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Mfg recovers from pandemicdisruption: ASI

Feb 06, 2024 08:32 AM IST

In terms of numbers, the average factory in the ASI sample frame is much bigger and the number of average workers per factory higher at 54.4 in 2021-22, compared to 50.3 in 2020-21 and 53 in 2019-20

Bigger factories that are doing better, and a revival of organized manufacturing are headline (and critical) findings of the 2020-21 and 2021-22 Annual Survey of Industries (ASI) data released by the Ministry of Statistics, on Monday.

According to data, the disruption of organized manufacturing might have contributed to the reverse migration seen during the Covid-19 pandemic, but this reversed itself by 2021-22. (AFP/ Representational Use)
According to data, the disruption of organized manufacturing might have contributed to the reverse migration seen during the Covid-19 pandemic, but this reversed itself by 2021-22. (AFP/ Representational Use)

The disruption of organized manufacturing might have contributed to the reverse migration seen during the Covid-19 pandemic, but this reversed itself by 2021-22, the data show. What has followed the pandemic, they indicate, appears to be a process of consolidation of India’s factories. While number of factories has fallen marginally for the first time in almost two decades, the ones that exist employ more people per factory. And the bigger factories are doing better than their smaller counterparts in India’s manufacturing. These are among the most important findings from the data.

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These numbers, in a way, corroborate, what is already seen in databases such as the Periodic Labour Force Survey (PLFS). However, they are important because ASI captures the registered manufacturing part of the overall manufacturing universe, not petty manufacturing enterprises. ASI uses multiple criteria to classify a unit as registered manufacturing, the most important of which is employment of 10 workers with power or 20 without power.

In terms of numbers, the average factory in the ASI sample frame is much bigger and the number of average workers per factory higher at 54.4 in 2021-22, compared to 50.3 in 2020-21 and 53 in 2019-20.

How did the pandemic affect industrial activity in India? Because the ASI data is presented in nominal terms, one has to apply a suitable deflator to answer this question. HT has applied the deflator for manufacturing sector component of the GVA (gross value added (the value of the output of an economy less the value of intermediaries) to make these comparisons. In real terms, manufacturing GVA, as seen in ASI data, contracted by 2.5% 2019-20 and then expanded by 8.2% and 16% in 2020-21 and 2021-22. For overall manufacturing GVA (culled from the GDP numbers) , these numbers were a 3% contraction in 2019-20 and 2.9% and 11.1% expansion in 2020-21 and 2021-22. This suggests that small-scale manufacturing has lagged behind large manufacturing in the Indian economy during this period.

To be sure, not all parts of registered manufacturing survived the pandemic unscathed. The total number of workers and persons engaged shows a fall between 2019-20 and 2020-21 in the ASI data. This is despite an increase in the total number of factories during this period. The period between 2020-21 and 2021-22 shows the opposite trend. While the number of factories fell marginally (by 467) to 249,987 in 2021-22, both the number of workers and persons actually increased during this period. This is in keeping with the rise in share of manufacturing employment between the 2020-21 and 2021-22 PLFS rounds.

ASI data also shows what many commentators have described as a profit-led recovery in the post-pandemic period. Overall wages paid to workers had recovered to pre-pandemic levels in 2021-22, but their compound annual growth rate (CAGR) since 2018-19 stood at 4%, compared to 8.9% between 2015-16 and 2018-19. On the other hand, the three-year CAGR of profits was 16.2% in the 2021-22 compared to just 0.4% in 2018-19. These broad trends do not change if wages paid to workers are adjusted by the number of workers and profits are adjusted by number of factories.

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  • ABOUT THE AUTHOR
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    Abhishek Jha is a data journalist. He analyses public data for finding news, with a focus on the environment, Indian politics and economy, and Covid-19.

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