ASSETS AND BORROWINGS OF THE UNORGANISED MANUFACTURING ENTERPRISES IN INDIA

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1 Report No. 435(51/2.2/3) ASSETS AND BORROWINGS OF THE UNORGANISED MANUFACTURING ENTERPRISES IN INDIA NSS Fifty-first round July June 1995 National Sample Survey Organisation Department of Statistics Government of India

2 P R E F A C E The National Sample Survey Organisation(NSSO) of the Department of Statistics in the Ministry of Planning and Programme Implementation had carried out an integrated survey on Unorganised Manufacturing and Repairing Enterprises in its fifty first round during July 1994 to June The survey was taken up as a follow up to the Economic Census conducted in 1990 along with the house listing operations of the 1991 population census. The survey was integrated in the sense that all types of manufacturing and repairing units, unlike the survey on same subject carried out in recent past, were covered. Results based on this survey are released in three reports, the first two of which containing some selected results (report No. 433(51/2.2/1)) and salient features of the unorganised manufacturing and repairing units (report No. 434(51/2.2/2)) have been already released. The present report, the third in the series, discusses working capital, outstanding loan and fixed assets of the unorganised manufacturing and repairing enterprises in details. While Chapter One of this report gives an introductory note, Chapter Two discusses important concepts and definitions followed in the survey. Chapter Three presents sample design and estimation procedure adopted and Chapter Four summarises the results on working capital, outstanding loan and fixed assets. Detailed statistical tables are appended to this report. It is hoped that the data presented in the first two reports and those presented in this report will fill up an information gap in the unorganised industrial sector and will enable the economic planners to understand the contribution of this sector to the national economy. The present report was prepared by the Survey Design and Research Division (SDRD) of the NSSO. I am thankful to the team of SDRD Officers for undertaking painstaking analysis of data and then drafting the report. The suggestions offered by the Governing Council Members of NSSO helped a lot in improving the report. I sincerely acknowledge the efforts made by them. Comments and suggestions from readers of the report will be most welcome. New Delhi August 1998 S. Ray Chief Executive Officer National Sample Survey Organisation

3 Report No. 435( 51/2.2/3) C O N T E N T S Page No. Highlights List of detailed Statistical Tables i - iii iv - vi Chapter One Introduction 1 Chapter Two Concepts and Definitions 2 Chapter Three Sample Design Estimation Procedure 3-7 Chapter Four Summary of Findings 8-37 Chapter Five Industry division codes and description of the corresponding economic activities 38 APPENDIX Detailed Statistical Tables A1 - A134

4 i Highlights * Out of about 1.2 lakhs enterprises surveyed in villages, only 6 per thousand maintained usable books of accounts. In urban areas, only 19 per thousand of the total of about 0.7 lakh surveyed enterprises maintained usable books of accounts. The estimated number of unorganised manufacturing and repair enterprises in India during was about 145 lakhs. Of the total estimated enterprises, about 72 per cent were located in rural areas and the rest in urban areas. About 84 per cent (91 per cent for rural and 68 per cent for urban) of the total number of enterprises in the country operated usually with the help of unpaid household labour only. The remaining 16 per cent enterprises employed at least one hired worker (including paid household workers) on a fairly regular basis during the reference period of one year. About 78 per cent of the total enterprises which managed without engaging any hired worker were in the rural areas and the rest in urban areas. Out of the total establishments (each of which employed at least one hired or paid household worker), in about 71 per cent establishments, total number of workers was 5 or less each. Among the states, Uttar Pradesh had the highest number of enterprises both in rural and urban areas. Among various activities, manufacture of wood and wood products, furniture & fixtures was found to be the major activity in rural India. On the other hand, repair service was the major activity among the enterprises located in urban areas of the country. About 23 per cent of the enterprises of rural / urban India were engaged in the activities, noted above. About 99 per cent of the enterprises in rural India and 95 per cent of the enterprises in urban India were proprietary in nature (i.e. ownership vested with one person only). Partnership enterprises had a share of 1 per cent in total number of enterprises in rural India and a share of 4 per cent in urban India. Most of the enterprises (rural: 94 per cent, urban: 75 per cent) were not registered with any agency. About 66 per cent of the enterprises in rural India and about 52 per cent of the enterprises in urban India did not use any energy in their manufacturing process. The major sources of energy used by the enterprises in the manufacturing process were: electricity * Results based on unorganised manufacturing enterprises survey (Sch. 2.2, 51st round ) are presented in three reports viz. 433(51/2.2/1), 434(51/2.2/2) & 435(51/2.2/3). However, for convenience of the users, a combined set of summary statistics is presented in each of the three reports.

5 ii (rural: 8 per cent of the enterprises, urban: 30 per cent), firewood (rural: 10 per cent, urban: 3 per cent), coal/coal gas (rural: 2 per cent, urban: 3 per cent), charcoal (rural & urban: 2 per cent each) and diesel oil (rural: 4 per cent, urban: 1 per cent). In rural India, about 93 per cent of the enterprises were perennial (i.e. operating almost throughout the year) and 6 per cent were seasonal. In urban India, their share was about 98 per cent and 2 per cent respectively. Of the household enterprises (i.e. those run on either proprietary or partnership basis), about 6 per cent in rural India and 4 per cent in urban India operated without any fixed premises. About 76 per cent of the enterprises in rural India and 46 per cent of the enterprises in urban India used the residences of the owners for their activity. Of the household enterprises, about 12 per cent were owned by ST's and 23 per cent by SC's in rural areas. In urban areas, they respectively owned about 2 per cent and 12 per cent of the household enterprises. The estimate of total number of persons employed in the unorganised manufacturing and repair enterprises in India was about 332 lakhs. Out of the total workers employed, about 67 per cent were engaged in enterprises located in the Indian villages and the rest in urban blocks. About 68 per cent of the total employed were engaged in enterprises operated without engaging any hired worker (including paid household worker). Nearly 31 per cent of the total workers employed were females and the rest males. Female participation in unorganised manufacturing and repair enterprises was much more in rural areas than in urban areas. There were 378 females per thousand of total employed in rural areas, as against only 175 females in urban areas. Around 56 per cent (53 per cent in rural India and 62 per cent in urban India) of the total employed were directly involved in or associated with the manufacturing process and the rest were other workers. Among those directly linked with the manufacturing process, about 23 per cent in rural India and 60 per cent in urban India were hired workers. About 9 per cent of the workers (rural: 10 per cent, urban: 9 per cent) were children. Among the child workers, percentage share of girls was about 46 per cent in rural India and 23 per cent in urban India. The average gross value added (during the reference period of last one year) was estimated as Rs for a rural enterprise and Rs for an urban enterprise. Contribution of the unorganised manufacturing sector, in terms of value added, to the national economy was Rs crores, out of which little less than 41 per cent was from enterprises located in the rural areas and the rest from urban areas. Manufacture of food products industry (NIC 20 & 21 taken together) alone covered more than one-fifth (about 22 per cent) of the total value added in rural India and little more than 10 per cent in urban India. The share of Uttar Pradesh in value added in the total rural sector was about

6 iii one-fifth, while Maharashtra contributed little less than one-fifth of value added in the total urban sector. Average values of fixed assets owned, working capital (closing balance) and outstanding loan for a rural enterprise were Rs , Rs and Rs respectively. The same for an urban enterprise were Rs , Rs and Rs respectively. The total value of the fixed assets owned was about Rs crores, of which 37 per cent was from the enterprises located in the rural areas and the rest in the urban areas. Manufacture of food products (NIC 20) had the highest share (about 16 per cent) in the total fixed assets owned. Per enterprise estimate of fixed assets owned was more in urban areas than in rural areas in each of OAMEs, NDMEs and DMEs. More than 50 per cent of the total fixed assets owned were accounted for by land and building. Besides other, plant & machinery was the only other item having noteworthy share. Much of the net additions to the fixed assets of the type owned was made for the items building and plant & machinery in each of OAMEs, NDMEs and DMEs in both rural and urban areas. For all enterprises taken together, the fixed assets hired per enterprise added up to Rs Value of fixed assets hired per enterprise was much higher in urban areas(rs ) than in rural areas(rs. 1803). The total working capital (net of opening balance and closing balance) was estimated as about Rs crores, of which 34 per cent was in the rural areas and the rest in urban areas. The estimate of rent per enterprise was much higher in urban enterprises (Rs. 1762) than the rent in rural enterprises (Rs. 110). Loans taken by the unorganised manufacturing enterprises outstanding at the end of the reference year were estimated as about Rs crores, of which 27 per cent was for the enterprises located in rural areas and the rest in urban areas. Mainly the public sector banks, regional rural banks and other commercial banks provided loans to the unorganised manufacturing and repairing enterprises both in rural and urban areas. Loans taken from the money lenders were also significant. Ratio of value added to output was in general higher in rural areas than in the urban areas in different industries. For all industries taken together, the ratio was 0.45 in rural areas, as against 0.38 in urban areas. Ratio of value added to fixed assets was higher in rural areas (0.83) than in urban areas (0.52) for all industries taken together.

7 iv LIST OF DETAILED STATISTICAL TABLES TABLE NO. D E S C R I P T I O N PAGE NO. (1) (2) (3 ) 1 Per enterprise estimated value of different items of physical working capital by industry division A1 - A6 (i) Rural A1 - A3 (ii) Urban A4 - A6 (iii) States A101 - A102 2 Per enterprise estimated value of different items of working capital by industry division A7 - A12 (i) Rural A7 - A9 (ii) Urban A10 - A12 (iii) States A103 - A104 3 Per enterprise estimates of outstanding loan at the end of the reference year by source of loan and industry division A13 - A18 (i) Rural A13 - A15 (ii) Urban A16 - A18 (iii) States A105 - A106 4 Per enterprise estimated market value of fixed assets owned as on last day of reference year by items of fixed assets and industry division A19 - A24 (i) Rural A19 - A21 (ii) Urban A22 - A24 (iii) States A107 - A108 5 Per enterprise estimated market value of fixed assets hired by items of fixed assets and industry division A25 - A30 (i) Rural A25 - A27 (ii) Urban A28 - A30 (iii) States A109 - A110 6 Per enterprise estimated rent on fixed assets hired by items of fixed assets and industry division A31 - A36 (i) Rural A31 - A33 (ii) Urban A34 - A36 (iii) States A11 - A112

8 v LIST OF DETAILED STATISTICAL TABLES TABLE NO. D E S C R I P T I O N PAGE NO. (1) (2) (3 ) 7 Per enterprise estimated value of net additions to land by industry division A37 - A42 (i) Rural A37 - A39 (ii) Urban A40 - A42 (iii) States A113 - A114 8 Per enterprise estimated value of net additions to building by industry division A43 - A48 (i) Rural A43 - A45 (ii) Urban A46 - A48 (iii) States A115 - A116 9 Per enterprise estimated value of net additions to other construction by industry division A49 - A54 (i) Rural A49 - A51 (ii) Urban A52 - A54 (iii) States A117 - A Per enterprise estimated value of net additions to plant and machinery by industry division A55 - A60 (i) Rural A55 - A57 (ii) Urban A58 - A60 (iii) States A119 - A Per enterprise estimated value of net additions to transport equipments by industry division A61 - A66 (i) Rural A61 - A63 (ii) Urban A64 - A66 (iii) States A121 - A Per enterprise estimated value of net additions to tools by industry division A67 - A72 (i) Rural A67 - A69 (ii) Urban A70 - A72 (iii) States A123 - A124 vi

9 LIST OF DETAILED STATISTICAL TABLES TABLE NO. D E S C R I P T I O N PAGE NO. (1) (2) (3 ) 13 Per enterprise estimated value of net additions to other fixed assets by industry division A73 - A78 (i) Rural A73 - A75 (ii) Urban A76 - A78 (iii) States A125 - A Per enterprise estimated value of net additions to total fixed assets(excluding land) by industry division A79 - A84 (i) Rural A79 - A81 (ii) Urban A82 - A84 (iii) States A127 - A Per enterprise estimated value of net additions to total fixed assets(including land) by industry division A85 - A90 (i) Rural A85 - A87 (ii) Urban A88 - A90 (iii) States A129 - A Per enterprise estimated value of total fixed assets (excluding land) by industry division A91 - A95 (i) Rural A91 - A93 (ii) Urban A93 - A95 (iii) States A131 - A Per enterprise estimated value of total fixed assets (including land) by industry division A96 - A100 (i) Rural A96 - A98 (ii) Urban A98 - A100 (iii) States A133 - A134

10 Chapter One Introduction 1.1 The National Sample Survey Organisation (NSSO) carried out an integrated survey on unorganised manufacturing and repairing enterprises in its 51st round during July June1995. This survey was taken up as a follow-up to the third Economic Census conducted in 1990 along with the house listing operations of the 1991 population census. The survey was integrated in the sense that the 51st round survey, unlike 40th and 45th rounds, covered all types of enterprises : viz. (i) Own Account Manufacturing Enterprises (OAMEs), (ii) Non-Directory Manufacturing Establishments (NDMEs) and (iii) Directory Manufacturing Establishments (DMEs). In NSS 40th (July June 1985) and 45th (July June 1990) rounds survey on unorganised enterprises only OAMEs and NDMEs were covered. DMEs were, however, surveyed separately under the technical guidance of Central Statistical Organisation (CS0). 1.2 All economic activities covered by the two-digit codes 20 to 39 and 97 under the revised National Industrial Classification of different economic activities, 1987 (henceforth in this report termed NIC, 1987) were covered in 51st round survey. Manufacturing and repairing enterprises registered under sections 2m(i) & 2m(ii) of the Indian Factories Act, 1948 and bidi and cigar manufacturing enterprises registered under Bidi and Cigar Workers (Condition of Employment) Act, 1966 were not included in this survey. 1.3 The whole of the Indian Union excepting Ladakh, Kargil, Anantanag, Pulwara, Srinagar, Badgam, Baramula and Kupwara districts of Jammu & Kashmir and some inaccessible villages of Nagaland and Andaman & Nicobar Islands was covered for this survey purpose. Thus the corresponding state/u.t. level as well as all-india level estimates presented in the report are based on the areas other than those left out from the survey coverage. In the case of central sample first stage units (FSUs) were surveyed, of which 8214 were villages in the rural areas and 5258 enumeration blocks/ufs blocks in the urban areas. 1.4 The present report is the third of the series of reports being released on unorganised manufacture based on the data collected in central sample of NSS 51st round. It discusses the estimates of working capital, outstanding debt and fixed assets of the unorganised manufacturing and repairing enterprises in details. The number of unorganised manufacturing and repairing enterprises, persons employed therein and value added by those enterprises are discussed in the first report (No. 433(51/2.2/1)). The second report (No. 434(51/2.2/2)) presents mainly the distribution of these enterprises and their employment by ownership type, source of energy used, agency of registration, nature of operation, social group of the owner and location of premises. 1.5 This report consists of five Chapters including the present one. While Chapter Two presents concepts and definitions of some of the important items relevant to this report, Chapter Three gives a note on sample design and estimation procedure adopted in 51st round survey. A summary of the results on working capital, fixed assets and borrowings of the Indian unorganised manufacturing and repairing enterprises during is given in Chapter Four. Industry division codes and the corresponding economic activities are given in Chapter Five. The detailed statistical tables are given in APPENDIX. 1

11 Chapter Two Concepts and definitions 2.0 The concepts and definitions as followed in the survey of unorganised manufacturing and repairing enterprises during 51st round (July June 1995) was broadly on the lines of recent past rounds on unorganised manufacturing and repairing enterprises. A few general items are discussed here and the other relevant items are discussed in Chapter Four. 2.1 Enterprise : An undertaking engaged in the production and/or distribution of some goods and/or services meant mainly for the purpose of sale, whether fully or partly, is termed as an enterprise. An enterprise may be owned and operated by a single household or by several households jointly on a partnership basis, or by an institutional body. The activities of an enterprise may be carried out by household members and/or by hiring outside labourer on a fairly regular basis. 2.2 Own-account enterprise : An enterprise which is run without any hired worker employed on a fairly regular basis is termed an own account enterprise. If such an enterprise is engaged in manufacturing and/or repairing activities, it is termed an own account manufacturing enterprise(oame). 2.3 Establishment : An enterprise which is employing at least one hired worker on a fairly regular basis is termed establishment. 2.4 Non-directory establishment : An establishment employing less than six workers (household and hired workers taken together) is termed non-directory establishment. If such an establishment is engaged in manufacturing and/or repairing activities, it is termed non-directory manufacturing establishment (NDME). 2.5 Directory establishment : A directory 1 establishment is an establishment which has employed six or more workers (household and hired workers taken together). If such an establishment is engaged in manufacturing and/or repairing activities, it is termed directory manufacturing establishment (DME). 2.6 Workers : All persons, household and non-household, paid or unpaid, those who are directly or indirectly associated with or incidental to manufacturing and/or repairing activities of an enterprise are workers. Parttime workers are also taken as workers of the enterprise so long they are engaged on a fairly regular basis. The workers who are directly engaged in or incidental to manufacturing and/or repairing activities of an enterprise have been divided into three different categories, namely, (i) hired workers (other than household workers), (ii) paid household workers and (iii) unpaid household workers. The remaining workers i.e., the workers who are indirectly associated with or incidental to manufacturing process are classified as "other workers". 2.7 Fairly regular basis : The term "fairly regular basis" means the major part of operation(s) of an enterprise during a reference period. 2.8 Reference year : In many cases small manufacturing and repairing enterprises do not maintain usable books of account. In such a situation, for an enterprise maintaining books of account, reference year is the accounting year ending on a date lying within the period of 365 days prior to the date of survey. In all other cases where it is not possible to choose an accounting year as reference year, the period of 365 days immediately preceding the date of survey is taken as reference year.

12 Chapter Three Sample Design and Estimation Procedure 1 General In 51st round the total number of villages and block surveyed at the national level was for the central sample. These samples were classified into two categories as "Sample-1" an "Sample-2" in both rural and urban areas. The samples of sample-1 were distributed over the four sub-rounds in equal numbers, whereas for sample-2, there was no sub-round restriction. The survey period of 51st round was July June 1995 and the same for the four sub-rounds of sample-1 was as follows : Sub-round 1 : July - September, 1994 Sub-round 2 : October - December, 1994 Sub-round 3 : January - March, 1995 Sub-round 4 : April - June, 1995 A stratified two-stage sampling design was adopted. The first stage units (FSUs) were the villages (panchayat wards in case of Kerala) in the rural areas and urban blocks in the urban areas. In particular, for the urban areas, enumeration blocks (EBs) were taken as FSUs where 1990 economic census (EC - 90) frame was used and NSSO urban frame survey (UFS) blocks otherwise. The second stage units (SSUs) were the manufacturing and repairing enterprises in the selected FSUs. 2 Allocation of sample FSUs between rural and urban areas State/UT level total sample size (i.e., total number of villages and blocks to be surveyed) was allocated between the rural and urban areas in proportion to population as per 1991 population census with double weightage to the urban areas. The total sample size for both rural and urban areas, as mentioned above, was equally divided into two sample types, namely Sample-1 and Sample-2. 3 Sampling frame For rural areas, list of villages showing number of OAMEs, NDMEs and DMEs as per 1990 economic census was used as the sampling frame for selection of FSUs, for both the sample types, in different States/UTs except Jammu & Kashmir(J & K), Arunachal Pradesh and Nicobar district of Andaman & Nicobar Islands. For the state of Kerala, however, list of Panchayat wards, giving count of OAMEs, NDMEs and DMEs at panchayat level as per 1990 economic census, was used. For Jammu & Kashmir, list of 1981 population census villages, while for Nicobar district of Andaman & Nicobar Islands, list of 1991 population census villages was used. In the case of Arunachal Pradesh, list of villages as per 1991 population census was used as the sampling frame for selection of sample "nucleus" villages around which clusters were formed. In the case of urban areas, list of EBs as per 1990 economic census constituted the sampling frame for Class 1 towns (except Jammu & Kashmir) of sample type 1 and for all towns (except J & K) of sample type 2. The list of UFS blocks was used as the sampling frame for all towns of Jammu & Kashmir and other than class 1 towns of the other states for sample type 1, and for all towns of Jammu & Kashmir only in the case of sample type 2. 4 Stratification In the rural areas for samples of type 1 each district generally formed a separate 1

13 stratum. However for the state of Gujarat, where NSS regions cut across some district boundaries, parts (viz., groups of taluks) of each such district belonging to different NSS regions formed separate strata. If any district (or part thereof falling in an NSS region in case of Gujarat) had a smaller number of manufacturing enterprises, it was clubbed with the neighbouring district within the same NSS region to form a separate stratum to ensure a minimum allocation of 8 villages at the stratum level. Each district as a whole was always taken as a separate stratum for samples of type 2. In the case of urban areas for samples of type 1, strata were formed within each NSS region by grouping cities/towns according to the population of the cities/towns viz., p<=0.5, 0.5<=p<1, 1<=p<5, 5<=p<10 and p>=10 (where p stands for 1991 census population of the town in lakhs). Each city with population 10 lakhs or more formed a separate stratum. For samples of type 2, strata were formed within each district by grouping cities/towns according to the population, viz., p<1, 1<=p<5, 5<=p<10 and each city with p>=10. However, no grouping of towns was made for the states of Assam, Haryana and Pondicherry. 5 Sub-stratification For rural samples of type 1, where 1990 EC frame was used, the FSUs in a stratum were grouped into 3 sub-strata as detailed below. (a) sub-stratum 1 consisting of FSUs having at least one DME; (b) sub-stratum 2 consisting of those of the remaining FSUs which had at least one NDME; and (c) sub-stratum 3 consisting of all th residual FSUs in the stratum. There was no sub-stratification at the stratum level for the States/UTs where population census frame was used for selection of FSUs. For these States/UTs, all FSUs in a stratum were identified with substratum 3 for operational convenience. In urban areas for samples of type 1 three sub-strata were formed in class 1 towns (except for J & K) as follows :- (i) sub-stratum 1 consisting of EBs having at least one DME; (ii) sub-stratum 2 consisting of those of the remaining EBs in the stratum having at least one NDME; and (iii)sub-stratum 3 consisting of all the remaining FSUs in the stratum. For other towns, includiing all towns of Jammu & Kashmir, two sub-strata were formed, where sub-stratum 1 consisted of all UFS blocks identified as Industrial area (IA) and the remaining UFS blocks in the stratum constituted sub-stratum 2. For samples of type 2 stratum level substratification was not done in both rural and urban areas. 6 Allocation of sample FSUs among strata and sub-strata The total rural samples of type 1 for a State/UT were allocated to the constituent strata/sub-strata in proportion to weighted sum of the number of manufacturing enterprises of different types, as available from EC 1990, the weights being 16, 4 & 1 for DME, NDME and OAME respectively. A minimum allocation of one sample was ensured at sub-stratum level and efforts were made to make the stratum level allocations as multiples of 4 to allocate equal number of samples in each of the four sub-rounds. However, the total rural samples of type 2 for a State/UT were allocated to the constituent strata in proportion to their total number of manufacturing enterprises (weights being equal for DME, NDME & OAME) as available from EC A minimum allocation of 2 FSUs was done for each stratum. In urban areas, for samples of type 1, allocated sample size of FSUs for a 2

14 State/UT was further allocated to the constituent strata in proportion to weighted sum of the manufacturing enterprises (in proportion to population for J & K) as was done in the rural areas. For class 1 towns (except for J & K), the stratum level FSUs were further allocated to three sub-strata again in proportion to weighted sum of the number of manufacturing enterprises in the ratio 16 : 4 : 1. The allocation at the substratum level had been kept at a minimum of 2 FSUs. For other towns (including all towns of J & K) the UFS blocks of substratum 1 were completely selected for survey, subject to a maximum of half of the stratum allocation of samples of a particular type; and the rest to sub-stratum 2. The total urban samples of type 2 for a State/UT (except for J & K) was allocated to the constituent strata in proportion to their total number of manufacturing enterprises. For the state of Jammu & Kashmir stratum level allocation was done in proportion to 1981 census population. 7 Selection of first stage units (FSUs) The sample FSUs for rural samples of type 1, at stratum x sub-stratum level, were selected with probability proportioned to size (PPS), size being the number of enterprises/population as detailed below :- (A) For States/UT where 1990 EC frame was used, size was number of DMEs, NDMEs and OAMEs in the FSU belonging to sub-stratum 1, 2 and 3 respectively. (B) For other States/UTs viz., (i) Arunachal Pradesh, size = 1 for each FSU (ii) Jammu & Kashmir, size = population in the FSU as per 1981 census; (iii) Nicobar district of Andaman & Nicobar, size = population in the FSU as per 1991 census. The stratum x sub-stratum level rural samples of type 2 were selected by PPS with replacement, size being the total number of manufacturing enterprises (i.e. total of DMEs, NDMEs and OAMEs) in the FSU for the States/UTs where 1990 EC frame was used and for other States/UTs where 1990 EC frame was not used size was same as in rural samples of type 1. In urban areas sample blocks of type 1 were selected from each sub-stratum of class 1 towns (except for J & K) with PPS with replacement taking number of DMEs, NDMEs and OAMEs in the FSU as size for sub-stratum 1, 2 & 3 respectively. For other towns (including all towns of J & K) the sample blocks from each sub-stratum were selected circular systematically with equal probability. Sample blocks of type 2 were selected with PPS with replacement, size being the total number of OAMEs, NDMEs and DMEs for all the Sates/UTs except J & K for which simple random sampling without replacement technique was followed for selection of sample blocks. Both in rural and urban areas, for samples of type 1, size of an FSU of substratum 3 was taken as 1 if there was no OAME or no information about number of enterprises due to incompleteness of the frame. The FSUs of sample type 2 having no manufacturing enterprises or no information about them were also considered as FSUs of size 1. 8 Hamlet-group/sub-block formation : Large villages/blocks having approximate present (at the time of survey) population 1200 or more (600 or more for rural areas of Himachal Pradesh, Sikkim and Punch, Rajouri, Udhampur & Doda districts of J & K) and/or approximate present number of non-agricultural enterprises more than 200 were divided into a suitable number (say,d) of hamlet-groups (h.g.)/sub-blocks (s.b.). The survey was conducted in two h.g.s/s.b.s selected from D hamlet-groups/sub-blocks in the following manner. The h.g./s.b. having maximum number of manufacturing and repairing enterprises (OAMEs, NDMEs and DMEs taken together) was always selected and allotted a serial number '0'. From the remaining h.g.s/s.b.s, one more h.g./s.b. was selected at random and allotted a serial number '1'. In case there was not even a single manufacturing or repairing enterprise in a large village/block, the h.g./s.b. having maximum population was 3

15 selected and allotted serial number '0' and from the remaining h.g.s/s.b.s another was selected at random and allotted serial number '1'. In the case of a small village/block not requiring h.g./s.b. formation, the whole village/block was treated as a h.g./s.b. bearing serial number '0'. The minimum number of h.g./s.b. formed in large villages/blocks was 4. 9 Sampling of enterprises All OAMEs, NDMEs and DMEs which operated for at least 30 days (15 days in case of seasonal enterprises) during the last 365 days were considered for sampling. The enterprises registered under Factories Act, 1948 and Bidi and Cigar workers (condition of Employment) Act, 1966 were not considered for survey purpose. For FSUs of sample type 2, all the eligible manufacturing and repairing enterpriseslisted in the village / block /h.g. /s.b. were taken up for detailed survey. However, for samples of type-1, a maximum of 16 enterprises were selected for detailed enquiry. All eligible manufacturing and repairing enterprises of different types were separately arranged by broad industry division (2-digit) codes as per NIC, This grouping of enterprises by NIC codes was done independently for each of the two selected hamlet-groups/sub-blocks for FSUs requiring hamlet-group/sub-block formation. The required number of sample enterprises were then selected circular systematically from the rearranged frame, separately for OAMEs, NDMEs and DMEs. 10 Estimation Procedure Since the method of formation of strata for the two types of samples is different, no combined estimate can be formed at the stratum level. Sample typewise estimates can be generated at region or state or national level. The combined estimates at the level of region or state or nation are obtained for the purpose of this report by taking a simple average of the two sets of aggregate estimates at the desired level. Ratios of the type Y/X are obtained at the last stage of estimation. The following notations are used in the formulae for estimation : s = subscript for s-th stratum t = subscript for t-th stratum i = subscript for i-th sample village/block (FSU) j = subscript for j-th enterprise type ( j = 1 for OAME; 2 for NDME; 3 for DME ) k = subscript for k-th sample enterprise of a particular enterprise type D= total number of hamlet-groups / subblocks formed in a sample FSU Z= total size of a sub-stratum within a stratum ( or total size of a stratum when no sub-stratification is made) z = FSU size used for selection n = number of sample FSUs surveyed for a particular sample type E = total number of enterprises listed for a particular enterprise type in hamletgroup / sub-block selected e = total number of enterprises surveyed for a particular enterprise type in the hamletgroup / sub-block 0/1 = subscript for hamlet-group / sub-block number( 0` or 1` as the case may be) y = sample value of any character under estimation Y = estimate of population total of the character y at the desired level of aggregation. The formula for rural samples of type 1 for all the States/UTs except for Jammu & Kashmir, Arunachal Pradesh and Nicobar district of Andaman & Nicobar Islands is as follows : 4

16 nst 1 3 e 1 E sti 0 j e sti j E sti 1 j 0 sti 1 j Y = [ ( ) s t Zst ysti0jk + Dsti 1 ysti1 jk ]...(1) i= 1 zsti j= 1 n stij e sti0 j k= 1 e sti1 j k= 1 The formula (1) holds good for urban samples of type 1 for class 1 towns of all the States/UTs except for Jammu & Kashmir. For other towns of all States/UTs and for all towns of Jammu & Kashmir in the case of samples of type 1 formula (1) is used where z sti = 1 for all I = 1, 2,...,n s. The formula used for estimation from the samples of type 2 for all the States/UTs ( except for urban samples of J & K ) is as follows : ns 1 3 e 1 E si 0 j e si j E si 1 j 0 si 1 j Y = [ ( ) s Zs ysi0jk + Dsi 1 ysi1 jk ]...(2) i= 1 zsi j= 1 n sij e si0 j k= 1 e si1 j k= 1 Formula (2) is also used for rural samples of type for Jammu & Kashmir and Nicobar district of Andaman & Nicobar Islands. It may be noted that if E = e as planned for sample FSUs of sample type 2, the formula(2) reduces to : ns 1 3 e 1 si 0 j e si 1 j Y = [ ( ) s Zs ysi0jk + Dsi 1 ysi1 jk ]...(3) i= 1 zsi j= 1 nsij k= 1 k= 1 The formula for rural areas of Arunachal Pradesh is as follows : ns 1 3 e E si 0 j si 0 j Y =...( ) s Zs ysi0jk 4 i= 1 nsij j= 1 e si0 j k= 1 1

17 Chapter Four Summary of findings 4.0 As already mentioned in Chapter One, based on the data collected in schedule 2.2 of NSS 51st round survey on unorganised manufacture two reports have already been released giving estimated number of enterprises, persons employed therein and gross value added in details. The present report focuses mainly on working capital, fixed capital and borrowings of the unorganised manufacturing and repairing enterprises in India during In the 51st round survey a total of first stage units were surveyed in the central sample, of which 8214 were villages and 5258 enumeration blocks/ UFS blocks (the villages / urban blocks with no manufacturing unit surveyed, in spite of having some enterprises in these FSUs, are not included in this count). Statement 1 gives the distribution of the number of sample villages and blocks allotted for survey and actually surveyed in different states. 4.2 Detailed information was collected from each of a total of more than 1.9 lakhs sample manufacturing and repairing enterprises from the surveyed villages and blocks. Of the total sample enterprises, 63% were from the villages and the rest from urban blocks. Statement 2 lists the number of sample enterprises, by enterprise type, in different states for both rural and urban areas. Statement 3 shows the number of sample enterprises by enterprise type under different industries ( 2 - digit NIC code level ) separately for rural and urban areas. About 16% of the total sample enterprises were from wood and wood products(nic 27) industries alone. 4.3 A major problem of collection of data from the unorganised manufacturing and repairing enterprises is that most of these enterprises do not maintain usable books of accounts. Out of more than 1.2 lakhs enterprises surveyed in villages, only 6 per thousand maintained usable books of accounts. Only 19 per thousand of the total of about 0.7 lakhs sample enterprises surveyed in the urban areas maintained usable books of accounts. Statement 4 gives number of enterprises maintained usable books of accounts per thousand of sample enterprises separately for different types of enterprises in each of rural and urban areas. For obvious reasons it was easy to collect detail information on working capital, fixed assets, borrowings etc. from the sample enterprises maintaining books of accounts. 4.4 The estimate of total number of enterprises engaged in the manufacturing and repairing activities in unorganised sector in India during was about 145 lakhs. Of them, nearly 72% were in the rural areas and the rest in urban areas. Out of the total estimated 105 lakhs enterprises in the rural areas, about 91% were OAMEs, 6% NDMEs and the rest DMEs. In the urban areas, out of 40 lakhs estimated enterprises, 68% were OAMEs, 23% NDMEs and 9% DMEs. Statement 5 gives the estimated enterprises by enterprise type. As mentioned in para 4.0 details of estimated number of enterprises and employment therein are available in the Report No. 433(51/2.2/3).

18 Statement 1 : Distribution of number of FSUs allotted and actually surveyed in different states number of FSUs allotted number of FSUs surveyed STATE Rural Urban Total Rural Urban Total (1) (2) (3) (4) (5) (6) (7) Andhra Pradesh Arunachal Pradesh Assam Bihar Goa Gujarat Haryana Himachal Pradesh Jammu & Kashmir Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh West Bengal Andaman & Nicobar Is Chandigarh Dadra & Nagar Haveli Daman & Diu Delhi Lakshadweep Pondicherry All

19 Statement 2 : Number of sample enterprises in different states by enterprise type, separately for rural and urban areas in rural areas in urban areas State / U.T. OAME NDME DME ALL OAME NDME DME ALL ALL (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Andhra Pradesh Arunachal Pradesh Assam Bihar Goa Gujarat Haryana Himachal Pradesh Jammu & Kashmir Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh West Bengal Andaman & Nicobar Chandigarh Dadra & Nagar Haveli Daman & Diu Delhi Lakshadweep Pondicherry All

20 Statement 3 : Number of sample enterprises in different industries ( at 2 - digit level of NIC ) by enterprise type, separately for rural and urban areas in rural areas in urban areas NIC descriptions OAME NDME DME ALL OAME NDME DME ALL ALL (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) 20 Manufacture of food products do Beverages, tobacco etc., Cotton textiles Wool,silk &man-made fibre txtl 25 Jute and other textiles Textile products Wood and wood products Paper and paper products Leather and leather products Chemical and chemical products 31 Rubber, plastic and petroleum Non-metalic mineral products Basic metal & alloys industs Metal products and parts Mechinery and equipment do Transport equipment and parts Other manufacturing industries 39 Repair of capital goods Repair services Not recorded cases All All industries Statement 4 : Number of sample enterprises maintained usable books of accounts per thousand of sample enterprises separately for each type of enterprises Statement 5 : Estimated number (in lakhs ) of enterprises in by enterprise type (1) (2) (3) (4) (1) (2) (3) (4) enterprise type in rural areas in urban areas total enterprise type in rural areas in urban areas total OAME OAME NDME NDME DME DME ALL ALL Working capital : Working capital refers to the physical and financial resources used by an enterprise for its day to day activities. It is

21 therefore a constantly changing entity, since resources available at a particular point of time undergo change from dayto-day as the enterprise functions, a part of the resources getting used up in the manufacturing process or other connected activities and replenishments being made from time to time. Working capital has two segments : physical and financial. Physical part of the working capital includes raw materials, stores, fuel, lubricants, semi-finished products and finished products & by-products. Financial part comprises cash in hand & at bank and net balance of amounts receivable and payable From each of the sample enterprises values of different items of working capital, namely raw materials, stores, fuel, semi-finished goods, finished products and by products, cash in hand and at bank, amount receivable and amount payable, as at the beginning (opening balance) and at the end (closing balance) of the reference year were collected For the country as a whole, the total estimated value of working capital (net of opening balance and closing balance) in the unorganised manufacturing and repairing enterprises in India during was about Rs crores. The opening and closing Statement 6 : Estimated value of total working capital ( Rs. in crores) by enterprise type enterprise type opening balance closing balance net balance (1) (2) (3) (4) RURAL + URBAN OAME NDME DME ALL R U R A L OAME NDME DME ALL U R B A N balances were Rs crores and Rs crores respectively. Of the total working capital(net balance), about Rs.546 crores (about 34%) was invested in the enterprises located in rural areas and the rest in urban areas. About 80% of the total opening balance of the working capital was from urban areas as against about 77% in the case of closing balance. Estimated values of total working capital used in each of OAMEs, NDMEs and DMEs separately for rural and urban areas are given in Statement 6. As expected, DMEs being relatively larger units needed more working capital than the smaller units, say NDMEs and OAMEs. Nearly 53% of the total closing balance estimated for the enterprises located in rural areas had come from the DMEs, as against 69% in the case of urban areas Statement 7 provides percentage distribution of total value of closing balance of working capital at the end of the reference year by industries for all rural and urban enterprises taken together. It is seen that wood and wood products industry, NIC 27 had the highest share (12%) of working capital at the end of the reference year, followed by other manufacturing industries, NIC 38 (about 11%), metal products and parts, NIC 34 (9%) and rubber, plastic and petroleum, NIC 31 ( about 8%) Per enterprise estimates of opening balance, closing balance and net balance of working capital used in OAMEs, NDMEs and DMEs separately for rural and urban areas are given in Statement 8. In NSS 45th round survey( ) on unorganised manufacturing enterprises values of closing balance(as on last day of the reference period) of different items of working capital were collected for OAMEs and NDMEs *. But in the DME survey ( DME survey was undertaken by the Field Operations Division of NSSO during October September 1990 * Information for opening balance was not collected in NSS 45th round. OAME NDME DME ALL

22 Statement 7 : Percentage distribution of total value of closing balance of working capital at the end of reference year by industries for all rural and urban enterprises taken together in perce- NIC description ntage share (1) (2) (3) 20 Manufacture of food products d Beverages, tobacco etc Cotton textiles Wool, silk & man-made fibre txtl Jute and other textiles Textile products Wood and wood products Paper and paper products Leather and leather products Chemical and chemical products Rubber, plastic and petroleum Non-metalic mineral products Basic metal & alloys industries Metal products and parts Machinery and equipment do Transport equipment and parts Other manufacturing industries Repair of capital goods Repair services 5.1 all under the technical guidance of CSO), information for both opening and closing balances was collected for DMEs. Statement 8A presents per enterprise estimates of closing balance of working capital for OAMEs, NDMEs and both opening and closing balances for DMEs for the year Statement 8 : Estimated value (in Rs.) of working capital per enterprise by types of enterprise in enterpr ise type opening balance closing balance % change net balanc e (1) (2) (3) (4) (5) RURAL + URBAN OAME NDME DME ALL R U R A L OAME NDME DME ALL U R B A N OAME NDME DME ALL Statement 8A : Estimated value (in Rs.) of working capital per enterprise during * (45th round) by type of enterprises enterprise type in rural areas in urban areas OAME (Closing Balance) NDME (Closing Balance) DME (Opening Balance) (1) (2) (3) DME (Closing Balance) Source : Sarvekshana - Vol. XVIII. No. 4 (April - June 1995) for OAMEs and NDMEs. For DMEs - Report on Unorganised Manufacture : Directory Establishments ( ) issued by CSO in It is observed from Statement 8 that the estimated value of working capital per enterprise, opening balance and closing balance both, were more in the urban enterprises than in the rural enterprises. This is true for OAMEs, NDMEs and DMEs separately. Even the