Nearly 20 per cent of unorganized manufacturing activity in urban Gujarat sick

By A Representative 
A recent survey has made the drastic revelation that nearly 20 per cent of all unorganized sector manufacturing enterprises in Gujarat’s urban areas are sick, belying those who believe that sickness has not touched the state’s lower rung manufacturing. Indeed, if the survey is to be believed, the sickness has hit women the most, as they own majority of these enterprises. In fact, the data, which found their way in the National Sample Survey (NSS) report, “Operational Characteristics of Unincorporated Non-agricultural Enterprises (Excluding Construction) in India”, released in November 2012, suggest that Gujarat leads among Indian states in this sickness.
The survey says that 18.8 per cent of all unorganized manufacturing sector enterprises “shrinking” or “fall in demand”, which is the highest compared to any other state. While the all-India average is 12.1 per cent, the comparable figures for Maharashtra are 14.1 per cent, Tamil Nadu a mere 1.8 per cent, Andhra Pradesh 6.8 per cent, Bihar 14 per cent and Madhya Pradesh 11 per cent. The NSS, interestingly, gives no explanation for the reasons for the “fall in demand”, though adds certain other factors which has led to the sickness.
Data suggest that there is no shortage of raw material needed for the unorganized manufacturing activity -- a mere 1.2 per cent reported lack of raw material as the factor behind sickness. Even then, as many as 8.6 per cent of Gujarat’s enterprises reported “non-availability” of credit or “high cost of credit”, and another 7.2 per cent said they faced the problem of “non-recovery of financial dues”. All this at a time when, infrastructure wise, the sector is doing pretty well. Just about 0.4 per cent of them said they face “erratic power supply”.
What is noteworthy is that, a great majority of these enterprises, about 87 per cent, operate from their households, which is one of the highest in the country. Also, most of them – 59.5 per cent – are owned by women, which again is very high compared to other states. Further, a great majority of them, nearly 40 per cent of those surveyed, were found involved in the manufacture of wearing apparel, while others were involved different other activities, mainly manufacture of textiles and of food products.
The survey results go to confirm recent conclusions drawn by an International Labour Organisation (ILO) study, carried out by a senior faculty of the Centre for Environmental Planning and Technology (CEPT) University, Prof Darshini Mahadevia, which says that poor wages in the organized manufacturing sector in Gujarat are driving workers, especially women, to unorganized manufacturing activity.
Prof Mahadevia says, though Gujarat is “the third most industrialized state of India and is one among only two states that have registered a higher rate of urbanization in comparison to the previous decade among all the states in India”, yet it is also “in the bottom quarter in terms of ranking of the states in wages/salary.”

Making a study of Ahmedabad, she says, “A survey of slums in 2009 in Ahmedabad’s Vasna ward, which is a middle class ward, found that the average income of a household of 5.9 people was 4,965 rupees per month, which would amount to about Rs 85 per day when the work participation rate of the community is 39.4 per cent.” Citing another study, she adds, “In the industrial ward of Amraiwadi, the average income of a household of 5 people was Rs 3,248 per month in the same year, which would represent an average daily wage of 104 rupees.” 

It is in this backdrop the expert says that there was a consistent increase in self-employment among the males as well as females in Ahmedabad city, from 34.7 per cent in 1987–88 to 53.6 per cent in 2009–10. Quoting NSS figures, she says, “Self-employment in manufacturing means the outsourcing of the manufacturing work, most of which can be done at the household level, especially because the low-income population does not have access to any workspace outside the home”
In fact, her study finds that “the manufacturing in Ahmedabad is of the type that operates through subcontracting, wherein women are more suitable as workers than men.” In her estimate, nearly 70 per cent of the women were informally employed in 2004–05, which increased to 80 per cent in 2009–10; while the proportion increased from 55 per cent to 67 per cent among men.