<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">China's services sector experienced an uptick in growth in March, with new business expanding at the fastest rate in three months, as indicated by a private-sector survey. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">According to a Reuters report, this development is indicative of a potential recovery in sentiment within the world's second-largest economy. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">The Caixin/S&amp;P Global services purchasing managers' index (PMI) increased to 52.7 from 52.5 in February, marking the 15th consecutive month above the 50-mark, which denotes expansion.<o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">Improved underlying demand and initiatives to stimulate new orders contributed to the acceleration in the pace of new business expansion, reaching its highest level since December of the previous year. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">This surge in new business has also strengthened business confidence, while sub-index of future activity rose for the first time in three months. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">There is optimism surrounding the potential impact of new product lines, expansion strategies, and increased client budgets on sales.<o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">Despite the positive indicators in sales and business confidence, the growth in employment levels has experienced a setback. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">Employment in the services sector contracted for the second consecutive month in March, although the rate of job shedding eased compared to February. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">Respondents said that resignations among staff and redundancies aimed at enhancing productivity as contributing factors to the decline in payroll numbers.<o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">The upbeat performance of the services sector, along with favourable results from the Caixin manufacturing PMI, propelled the composite PMI to 52.7 last month, up from 52.5 in February. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">This marks the highest reading since May 2023, suggesting an overall improvement in both manufacturing and services activities. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">The growth in supply and demand, along with enhanced exports and sustained market optimism, contributed to this positive trend.<o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">Reuters cited Wang Zhe, an economist at Caixin Insight Group, who commented on the survey results. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">He noted that growth in both manufacturing and services sectors accelerated slightly. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">Additionally, he highlighted improved exports and sustained market optimism as contributing factors. <o:p></o:p></span></p>

<p class="MsoNormal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">However, Zhe also pointed out that employment levels continued to contract in both sectors, while input and output prices remained low, indicating persistent sluggish demand.<o:p></o:p></span></p>

<p class="MsoNormal"><i style="mso-bidi-font-style:normal"><span lang="EN-GB" style="mso-ansi-language:EN-GB">(With inputs from Reuters)<o:p></o:p></span></i></p>


China's services sector experienced an uptick in growth in March, with new business expanding at the fastest rate in three months, as indicated by a private-sector survey.

China's services sector experienced an uptick in growth in March, with new business expanding at the fastest rate in three months, as indicated by a private-sector survey. According to a Reuters report, this development is indicative of a potential recovery in sentiment within the world's second-largest economy. The Caixin/S&P Global services purchasing managers' index (PMI) increased to 52.7 from 52.5 in February, marking the 15th consecutive month above the 50-mark, which denotes expansion. Improved underlying demand and initiatives to stimulate new orders contributed to the acceleration in the pace of new business expansion, reaching its highest level since December of the previous year. This surge in new business has also strengthened business confidence, while sub-index of future activity rose for the first time in three months. There is optimism surrounding the potential impact of new product lines, expansion strategies, and increased client budgets on sales. Despite the positive indicators in sales and business confidence, the growth in employment levels has experienced a setback. Employment in the services sector contracted for the second consecutive month in March, although the rate of job shedding eased compared to February. Respondents said that resignations among staff and redundancies aimed at enhancing productivity as contributing factors to the decline in payroll numbers. The upbeat performance of the services sector, along with favourable results from the Caixin manufacturing PMI, propelled the composite PMI to 52.7 last month, up from 52.5 in February. This marks the highest reading since May 2023, suggesting an overall improvement in both manufacturing and services activities. The growth in supply and demand, along with enhanced exports and sustained market optimism, contributed to this positive trend. Reuters cited Wang Zhe, an economist at Caixin Insight Group, who commented on the survey results. He noted that growth in both manufacturing and services sectors accelerated slightly. Additionally, he highlighted improved exports and sustained market optimism as contributing factors. However, Zhe also pointed out that employment levels continued to contract in both sectors, while input and output prices remained low, indicating persistent sluggish demand. (With inputs from Reuters)

China's services sector shows accelerated growth in March, Caixin PMI reveals

Japan's services sector activity grew at the fastest pace in half a year in May as consumer sentiment recovered further following the easing of Covid curbs.

Japan's service sector activity grows at fastest pace in 6 months

Japan's services sector activity contracted at the fastest pace in five months in January in a sign business faced pressure from a record surge in new coronavirus infections due to the Omicron variant.

Japan's service sector shrinks amid Covid-19 surge

<p>The massive US services sector continued to improve in May, expanding for the 12th straight month and hitting an all-time high, according to an industry survey released Thursday.</p>

<p>As the economic reopening from the COVID-19 pandemic picked up speed, the Institute for Supply Management (ISM) said its service sector index rose 1.3 points to 64, surpassing analyst expectations.</p>

<p><strong>Also read |&nbsp;<a href="https://www.wionews.com/world/belarus-slaps-retaliatory-sanctions-on-us-389264" hreflang="en">Belarus slaps retaliatory sanctions on US</a></strong></p>

<p>ISM's non-manufacturing index showed all 18 service industries reported growth, though the employment component slowed.</p>

<p>"The rate of expansion is very strong, as businesses have reopened and production capacity has increased," survey chair Anthony Nieves said in a statement.</p>

<p>"However, some capacity constraints, material shortages, weather-related delays and challenges in logistics and employment resources continue."</p>

<p><strong>Also read |&nbsp;<a href="https://www.wionews.com/world/us-to-distribute-80-million-vaccine-doses-through-covax-india-to-receive-6-million-in-first-phase-white-house-389263" hreflang="en">US to distribute 80 million vaccine doses through Covax; India to receive 6 million in first phase: White House</a></strong></p>

<p>The survey showed prices continued to climb as well amid widespread reports of rising costs for commodities — with none showing declines in the month, according to the report.</p>

<p>"Stimulus money, increased vaccinations, increased dining capacity and pent-up demand are driving a fast recovery for dine-in restaurants — and all consumer segments, it seems — resulting in labor shortages and supply chain gaps," said one respondent in the accommodation and food services sector.</p>

<p>A construction executive flagged shortages of "crucial material and equipment" as the biggest concern.</p>

<p>Nieves noted the 4.3 point jump in the supplier deliveries index indicating deliveries have slowed, which he said "is typical as the economy improves and customer demand increases."</p>


The massive US services sector continued to improve in May, expanding for the 12th straight month and hitting an all-time high, according to an industry survey released Thursday.

The massive US services sector continued to improve in May, expanding for the 12th straight month and hitting an all-time high, according to an industry survey released Thursday. As the economic reopening from the COVID-19 pandemic picked up speed, the Institute for Supply Management (ISM) said its service sector index rose 1.3 points to 64, surpassing analyst expectations. Also read | Belarus slaps retaliatory sanctions on US ISM's non-manufacturing index showed all 18 service industries reported growth, though the employment component slowed. "The rate of expansion is very strong, as businesses have reopened and production capacity has increased," survey chair Anthony Nieves said in a statement. "However, some capacity constraints, material shortages, weather-related delays and challenges in logistics and employment resources continue." Also read | US to distribute 80 million vaccine doses through Covax; India to receive 6 million in first phase: White House The survey showed prices continued to climb as well amid widespread reports of rising costs for commodities — with none showing declines in the month, according to the report. "Stimulus money, increased vaccinations, increased dining capacity and pent-up demand are driving a fast recovery for dine-in restaurants — and all consumer segments, it seems — resulting in labor shortages and supply chain gaps," said one respondent in the accommodation and food services sector. A construction executive flagged shortages of "crucial material and equipment" as the biggest concern. Nieves noted the 4.3 point jump in the supplier deliveries index indicating deliveries have slowed, which he said "is typical as the economy improves and customer demand increases."

US service sector index hits all-time high in May: Survey

Japan's services sector shrank at the fastest pace in five months, as a heavy blow to demand from a resurgence in coronavirus infections and a state of emergency in parts of the country greatly hurt new business orders.

World Business Watch: Japan's service sector slump deepens as COVID-19 emergency hits business

<p>The nationwide lockdown in India may or may not be extended beyond May 3, but companies and the manufacturing sector have already prepared their plans. As the priority will be to avoid coronavirus cases at all costs, companies will likely resume only 50 per cent of the work, keeping precautions in mind.&nbsp;</p>

<p>Contributing to around 7.5 per cent of India's GDP and employing over 35 million workers, the auto industry is preparing for big changes. &nbsp;</p>

<p>" We will be taking precautions at all the places, ranging from company buses for employees to canteens where capacity could be reduced to maintain social distancing norms. Production may come down initially but lower initial demand and some stock already lying with us could balance this reduction in production", said Raju B Ketkale, Deputy MD, Toyata Kirloskar Motor.</p>

<p>It's not only the production, but the sales process at dealerships and showrooms of the companies will also be impacted.</p>

<p>"There will be thermal checking and sanitisation points set-up at all the entry and exit points, workstations and the premises of the dealerships and showrooms. A product demonstration will also see a change as a whole new disinfection process will be implemented before every demo, to assure customer safety", said Shashank Srivastava, Executive Director, Maruti Suzuki India</p>

<p>"The concern in all of the manufacturing industries is of the people gathering anywhere in the plant or in the offices. Restrictions will be there to stop the second wave of Coronavirus from occurring", said Ashim Sharma, Partner, NRI Consulting &amp; Solutions.</p>

<p>The service sector is also planning to handle the post-COVID-19 lockdown situation in a different way. Here, the 'work from home' concept is not going to fade away anytime soon.&nbsp;</p>

<p>"Businesses have found out that 'work from home' concept is very suitable for them. As a result of more people working from their place of dwelling, some areas have seen internet and voice traffic surge. Now we are planning for long term viability of these services spread across wide areas. Telecom network has to be firmed up now", said Rajan Mathews, Director-General, Cellular Operators Association of India</p>

<p>Post COVID-19 scenario will be also suitable for further growth of co-working business in India. Co-working workspace provides work stations and workplaces with shared resources including premises, high-speed broadband, electricity, pantry services etc. Those who are not comfortable working from home can use shared spaces at these locations.&nbsp;</p>

<p>"In our business also social distancing norms will change significantly. As a business model co-working will do better. We have seen 50-60 per cent jump in a number of enquiries", said Neetish Sarda, founder Smartworks, a shared office space provider as the company is betting on demand increasing post-COVID-19 lockdown is lifted.</p>


The nationwide lockdown in India may or may not be extended beyond May 3, but companies and the manufacturing sector have already prepared their plans. As the priority will be to avoid coronavirus cases at all costs, companies will likely resume only 50 per cent of the work, keeping precautions in mind.

The nationwide lockdown in India may or may not be extended beyond May 3, but companies and the manufacturing sector have already prepared their plans. As the priority will be to avoid coronavirus cases at all costs, companies will likely resume only 50 per cent of the work, keeping precautions in mind. Contributing to around 7.5 per cent of India's GDP and employing over 35 million workers, the auto industry is preparing for big changes. " We will be taking precautions at all the places, ranging from company buses for employees to canteens where capacity could be reduced to maintain social distancing norms. Production may come down initially but lower initial demand and some stock already lying with us could balance this reduction in production", said Raju B Ketkale, Deputy MD, Toyata Kirloskar Motor. It's not only the production, but the sales process at dealerships and showrooms of the companies will also be impacted. "There will be thermal checking and sanitisation points set-up at all the entry and exit points, workstations and the premises of the dealerships and showrooms. A product demonstration will also see a change as a whole new disinfection process will be implemented before every demo, to assure customer safety", said Shashank Srivastava, Executive Director, Maruti Suzuki India "The concern in all of the manufacturing industries is of the people gathering anywhere in the plant or in the offices. Restrictions will be there to stop the second wave of Coronavirus from occurring", said Ashim Sharma, Partner, NRI Consulting & Solutions. The service sector is also planning to handle the post-COVID-19 lockdown situation in a different way. Here, the 'work from home' concept is not going to fade away anytime soon. "Businesses have found out that 'work from home' concept is very suitable for them. As a result of more people working from their place of dwelling, some areas have seen internet and voice traffic surge. Now we are planning for long term viability of these services spread across wide areas. Telecom network has to be firmed up now", said Rajan Mathews, Director-General, Cellular Operators Association of India Post COVID-19 scenario will be also suitable for further growth of co-working business in India. Co-working workspace provides work stations and workplaces with shared resources including premises, high-speed broadband, electricity, pantry services etc. Those who are not comfortable working from home can use shared spaces at these locations. "In our business also social distancing norms will change significantly. As a business model co-working will do better. We have seen 50-60 per cent jump in a number of enquiries", said Neetish Sarda, founder Smartworks, a shared office space provider as the company is betting on demand increasing post-COVID-19 lockdown is lifted.

Explained: Post-lockdown strategy of manufacturing and service sector

<p>During a recent trip, as I was about to board my aircraft from Terminal 3 of the Delhi Airport, I was surprised when a young girl scanning my boarding pass gave me an extra warm smile. She greeted me with an enthusiastic ‘Good Morning’. &nbsp;</p>

<p>She must have been in her early twenties, but her confidence and poise impressed me. Before I moved on, she told me that she had done her vocational course at an academy, after her graduation. &nbsp;&nbsp;</p>

<p>The warmth of her greetings remained with me on the flight. On my subsequent return, I made inquiries and learnt that she hailed from a small town in western Uttar Pradesh. &nbsp;</p>

<p>She had come to Delhi to pursue her graduation but soon realised that a plain Bachelor’s degree was not of much use to her in the job market. That’s when she took the decision to pursue a professional course alongside her graduation, and the outcome was there in front of me.&nbsp;</p>

<p>This young girl, in my mind, typifies the future of tourism, hospitality, and the aviation sector. Keeping in mind their contribution towards the overall experience of a journey, it is important that these three sectors are viewed holistically, whether while framing policies or while providing training to personnel engaged. &nbsp;</p>

<p>Since these are service-driven sectors, quality training assumes great importance. And as far as training is concerned, like for everything else, the quality of output is dependent on the quality of input and of processing.<br />
<br />
Both of these – quality of input, and quality of the training process – are amongst the largest challenges faced by the industry.</p>

<p>The quality of input is a challenge because jobs in the travel, tourism, and hospitality sectors even at the entry level, require a degree of sophistication. &nbsp;</p>

<p>This includes good communication skills, emotional intelligence, decision making power, and above all, ability to work under pressure while continuing to smile. &nbsp;</p>

<p>Such skills are not formally taught in any school, college or training programme. So, while the focus of specialised training is on equipping potential and professionals with specific technical skills required for specific jobs, the possession of requisite soft skills are a matter of chance. People like the young girl I met possess them, or develop them instinctively. &nbsp;<br />
<br />
The skill gap in the sector is accentuated by several other factors. In order to leverage the massive potential that travel and tourism sectors offer in a culturally rich and diverse country like ours, we need the right talent at every level. &nbsp;</p>

<p>It is important to cast our net wider than just the metropolitan cities to recruit such talent at the entry level. This means being able to bring quality training to smaller cities and towns. &nbsp;</p>

<p>The government supported programmes like the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) are trying to do that, but for these to be more effective, the industry needs to get involved. The industry engagement is specifically useful in ensuring that the training curriculum is designed to meet the practical needs at the workplace.&nbsp;</p>

<p>Availability of suitable trainers is another area that requires committed efforts from the industry. Ideally, trainers need some practical experience of working in the industry and finding such people is always a challenge, especially in smaller cities and towns. &nbsp;</p>

<p>That’s understandable since they have better opportunities available elsewhere. The industry can step in to fill this gap by a two-fold approach. In the short term, they can depute some experienced employees as temporary trainers, as part of their Corporate Social Responsibility initiatives. &nbsp;</p>

<p>This would be a win-win, as students will benefit from the practical experience of such guest trainers, while the industry will ultimately get better-trained talent. &nbsp;</p>

<p>In the long term, the industry can contribute by helping build capacity of local trainers and by giving them exposure to an actual working environment through short-term familiarisation programmes. &nbsp;&nbsp;</p>

<p>Growth is awaiting us. We have the potential, demand, and demographics. All the pieces for a massive boom in the sector are present, yet we need to find innovative ways to ensure they fit together to make it happen.<br />
&nbsp;</p>

<p><em>(This article was originally published on The DNA. Read the <a href="https://www.dnaindia.com/analysis/column-look-for-service-sector-professionals-in-india-s-tier-2-towns-2742274">original article</a>)</em></p>

<p><em>(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)&nbsp;</em><br />
&nbsp;</p>

<p>&nbsp;</p>


During a recent trip, as I was about to board my aircraft from Terminal 3 of the Delhi Airport, I was surprised when a young girl scanning my boarding pass gave me an extra warm smile.

During a recent trip, as I was about to board my aircraft from Terminal 3 of the Delhi Airport, I was surprised when a young girl scanning my boarding pass gave me an extra warm smile. She greeted me with an enthusiastic ‘Good Morning’. She must have been in her early twenties, but her confidence and poise impressed me. Before I moved on, she told me that she had done her vocational course at an academy, after her graduation. The warmth of her greetings remained with me on the flight. On my subsequent return, I made inquiries and learnt that she hailed from a small town in western Uttar Pradesh. She had come to Delhi to pursue her graduation but soon realised that a plain Bachelor’s degree was not of much use to her in the job market. That’s when she took the decision to pursue a professional course alongside her graduation, and the outcome was there in front of me. This young girl, in my mind, typifies the future of tourism, hospitality, and the aviation sector. Keeping in mind their contribution towards the overall experience of a journey, it is important that these three sectors are viewed holistically, whether while framing policies or while providing training to personnel engaged. Since these are service-driven sectors, quality training assumes great importance. And as far as training is concerned, like for everything else, the quality of output is dependent on the quality of input and of processing. Both of these – quality of input, and quality of the training process – are amongst the largest challenges faced by the industry. The quality of input is a challenge because jobs in the travel, tourism, and hospitality sectors even at the entry level, require a degree of sophistication. This includes good communication skills, emotional intelligence, decision making power, and above all, ability to work under pressure while continuing to smile. Such skills are not formally taught in any school, college or training programme. So, while the focus of specialised training is on equipping potential and professionals with specific technical skills required for specific jobs, the possession of requisite soft skills are a matter of chance. People like the young girl I met possess them, or develop them instinctively. The skill gap in the sector is accentuated by several other factors. In order to leverage the massive potential that travel and tourism sectors offer in a culturally rich and diverse country like ours, we need the right talent at every level. It is important to cast our net wider than just the metropolitan cities to recruit such talent at the entry level. This means being able to bring quality training to smaller cities and towns. The government supported programmes like the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) are trying to do that, but for these to be more effective, the industry needs to get involved. The industry engagement is specifically useful in ensuring that the training curriculum is designed to meet the practical needs at the workplace. Availability of suitable trainers is another area that requires committed efforts from the industry. Ideally, trainers need some practical experience of working in the industry and finding such people is always a challenge, especially in smaller cities and towns. That’s understandable since they have better opportunities available elsewhere. The industry can step in to fill this gap by a two-fold approach. In the short term, they can depute some experienced employees as temporary trainers, as part of their Corporate Social Responsibility initiatives. This would be a win-win, as students will benefit from the practical experience of such guest trainers, while the industry will ultimately get better-trained talent. In the long term, the industry can contribute by helping build capacity of local trainers and by giving them exposure to an actual working environment through short-term familiarisation programmes. Growth is awaiting us. We have the potential, demand, and demographics. All the pieces for a massive boom in the sector are present, yet we need to find innovative ways to ensure they fit together to make it happen. (This article was originally published on The DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Jobs in travel, tourism, and hospitality sectors require a degree of sophistication

<p>Last month the National Sample Survey Organization (NSSO), India&rsquo;s pre-eminent public data collection agency released a report right in time for some Independence Day deliberations. But it hardly got any press coverage anywhere, despite the fact that it deals with the condition of nearly 70 per cent&nbsp;of India&rsquo;s non-agricultural workforce. This is a report based on a survey of nearly three lakh enterprises all over the country in the informal manufacturing and service sectors.&nbsp;</p>

<p>The unorganised or informal sector refers to those millions of tiny businesses that employ a handful of workers each, or in many cases do not employ any hired workers at all, but operate only with family labour. Seventy years after Independence, the Indian economy remains dominated, in numerical terms by the informal sector.</p>

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<h5>111 million is a large number, nearly 70 per cent of the nonagricultural labour force of India.</h5>
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<p>The NSSO report estimates the number of such enterprises in manufacturing and services (that is, excluding agriculture and construction) at 6.34 crore. The estimated size of the workforce employed in this sector is 11.1 crore or 111 million. It is important to emphasise that these are the estimates based on the sample survey. As is well-known, small informal businesses are hard to investigate. So, despite the best efforts of the NSSO (and it is widely known to be one of the best at the job it does) in reality the numbers may be much higher. In any case, 111 million is a large number, nearly 70 per cent of the nonagricultural labour force of India. And it has increased from 108 million in 2010 (the previous survey round). Of the 111 million, 36 million are in manufacturing, 39 in trade and 36.5 in other services.&nbsp;</p>

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<h5>The majority of the non-agricultural workforce in India reports being self-employed and this fact has not changed for decades.</h5>
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<p>Interestingly, of the over 6 crore enterprises in this sector, 84 per cent do not report employing any hired workers and this proportion has remained more or less constant over the past 30 years. Such firms account for 62 per cent of all workers in this sector. In other words, the majority of the non-agricultural workforce in India reports being self-employed and this fact has not changed for decades.</p>

<p>In this backdrop, let us consider the statement made by BJP President Amit Shah earlier this year, that the government would not be able to provide jobs to everyone who needs or wants one, but would rather encourage self-employment. Self-employment is, in fact, already the default option for anyone who cannot secure a job. So this statement does not amount to saying much.</p>

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<h5>In the informal sector, a family of even three members (say a husband-wife team with a child) that works together running a shop, a restaurant, a workshop, etc. earns only INR 8000 per month even today.</h5>
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<p>The most important part of the report is the data on earnings in the informal sector. If we look at the enterprises that work only with family labour, the report shows that the earnings of such enterprises (measured as Gross Value Added or receipts minus non-wage expenditures) are on average INR 95,753 per year or roughly INR 8000 per month. The good news is that this number has increased substantially, at least in nominal terms, since 2010, when it was INR 57,883. But the absolute value is still low. What it means is that in the informal sector, a family of even three members (say a husband-wife team with a child) that works together running a shop, a restaurant, a workshop, etc. earns only INR 8000 per month even today. What about hired workers in this sector? The report estimates their earnings to be INR 87544 per year or around 7300 per month. Very similar to self-employed workers.</p>

<p>What is the reason for such low earnings? A typical answer is because these workers are not very skilled and the businesses are not very productive. In fact, there is no shortage of skills in the informal sector. What they lack is formal certification of their skills, because most workers are informally trained. And as for productivity, the situation is similar to that of farmers who often fail to capture the value of what they produce because of their vulnerable position in a supply chain dominated by more powerful actors such as fertilizer and seed companies, and big retailers. In the informal manufacturing and service sector too, intense competition and a weak position in the supply chain result in informal businesses failing to capture most of the value they produce. Thus, appearing to be of low productivity and earning a pittance.</p>

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<h5>This very large section of our workforce does not earn enough to be in the income tax net either from the wage or the business income end.</h5>
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<p>Needless to say, this very large section of our workforce does not earn enough to be in the income tax net either from the wage or the business income end. Further, many transactions still occur in cash. There are many reasons for this, two important ones being that banking is expensive for low amounts of money and that these workers are not treated with respect in banks.&nbsp;</p>

<p>The Modi government&rsquo;s response to the persistent informal and cash-based nature of the economy has been to force formality by measures such as demonetisation and the Goods and Services Tax. These are meant to ensure that such economic activity also becomes visible to the government and can be monitored and taxed.&nbsp;</p>

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<h5>On the heels of demonetisation came the confusion and shock of GST.</h5>
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<p>Unfortunately, the NSSO survey cannot help us understand the effect of demonetisation on this sector because it was conducted from July 2015 to June 2016. But, it is telling that to date no comprehensive survey has been carried out by the government to assess the extent of the damage to the informal economy due to demonetisation. I know from my own conversations with the handloom and power loom weavers in Banaras that business was at a standstill for several weeks in November and December. And its effects are still being felt because losses forced many weavers to sell assets, including machines, to survive. On the heels of demonetisation came the confusion and shock of GST.&nbsp;</p>

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<h5>The most important one is to give the informal sector the infrastructure it needs to flourish, building functional cooperatives that improve the bargaining power of small producers, ensuring effective government support at least equal to what big businesses receive, and so on.</h5>
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<p>In fact, the Modi approach is misguided on several levels. First, these measures are authoritarian, nonfederal, and undemocratic. Second, the economics behind them is unsound. Third, there are many better ways to ensure that the government tax base widens and transactions become formal. The most important one is to give the informal sector the infrastructure it needs to flourish, building functional cooperatives that improve the bargaining power of small producers, ensuring effective government support at least equal to what big businesses receive, and so on.</p>

<p>But let us step back for a bit. This August 15th marks the 70th anniversary of India&rsquo;s independence. That is seven decades of policy-making with the aim of creating a modern Indian economy. The early development planners and economists in the 1950s spoke of the elimination of the small-scale economy that later came to be called the informal sector. Textbooks commonly referred to it as a transient phenomenon, soon to be replaced with large, modern firms. What happened? How come, even after decades of both planning and market-led growth, the better part of our workforce is still self-employed in tiny businesses and earns half of what a peon in a government office earns?</p>

<p>Plainly, the policies that were followed, both during the planning and the post-reform periods have not worked. But a nation-wide serious debate on both these failures has not occurred. It is in no political party&rsquo;s interest to conduct such a debate because they have no imagination other than what has been tried already.&nbsp;</p>

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Though India has barely made the shift to big industries, the informal businesses are failing to prosper because of intense competition and a weak position in the supply chain.

Last month the National Sample Survey Organization (NSSO), India’s pre-eminent public data collection agency released a report right in time for some Independence Day deliberations. But it hardly got any press coverage anywhere, despite the fact that it deals with the condition of nearly 70 per cent of India’s non-agricultural workforce. This is a report based on a survey of nearly three lakh enterprises all over the country in the informal manufacturing and service sectors. The unorganised or informal sector refers to those millions of tiny businesses that employ a handful of workers each, or in many cases do not employ any hired workers at all, but operate only with family labour. Seventy years after Independence, the Indian economy remains dominated, in numerical terms by the informal sector. 111 million is a large number, nearly 70 per cent of the nonagricultural labour force of India. × The NSSO report estimates the number of such enterprises in manufacturing and services (that is, excluding agriculture and construction) at 6.34 crore. The estimated size of the workforce employed in this sector is 11.1 crore or 111 million. It is important to emphasise that these are the estimates based on the sample survey. As is well-known, small informal businesses are hard to investigate. So, despite the best efforts of the NSSO (and it is widely known to be one of the best at the job it does) in reality the numbers may be much higher. In any case, 111 million is a large number, nearly 70 per cent of the nonagricultural labour force of India. And it has increased from 108 million in 2010 (the previous survey round). Of the 111 million, 36 million are in manufacturing, 39 in trade and 36.5 in other services. The majority of the non-agricultural workforce in India reports being self-employed and this fact has not changed for decades. × Interestingly, of the over 6 crore enterprises in this sector, 84 per cent do not report employing any hired workers and this proportion has remained more or less constant over the past 30 years. Such firms account for 62 per cent of all workers in this sector. In other words, the majority of the non-agricultural workforce in India reports being self-employed and this fact has not changed for decades. In this backdrop, let us consider the statement made by BJP President Amit Shah earlier this year, that the government would not be able to provide jobs to everyone who needs or wants one, but would rather encourage self-employment. Self-employment is, in fact, already the default option for anyone who cannot secure a job. So this statement does not amount to saying much. In the informal sector, a family of even three members (say a husband-wife team with a child) that works together running a shop, a restaurant, a workshop, etc. earns only INR 8000 per month even today. × The most important part of the report is the data on earnings in the informal sector. If we look at the enterprises that work only with family labour, the report shows that the earnings of such enterprises (measured as Gross Value Added or receipts minus non-wage expenditures) are on average INR 95,753 per year or roughly INR 8000 per month. The good news is that this number has increased substantially, at least in nominal terms, since 2010, when it was INR 57,883. But the absolute value is still low. What it means is that in the informal sector, a family of even three members (say a husband-wife team with a child) that works together running a shop, a restaurant, a workshop, etc. earns only INR 8000 per month even today. What about hired workers in this sector? The report estimates their earnings to be INR 87544 per year or around 7300 per month. Very similar to self-employed workers. What is the reason for such low earnings? A typical answer is because these workers are not very skilled and the businesses are not very productive. In fact, there is no shortage of skills in the informal sector. What they lack is formal certification of their skills, because most workers are informally trained. And as for productivity, the situation is similar to that of farmers who often fail to capture the value of what they produce because of their vulnerable position in a supply chain dominated by more powerful actors such as fertilizer and seed companies, and big retailers. In the informal manufacturing and service sector too, intense competition and a weak position in the supply chain result in informal businesses failing to capture most of the value they produce. Thus, appearing to be of low productivity and earning a pittance. This very large section of our workforce does not earn enough to be in the income tax net either from the wage or the business income end. × Needless to say, this very large section of our workforce does not earn enough to be in the income tax net either from the wage or the business income end. Further, many transactions still occur in cash. There are many reasons for this, two important ones being that banking is expensive for low amounts of money and that these workers are not treated with respect in banks. The Modi government’s response to the persistent informal and cash-based nature of the economy has been to force formality by measures such as demonetisation and the Goods and Services Tax. These are meant to ensure that such economic activity also becomes visible to the government and can be monitored and taxed. On the heels of demonetisation came the confusion and shock of GST. × Unfortunately, the NSSO survey cannot help us understand the effect of demonetisation on this sector because it was conducted from July 2015 to June 2016. But, it is telling that to date no comprehensive survey has been carried out by the government to assess the extent of the damage to the informal economy due to demonetisation. I know from my own conversations with the handloom and power loom weavers in Banaras that business was at a standstill for several weeks in November and December. And its effects are still being felt because losses forced many weavers to sell assets, including machines, to survive. On the heels of demonetisation came the confusion and shock of GST. The most important one is to give the informal sector the infrastructure it needs to flourish, building functional cooperatives that improve the bargaining power of small producers, ensuring effective government support at least equal to what big businesses receive, and so on. × In fact, the Modi approach is misguided on several levels. First, these measures are authoritarian, nonfederal, and undemocratic. Second, the economics behind them is unsound. Third, there are many better ways to ensure that the government tax base widens and transactions become formal. The most important one is to give the informal sector the infrastructure it needs to flourish, building functional cooperatives that improve the bargaining power of small producers, ensuring effective government support at least equal to what big businesses receive, and so on. But let us step back for a bit. This August 15th marks the 70th anniversary of India’s independence. That is seven decades of policy-making with the aim of creating a modern Indian economy. The early development planners and economists in the 1950s spoke of the elimination of the small-scale economy that later came to be called the informal sector. Textbooks commonly referred to it as a transient phenomenon, soon to be replaced with large, modern firms. What happened? How come, even after decades of both planning and market-led growth, the better part of our workforce is still self-employed in tiny businesses and earns half of what a peon in a government office earns? Plainly, the policies that were followed, both during the planning and the post-reform periods have not worked. But a nation-wide serious debate on both these failures has not occurred. It is in no political party’s interest to conduct such a debate because they have no imagination other than what has been tried already.

After 70 years Independence, Indian economy remains dominated by the informal sector

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