Nadu, and West Bengal that have large commercial hubs. Metropolises such as Mumbai, Chennai, and Kolkata remain magnets not just for creation of enterprises but also for providing jobs.

Apart from the States mentioned above, Uttar Pradesh and Andhra Pradesh are also among the top five States leading both in the number of enterprises as well as in job-creation. Even if these are extremely small units, both enterprise and employment levels in these States appear to be rising steadily. A more detailed study will have to be done to find out whether employment generation is rising more rapidly in Uttar Pradesh than earlier envisaged as this is a State that has always been considered a laggard as far as development is concerned.

Interestingly, just five States — Andhra Pradesh, Maharashtra, Tamil Nadu, Uttar Pradesh, and West Bengal — account for as much as 50 per cent of the total enterprises in the country. They have a combined share of 49 per cent of the total employment. Tamil Nadu has the most number of enterprises — 4.44 million units or 10.56 per cent of the national total. The State, however, accounts for only 9.97 per cent of the total jobs. In contrast, Maharashtra which is second with 4.37 million enterprises — 10.39 per cent of the total — provides 11.95 per cent of the jobs. West Bengal with 4.28 million enterprises — 10.17 per cent of the national total — provides 9.42 per cent of the total jobs.

Here again, the data from 1998 to 2005 appear to throw up fresh questions. In States with many enterprises, the relative job generation is not as high. It needs to be examined whether this is due to the units being extremely small or whether they are more capital intensive.

The census may also revive the controversy over "jobless growth" in the economy. It has revealed that employment in the non-agricultural sector has risen by 2.5 per cent annually while the number of enterprises in the services and manufacturing sectors has risen by 4.8 per cent annually. Besides, the 42.12 million enterprises documented in the census employ an average of just 2.35 workers each. Only 1.3 per cent of these enterprises employed more than 10 workers. More studies would be useful to find out the reasons for this.

The census has also found that 61 per cent of all enterprises are located in the rural areas and 39 per cent in the urban areas. The growth rate of the enterprises in the rural areas is 5.53 per cent, much faster than the 3.71 per cent recorded in the urban regions. A study of the nature of the enterprises in the rural and urban areas might reveal the reasons for this difference.

Another interesting aspect is that the highest growth in terms of both enterprises and employment has taken place in States affected by insurgency. For instance,Mizoram, Tripura, and Assam are among the top five in terms of growth of enterprises while Jammu and Kashmir has the highest growth in employment generation. While the average annual growth rate for the country is 4.8 per cent, Mizoram shows a growth of 9.6 per cent followed by Kerala with 8.9 per cent, Tripura with 8.79 per cent, and Assam with 6.57 per cent.

Similarly, employment growth has been the highest in Jammu and Kashmir despite terrorism having affected the State for many years. In contrast to the average annual employment growth of 2.49 per cent, the State has had 6.82 per cent job growth from 1998 to 2005.

Many of the questions raised by the census may be answered by the final results to be announced in December. But others are bound to require a more detailed study, especially on whether the high growth achieved in recent years has been accompanied by higher employment or whether it is actually, as some sections are saying, jobless growth.

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