5.2.1 For the purpose of collection of data relating to manufacturing activities through sample survey, all manufacturing units in the country are classified into two broad sectors namely, registered and unregistered sectors or organised and unorganised sectors–the terms being quite often used interchangeably. While the registered manufacturing sector covers the manufacturing units registered under sections 2m (i) and 2m (ii) of the Factories Act, 1948 or under the Bidi & Cigar Workers (Condition of Employment) Act, 1966, i.e. the units employing 10 or more workers and using power or 20 or more workers but not using power, the unregistered manufacturing sector covers all residual manufacturing units.
5.2.2 Data with respect to the unregistered manufacturing units or enterprises are collected through the periodic sample surveys. Apart from these sample surveys specifically designed to collect detailed data relating to employment, fixed assets, working capital, details of input and output, gross value added, etc. from the unregistered manufacturing enterprises, information on number of workers engaged in manufacturing activities are also available from three more sources namely, Employment-Unemployment Surveys (EUS) of the NSSO, decennial Population Censuses and the periodic Economic Censuses. The Economic Censuses also give information on the number of enterprises. It may be mentioned that employment data available from each of these three sources takes into account all types of workers irrespective of whether the employing enterprises are registered or unregistered in nature.
5.2.3 Collection of data on unregistered manufacture has been a regular feature in the NSS. In fact, the very 1st Round of the NSS (October 1950 to March 1951) had Small-scale manufacture and handicrafts (household), as one of its subjects in the round. Thereafter, data on this subject were collected also in the NSS rounds 3–10, 14, 23 and 29 (July 1974–June 1975). It may be mentioned that data pertaining to non-household small-scale manufacture and handicrafts also were collected in the 7th and 23rd Rounds of the NSS. In all these surveys, a list of villages as per the Population Census has been used as the sampling frame for selection of villages. In the urban areas, a list of census enumeration blocks, or list of Urban Frame Survey (UFS) blocks as per the NSSO since their availability, has been used as the sampling frame for selection of urban blocks.
5.2.4 With the launching of the First Economic Census (EC) in 1977, the Follow-up Enterprise Surveys (FuS) of Economic Census on unregistered manufacture have thereafter used the village and block-level information on the number of enterprises and workers as per the EC for selection of villages and urban blocks in the FuS. The approach of listing of enterprises in the FuS has also been changed from the household approach as followed earlier to the site approach. Of course, the enterprises operating without any fixed premises are listed against the households of the owners of such enterprises. The subject of unregistered manufacture through the FuS has so far been covered during 1978-79, 1984-85, 1989-90, 1994-95, 1998-99, 1999-2000 and 2000-01.
5.2.5 The FuS adopt a stratified sampling design with villages and urban blocks as the first stage sampling units and unregistered manufacturing units as the ultimate sampling units. For selection of villages, the FuS generally use the list of villages with information on number of enterprises and workers as per the Economic Census (EC) as the sampling frame. For the urban areas, the list of enumeration blocks (EBs) with EB level count of number of enterprises and workers as per the EC is used as the sampling frame for selection of urban blocks subject to their usability, i.e. wherever the EB boundaries were identifiable. In the remaining cases, particularly for Class II to VI towns, lists of Urban Frame Survey (UFS) blocks as per the NSSO have generally been used in the past as the sampling frame for selection of urban blocks in the FuS. It is worth mentioning in this context that unlike the previous three ECs, the Fourth EC (1998) was carried out with UFS blocks as the primary geographical units for the urban areas. As a result, in the last survey on unregistered manufacture, i.e. in the 56th Round of NSS (2000-01), the list of UFS blocks with a count of the number of enterprises and workers as per the Fourth EC has been used as the sampling frame for selection of urban blocks from all towns of the country (except the State of Orissa for which the EC frame was not available and 66 towns of the State of Karnataka for which UFS blocks were not used as the primary geographical units in the fourth EC).
5.2.6 As regards selection of unregistered manufacturing units or enterprises for the purpose of collection of data in the FuS, first a frame of unregistered manufacturing enterprises is prepared at the time of survey in each sample village and block (or selected hamlet-groups and sub-blocks in case of large villages and blocks). Then from this frame, a specified number of about 16 enterprises are selected after grouping the enterprises into a certain number of second stage strata. Generally, all own account enterprises[4] together form one stratum, all non-directory establishments[5] together another stratum and the directory establishments[6] together, the third stratum in the FuS.
5.2.7 Data for the selected enterprises are collected by visiting the respective sites. However, for enterprises without fixed premises, requisite information about the entrepreneurial activities are collected by interviewing the owner of the enterprise (or any other suitable respondent) at the household of the owner.
5.2.8 Although the NSS was started as a Central Government project, a scheme has been evolved over the past, according to which a State or Union Territory Government can participate in the NSS by surveying the villages and urban blocks at least on an equal matching basis. At present all the State and Union Territory Governments except Andaman and Nicobar Islands, Dadra and Nagar Haveli and Lakshadweep are participating in the FuS.
5.2.9 With the increasing demand for reliable estimates at the State, Union Territory and regional levels, the sample size of first stage units (FSUs), i.e. villages and urban blocks in the surveys has gradually been increased over time. The sample allocation for the central sample at all-India level increased from 1,174 FSUs in the NSS 3rd Round (August–November 1951) to 15,032 FSUs in the NSS 56th Round (July 2000 – June 2001). The all-India state sample size in the 56th Round of NSS was fixed at 17,096 FSUs.
Current Status
5.2.10 According to the survey results of NSS 55th Round (1999-2000) that covers only household enterprises, i.e. proprietary and partnership enterprises, there are about 143 lakh such unregistered manufacturing enterprises in the country employing about 296 lakh workers. The recently concluded NSS 56th Round Survey also collected data relating to the unregistered manufacturing enterprises including non-household enterprises. The survey covers the entire country except: (i) Ladakh and Kargil districts of Jammu and Kashmir, (ii) interior villages of Nagaland situated beyond 5 kms. of a bus route, and (iii) villages in Andaman and Nicobar Islands that remain inaccessible throughout the year. All the State and Union Territory Governments except Andaman and Nicobar Islands, Dadra and Nagar Haveli and Lakshadweep have participated in the survey at least on an equal matching basis.
5.2.11 A sample of 15,032 FSUs, i.e. villages and urban blocks in the Central sample and 17,096 FSUs in the State sample has been allotted for survey at the all-India level. Enterprise-level data at the village and UFS block level as per the Fourth Economic Census (EC) have been used as the sampling frame for selection of villages and urban blocks except for the State of Orissa for which the EC frame was not available and 66 towns of Karnataka for which the EC did not use UFS blocks as the primary geographical units. For selection of villages in Orissa, the list of villages as per 1991 Population Census constituted the sampling frame. For selection of urban blocks from Orissa and 66 towns of Karnataka, the lists of UFS blocks of the NSSO constituted the sampling frame.
5.2.12 In the 56th Round of NSS, for the purpose of listing of enterprises, the sample FSUs having an approximate present population of more than 1200 or more than 120 non-agricultural enterprises are segmented into a minimum of 4 segments, called hamlet-groups for rural samples and sub-blocks for urban samples. The above cut-offs for segmentation of FSUs are a bit smaller in respect of rural areas of Himachal Pradesh, Sikkim and Poonch, Rajouri, Udhampur and Doda districts of Jammu and Kashmir. From the segments formed in the FSU, a sample of 3 segments – one with certainty, i.e. the segment having a maximum number of Directory Manufacturing Establishments (DMEs) (or with a maximum number of Non-directory Manufacturing Establishments (NDMEs) if there is no DME, or with a maximum number of own-account manufacturing enterprises (OAMEs) if there is no DME/ NDME, or with a maximum population if there is no manufacturing enterprise) and the other two from the remaining by circular systematic sampling with equal probability – is selected for the purpose of listing. While a separate frame of enterprises is prepared for the segment selected with certainty, a combined frame of enterprises is prepared for the other two segments selected circular systematically.
5.2.13 All the eligible enterprises in any sample FSU (or in the selected segments in case of segmentation of FSUs) that operated for at least 30 days (15 days in case of seasonal enterprises) during the last 365 days preceding the date of listing are considered for sampling in the 56th Round of NSS. All such enterprises in the frame of any FSU or FSU x segments, as the case might be, are grouped into three strata – one consisting of the DMEs and the other two consisting of the NDMEs and OAMEs, respectively. From each of the respective frames, a specified number of enterprises are selected for survey by circular systematic sampling after arranging the enterprises according to broad industry groups. The total number of enterprises surveyed per FSU is restricted to 16. The suitable rule for compensation for a shortfall of the requisite number of enterprises in any frame from the others is provided.
5.2.14 As regards the release of survey results, there has been a tremendous improvement during the past few years. The survey results are now being released almost without any time lag. This is really a great achievement. Data pertaining to the unregistered manufacturing enterprises but with ownership as either proprietary or partnership were last collected in the 55th Round of NSS (1999-2000), along with collection of data for many other industrial activities, household consumer expenditure as well as employment and unemployment. All such enterprises were defined as enterprises belonging to the informal sector. The key results based on the survey have been released in December 2000, i.e. only after 6 months of completion of the survey. According to the survey that collected data from a sample of 56,523 manufacturing enterprises spread over 10,170 villages and urban blocks of the country, an estimated 142.5 lakh unregistered manufacturing enterprises in the informal sector, employing about 296.5 lakh workers, were operating in the country during 1999-2000.
Select Issues
5.2.15 The Commission, after reviewing the system of data collection and broadly analysing the survey results of unregistered manufacture, has grouped the important issues into the following broad categories for the purpose of identifying the deficiencies in the present system and thereby recommending measures for improvement of the system:
Divergence in the alternative data sets
Accuracy of the survey estimates
Time frame for conducting the surveys
State participation
A. Divergence in the Alternative Data Sets
Deficiencies
5.2.16 It is clear from discussions under paragraph 5.2.2 that data on a number of enterprises are available from the Follow-up Enterprise Surveys (FuS) and Economic Censuses (EC) while the same with respect to number of workers are also available from two more sources namely, the Employment-Unemployment Surveys (EUS) of the NSSO and the decennial Population Censuses. Ideally speaking, the number of enterprises as per the FuS and the EC should be in close agreement as the definition of an enterprise is the same in both the operations. As regards the number of workers engaged in the activity, figures from different sources are not strictly comparable in view of certain differences in defining the same by different sources.
5.2.17 For ascertaining the number of workers, both the FuS and the EC consider the number of workers usually working in the enterprise in a day. But the reference period for determining the number of workers is generally the last month (average month of the last working season for seasonal enterprises in some surveys) in the FuS and the last year for perennial and casual enterprises or the last working season for seasonal enterprises in case of the EC. As regards the other two sources, the Census 1991 categorised a person as worker if he or she had worked at any time during last year while the EUS 1993-94 classified a person as worker provided he or she, during the last year, pursued some economic activity more or less regularly, even if it was intermittent in nature. Further, the coverage of activities under ‘work’ was wider in the EUS 1993-94 as compared to the Census 1991. To illustrate, all market activities, the production of all primary commodities for own consumption and own account production of fixed assets are classified as work in the EUS 1993-94. But the Census 1991 recognised all market activities and production for own consumption in cultivation of only certain crops such as cereals, millets, sugarcane, etc. as work. Growing of plantation crops, vegetables, flowers and other crops exclusively for home consumption were not considered as work in the Census 1991.
5.2.18 Recently, an Expert Committee to examine wide variations in data sets on the same subjects (Report released in February 2000) also studied the said divergence in the alternative data sets. According to the Report, the total number of manufacturing enterprises in the country as estimated by the FuS 1989-90 and the EC 1990 (see Annexe 5.15) are about 144 lakhs and 54 lakhs, respectively. Thus FuS estimate is about 2.7 times the EC count despite the fact that the FuS considered only the unregistered enterprises as against the EC taking into account all types of enterprises irrespective of their status of registration or type of ownership. State-wise results as per the alternative sources also reflect a similar pattern with the FuS figure being generally much higher than the figure reported by the EC.
5.2.19 In spite of some differences in the definitions of workers as per the alternative sources as discussed earlier, the estimated total number of workers engaged in the manufacturing activities as per the FuS 1989-90 and ASI 1989-90 can be compared with the total number of workers as per the other three sources, namely, the EC 1990, EUS 1993-94 and Census 1991 for a broad dimensional check on the quality of alternative estimates. This comparison (Source: Report of the Expert Committee to examine wide variations in data sets on the same subjects) reveals that (see Annexe 5.16) the numbers of workers are smaller in the censuses (EC 1990: 218 lakhs; Census 1991: 299 lakhs) than in the sample surveys (FuS & ASI 1989-90: 431 lakhs, EUS 1993-94: 368 lakhs). Interestingly, the number of workers engaged in unregistered manufacturing enterprises as per the FuS 1989-90, estimated to be about 350 lakhs, exceeded the number of workers as per both the censuses that included workers engaged in both unregistered and registered manufacturing enterprises.
Recommendations
5.2.20 Taking note of the extent of divergences in the alternative data sets, the Commission recommends that:
Uniform concepts and definitions should be adopted in the censuses and the sample surveys in defining the enterprises and workers. In case of non-uniformity, provisions must be made in the census and survey questionnaires so that it is possible to generate comparable estimates for a cross-examination of data and to take remedial measures in case of divergences in the data.
The advisory working groups and technical committees set up by the National Commission on Statistics should ensure standardisation of concepts and definitions in the censuses and sample surveys, to the extent possible.
The National Sample Survey Office should regularly study the extent of divergences in the alternative data sets so as to identify the reasons for divergences and suggest remedial measures. As the village and urban block level data of the number of enterprises and workers as per the Economic Census (EC) are used as the sampling frame for selection of villages and urban blocks in the Follow-up Enterprise Surveys, necessary measures must be taken in the EC to enhance the quality of the data.
B. Accuracy of the Survey Estimate
5.2.21 The Follow-up Enterprise Surveys (FuS) on unregistered manufacturing enterprises are carried out periodically by following similar concepts and definitions. Thus the results as per the FuS conducted at different points of time should be consistent. Examination of key results (see Annexe 5.17) as per the last three surveys namely, NSS 51st Round (1994-95), Special Enterprise Survey (1998-99) and NSS 55th Round (1999-2000) shows a decline in the estimated number of unregistered manufacturing enterprises at the all-India level during the period 1994-95 and 1998-99 (124 lakhs during 1994-95 and 101 lakhs during 1998-99). But a high rate of growth in the estimated number of unregistered manufacturing enterprises is observed during the next year (101 lakhs during 1998-99 and 143 lakhs during 1999-2000). Consequently, the estimated number of workers engaged in the activity for the periods discussed above also shows a similar trend (296 lakhs during 1994-95, 229 lakhs during 1998-99 and 296 lakhs during 1999-2000).
5.2.22 Thus,according to the FuS estimates, the period 1994-2000 is marked with a reverse trend (i.e. decline for the period 1994-99 and growth during 1999-2000) in the number of unregistered manufacturing enterprises and workers engaged therein. Interestingly, the estimated number of workers engaged in the unregistered manufacturing enterprises in the country remained the same (296 lakhs) during the periods 1994-95 and 1999-2000. To what extent the finding is correct needs to be examined. One way of doing so could probably be to compare the rate of growth for the period in the total number of workers as per the FuS and the Annual Survey of Industries (ASI) with the rate of growth in the corresponding employment figures as per the Employment-Unemployment Surveys of the NSSO conducted during NSS 50th Round (1993-94) and NSS 55th Round (1999-2000). The Commission finds that there is now no regular mechanisms for post-survey evaluation of survey results by cross-validating the same with those available from the alternative sources.
5.2.23 Estimate of gross value added (GVA) per worker as per the FuS is used for the purpose of GDP calculation. Sometimes there are perceptions from the data users that the FuS estimate of GVA per worker does not reflect the reality (see Annexe 5.17) for the estimates of GVA per worker as per the NSS 51st Round: 1994-95 and Special Enterprise Survey: 1998-99). In fact, the perception is that the same is quite often underestimated. Reluctance on the part of the enterprises to supply correct and complete information in the surveys is one of the reasons for likely underreporting of receipts and GVA. This reluctance might be due to various reasons such as apprehension that the information supplied may be utilised for taxation purposes. The perceived underestimation of GVA can be verified by cross-validating the data with other related socio-economic variables. The Commission has noted that the NSSO carried out a pilot survey during April to June 2000 to evolve a better methodology for the collection of more reliable data on GVA from the manufacturing and trading sectors.
5.2.24 The Commission has observed that the survey reports do not give the standard error of estimates. As a result, the users are left with no other choice but to accept the published results in good faith. This is a weakness of the present system of dissemination of survey results.
5.2.25 The FuS covers all manufacturing units not covered under the ASI. Many bigger units with a sufficiently large number of workers are also included in the FuS because they are not covered under the ASI as they have not been registered by the Chief Inspector of Factories and included in their list. Inclusion of these bigger units in the FuS sometimes distorts the FuS estimates to a great extent.
Recommendations
5.2.26 The Commission recommends that:
Standard errors of important estimates should invariably be published in the reports.
Post-survey evaluation should be regularly carried out to identify the deficiencies in the survey methodology for the purpose of taking remedial measures.
There should be a regular interaction between the survey agencies and the data users to discuss the limitations of survey results with a view to taking necessary corrective steps for improving the quality of survey data.
Until action is completed to cover all the bigger units in the ASI frame, steps should be taken in the Follow-up Enterprise Surveys to net such bigger units by proper stratification so as to improve the precision of the survey estimates.
Measures such as strengthening of training, field visits and scrutiny of schedules by higher-level officers, interactive feedback session at the initial stage of the survey, etc. should be taken to minimise non-sampling errors in the surveys.
Other measures like shortening of schedule and creating public awareness about the data requirements should also be taken to improve the quality of the data.
It would be worthwhile to extend the provisions of the Collection of Statistics Act for surveys in respect of unregistered manufacture as well as other sectors as in the case of Annual Survey of Industries.
C. Time Frame for Conducting the Surveys
Current Status
5.2.27 The FuS on unregistered manufacture have been carried during 1978-79, 1984-85, 1989-90, 1994-95, 1998-99, 1999-2000 and 2000-01. The surveys carried out during 1998-99 and 1999-2000 also included other subjects under the coverage. Thus, till 1998-99, the subject of unregistered manufacture was taken up almost quinquennially. Thereafter, the subject has however been covered in the next two years. The Commission is of the view that a proper time frame for carrying out the survey should be prepared in advance for the benefit of the users. While doing so, the plan of covering other subjects should also be spelt out.
5.2.28 The Commission has observed that the work of finalisation of schedules and instructions for data collection, validation and report-writing for the surveys carried out during 1978-79, 1984-85 and 1989-90 was the joint responsibility of the NSSO and the CSO (EC Division) - OAME and NDME part looked after by the NSSO and the DME part by the CSO. Data from OAMEs, NDMEs and DMEs in these surveys were collected from the same set of FSUs selected by the NSSO by adopting an integrated sampling design. In the subsequent surveys, all the three enterprise types have been covered by the NSSO.
Recommendations
5.2.29 The Commission recommends that:
The time frame for covering various non-agricultural activities, including unregistered manufacture, through Follow-up Enterprise Surveys (FuS) should be finalised keeping in view the periodicity of data requirements by the users vis-à-vis resources available for handling the survey work.
The collection of data relating to all types of unregistered manufacturing enterprises consisting of OAMEs, NDMEs and DMEs should be integrated in the FuS and it should be the responsibility of the NSSO to conduct such surveys, process the results and bring out the reports.
D. State Participation
Deficiencies
5.2.30 All the State and Union Territory Governments except Andaman and Nicobar Islands, Dadra and Nagar Haveli and Lakshadweep are participating in the NSS at least on an equal matching basis. But as regards data processing and release of survey results are concerned, the performance of the States and Union Territories, barring a few of them, is very discouraging. This is a major weakness of the existing system.
Recommendations
5.2.31 The Commission recommends that:
Views of the State and Union Territory Governments should be solicited and measures should be taken for improving their data processing capabilities.
The State and Union Territory Governments should actively involve the NSSO and the CSO in regular discussions and exchange of ideas for improvement of their system of data processing.
