Job Creation in India's Small Businesses

By Manoj Kumar

NEW DELHI (Reuters) – India's small businesses across manufacturing, trade, and services added approximately 11 million jobs by September's end, increasing total employment from 109.6 million to 120.6 million. Wage growth remained constrained due to high inflation.

Despite an average annual economic growth rate exceeding 7% over the past decade, job creation is still a significant concern for Prime Minister Narendra Modi, particularly among the youth, where unemployment remains high.

The number of small manufacturing businesses, primarily family-owned ventures like garment makers, auto components, and food processors, surged to 20.15 million in the 2023/24 year, up from 17.83 million the previous year, according to a government report released Tuesday.

Overall, the total count of small businesses in manufacturing, trade, and services rose to 73.4 million, an increase from 65 million the prior year.

This survey spans from October 2023 to September this year.

Saurabh Garg, secretary at the Ministry of Statistics, noted, "The unincorporated non-agricultural sector, comprising small manufacturing, trade, and other services, plays a crucial role in the economy, significantly contributing to employment," while announcing the annual report's findings.

During the survey period, small businesses increased by 12.84%, with employment growth exceeding 10%. However, wages faced pressure from inflation, with the average annual wage per hired worker rising 13% in 2023/24 to 141,071 rupees ($1,656), a modest rise relative to around 5.5% retail inflation.

Wages in small businesses, typically found in rural areas and urban slums, remain significantly below the national average per capita income of roughly $2,800.

($1 = 85.1410 Indian rupees)