Changing structural composition of the Informal Manufacturing Sector in India during 2011-16: An analysis of unit-level NSSO Data

In the context of an unprecedented decline in the manufacturing employment driven by the informal sector in the post-2010 period, the paper examines the structural compositional changes in the Informal Manufacturing Sector (IMS) in India, the largest employer within the manufacturing sector. Using enterprise-level data between 2010-11 and 2015-16, the paper finds major shifts in employment structures in IMS. Three trends need careful diagnosis. (1) There was tremendous growth in tiny enterprises, with a withdrawal of larger firms. (2) These tiny firms were overwhelmingly owned and operated by female entrepreneurs in rural areas. (3) These trends are more evident in the rural economy, which saw a withdrawal of family labour, and wage labour from the sector. A partial diagnosis lies in understanding the linkages between structural changes within IMS and the job loss nature of the economic growth which in turn has severely impacted the consumption demand.