By Dr. Gyan Pathak
The latest Annual Survey of Industries (ASI) Fact Sheet 2024-25 reveals that industries in India are still not producing employment at the scale needed in the country. It is much less than formation of capital and growth in production. Number of factories are not also growing much. The pattern that has emerged is clearly not employment-intensive.
The ASI 2024-25 shows that number of factories in India is increasing by 2.64 per cent in 2024-25 over 2023-24. While the GVA during this period grew by 9.59 per cent and fixed capital by 10.54 per cent, number or workers grew by only 7.31 per cent, and total persons engaged by 7.19 per cent. Input grew by 7.47 per cent, while output grew by 7.81 per cent. Total emoluments increased by 12.8 per cent.
The data reveals that capital, wages, and GVA are growing faster than the number of people engaged. Evidence suggests that there is no broad-based labour-intensive manufacturing expansion. However, persons engaged in per operating factories rose from 92 to 96, suggesting that existing factories are expanding, but slowly.
When we compare this data to the data since 2014-15, we find that during the entire decade employment has grown much slowly than manufacturing output, GVA and capital. During this period, while persons engaged grew by only 51.3 per cent and workers by 54.8 per cent, fixed capital grew by 106.6 per cent, output by 140 per cent, GVA by 131.3 per cent, and total emoluments by 161 per cent.
The data shows that manufacturing has become much bigger, but it has not generated employment at anything close to the rate at which its economic value has expanded. It is a problem if we aim at providing employment in large number in a country like India where unemployed people are in very large number.
It should be noted that ASI covers only the registered factories or organized manufacturing sector, broadly including factories covered by the Factories Act threshold and certain establishments. Therefore, ASI’s data of 2.1 crore manufacturing employment is not the complete story.
There is another economy wide Periodic Labour Force Survey (PLFS). PLFS 2025 reported 12.1 per cent growth in manufacturing employment compared to 11.6 per cent in 2024. In 2022, it reported a growth of 11.2 per cent. Actual position is that manufacturing employment share has increased by less than one percentage point since 2022, which one can’t say a manufacturing revolution.
The ASI 2024-25 data point towards a structural problem that is often obscured by the headline number of 2.1 crore of manufacturing job. The other data it contains suggest that India’s manufacturing expansion is becoming increasingly capital and productivity driven rather than labour absorption driven. It is particularly problematic because India needs faster Industrial growth to absorb very large number of workforce moving out of agriculture.
Over 2014-15 to 2024-25, according to ASI data, operating factories roughly grew by 15 per cent and person engaged grew 51 per cent. That means much of the employment growth has occurred through larger employment per factory, rather than simply through creation of many factories.
The data giver rise to a question where are the labour intensive MSMEs that should normally accompany India’s structural transformation? To answer this question, we need to combine ASI data with ASUSE (unincorporated enterprises), PLFS, EPFO payroll data and Economic Census.
Another problem the ASI data suggest that India’s manufacturing employment is concentrated in a somewhat different set of industries from those generating the bulk of manufacturing value added. The top five industries in terms of employment are food products 11.2 per cent, textile 8.4 per cent, basic metals 7.5 per cent, motor vehicles etc 7 per cent, and wearing apparel 7 per cent. They all together contribute 41.2 per cent in employment. However, the top five industries contributing 45 per cent in value are basic metals, motor vehicle, chemical and chemical products, pharmaceutical, and food products. It shows the structural problem India is facing today, because value comes from somewhere and employment comes from somewhere else. It means India’s labour-intensive industries are not expanding enough to dominate the manufacturing employment story.
Headline numbers in the ASI 2024-25 may look excellent and first sight. But the industrial spread both in GVA and in terms of employment are concentrated in only few sectors.
Then there is five-state concentration. The top five states in terms of employment are Tamil Nadu, Maharashtra, Gujarat, Uttar Pradesh, and Haryana which approximately employ 56 per cent. However, in terms of GVA the fiver top states are Maharashtra, Gujarat, Tamil Nadu, Karnataka and Uttar Pradesh contributing 54 per cent.
ASI 2024-25 does not give evidence that the manufacturing industry is becoming labour-intensive in near future, especially if structural problem remains unaddressed.
If the objective of industrial policy is maximum employment generation, India’s manufacturing strategy is not yet delivering enough jobs relative to the amount of capital being mobilised. At the same time, the smaller, labour-intensive and unincorporated manufacturing sector is employing far more people than the ASI-covered factory sector. (IPA Service)
