Sunday, June 15, 2008

Some numbers on SME activity, employment in India

According to fifth economic census:

As of 2005, about 26 million rural enterprises employed 51 million people, whereas about 16 million urban enterprises employed 49 million.

However, this trend seems to be changing, with rural employment in enterprises (engaged in activity other than agriculture) growing at an annual rate of 3.3 per cent between 1998 and 2005, as against 1.7 per cent in the case of urban enterprises. A change in composition in favor of the former could arrest the shift of populations to cities. A growth rate of 3-4 per cent in rural enterprise employment is achieved even if agriculture sector performs poorly. Therefore, enterprises do not depend on surplus farm income. They might have come up to cope with falling agriculture incomes. Nevertheless, healthy farm sector growth helps; a 2-3 per cent growth in agriculture output is likely to lead to a growth rate of rural employment of 5 per cent or more.

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