Estimating value added in the informal sector is a challenge to official statisticians. By the very nature of the sector, these are enterprises which have no regular record of activities, books of accounts, and times even place of work. The estimation of value added for such entities reflects one of the great achievements of Indian statisticians. Typically this has been done by combining data collected from NSS sample surveys of households, household enterprises, and the population census. All of these have been done at regular intervals in India. The typical perception about these entities has been that they function on the margins with little or no change in production organisation or technology. However, sample survey data in recent years has been hinting at significant changes in the way these enterprises carry out production. In this connection understanding the contribution of the different types of workers engaged in these activities is central to calculating their value added. This paper reviews the changes introduced in the methodology of calculating value added in the Informal sector in the 2011–12 base revision.
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“Exploring Differences in Employment Between Household and establishment Data” Abraham, Katharine, G., Haltiwanger, John C., Sandusky, Kristin and Spletzer, James. Journal of Labor Economics, Vol. 31, No. 2, Pt 2, 2013, pp. S129–S172.
‘Report of the Sub Committee on Unorganised Manufacturing & Services Sectors for Compilation of National Accounts Statistics with Base Year 2011–12’ National Accounts Division, Central Statistics Office, Ministry of Statistics and Programme Implementation, Government of India, New Delhi.
For a complete description of the approach see ‘Report of the Working Group on Workforce Estimation for Compilation of National Accounts Statistics with Base Year 1999–2000’ National Accounts Division, Central Statistics Office, Ministry of Statistics and Programme Implementation, Government of India, New Delhi.
It may be noted that in aggregate labour force survey estimates the category self employed refers to all three codes 11, 12 and 21. The decline in self employment is more marked in the category of 21. It is this group that withdraws from the LF in order to attend to family or school.
The decline in labour force is accounted for to a large measure due to the increase enrolment in Higher Education. The period has seen Gross Enrolment rise from 13% to about 25%. A second factor is rising household incomes has made women’s workforce participation an inferior good due to prevailing sociocultural norms.