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Unorganised must form the core of economic growth

Without industry, it is believed today that rapid economic growth is not achievable. Industrial development has shaped our modern life. Science and technology are the backbones of this development.

PATRANGA BASU | New Delhi |

Success lies in exponential economic growth. Large industries are the prime movers of growth. Without industry, it is believed today that rapid economic growth is not achievable. Industrial development has shaped our modern life. Science and technology are the backbones of this development.

The industrial revolution enabled the establishment of giant industries with the mechanization of production. Industrial labour is engaged in the direct production process in organised sectors. But the jobs they perform are mostly repetitive, mindless, and mundane. These jobs demand no innovation or creativity. The machines do it all. The workers have fixed hours with weekly holidays and earn fixed and honourable remuneration with a well-defined pay structure and social security benefits.

They have plenty of leisure time. But the number of such jobs in India is quite a few as a proportion of the total labour force in India. Recent data shows that organised sector jobs are also dwindling. Computers, robots, and artificial intelligence have replaced human involvement in big industries. On the other hand, a huge number of workers – about 90 per cent of the workforce in India – make up the unorganised sector contributing, in aggregate, 50 per cent of the GDP. T

hey must work for long hours without a break. They work even odd hours. Farmers work from dawn to dusk; fishermen work at night. They use little or no technology but employ more physical labour and brain power. They rely on their skills. It builds up confidence. But they cannot differentiate between work and leisure. These people are self-taught or have learnt from parents, seniors, friends, or fellow workers. But at the day’s end, their earnings are meagre. There is no formal pay protection; the earnings are sufficient only for daily sustenance. They do not enjoy any social security benefits.

They cannot even afford the best levels of health and education benefits. An unexpected disaster could push them into disarray. But these people are the real mass of society. There is a stark difference between the average income of these two sets of workers. In 2011, the real average daily wage in India’s organised sector was Rs. 513 whereas the corresponding wage in the informal sector stood at Rs. 166. This shows the disparity. Job is not the only concern of people; job satisfaction also matters to them.

Large industries do not recognize an individual’s self-respect, job satisfaction or creativity. Mundane repetition of the same task is the key to success or profitability. A person tries to fulfil his life’s ambitions through his job. But in modern society, one becomes frustrated quite easily.

So, what we need is simple technology at affordable prices, understood and comprehensible by an ordinary individual and which will not snatch away his or her joy and creativity. As most people, men and women, work in unorganised sectors, simple technology that is environmentally friendly will obviously be profitable to them. The invention of more ‘grassroots technology’ should be the desired goal of science and technology. Farming in India has traditionally been done by individuals or members of a family.

The risks and rewards are on individual landowners, however small the holding may be. Farmers individually cannot influence the market, but their products in aggregate can. It contributes to the GDP of the nation. Insecurity looms large on the farmers because of poor income.

At current prices, the average monthly income of a farmer’s family is a little more than Rs 10,000. Moreover, agricultural income may vary tremendously from year to year. Agricultural income in India is 21 times more variable than in the US. Similar is the case for several hundred million individuals working in the unorganised sector or in numerous trades and businesses. They include domestic or home-based workers, street vendors, rickshaw pullers, motor mechanics, carpenters and so on.

The individual annual income of this huge workforce including farmers is disastrously low. The recognition of this large workforce is particularly important. Unless their presence in the economy is felt and recognized, improvement in their conditions will not happen. The Government of India launched the e-SHRAM portal in August 2021 to create a National Database of Unorganised Workers.

Within three months up to December 2021, about 25 per cent of the workforce in the unorganised sector registered their names in the portal. 52.39 per cent who registered are women. The income slab of 94 per cent of workers is Rs 10,000 and below. To date, the registration has reached 28.42 crores of which 14.89 crore (52 per cent) are from agriculture, 2.78 crore (9.8 per cent) are household workers, and 2.58 crore (9 per cent) are construction workers.

The perseverance and resilience of these workers make our economy vibrant, though they live in the shadows. These workers are contributors to the GDP and at the same time good consumers collectively. But they have nothing to save. So, they are only participating in the economy without being able to invest in it.

There are two parallel economies running simultaneously in developing countries like India. One is of large industries in the organised sector producing consumer goods, infrastructural facilities, and luxuries and the other is engaged primarily in agriculture, essentials, and other services in the unorganised sector.

These two economies are unlikely to merge in the foreseeable future. There is no possibility that the unorganised sector will be taken over by the organised sector. So, unemployment or underemployment in a developing economy is imminent.

But the unorganised sector is not the focus of society. All eyes are on big industries, their investments, opportunities, and stock markets. The focus needs to be shifted now. Priorities must be redefined. People should be at centre stage, and not big industries.

Organisations and institutions as well as thinkers and economists must reflect on the health of the unorganised sector. Better-paid workers will create a better society as well as a robust economy more quickly as the size of the labour force in India is incredibly high. A small increase in their income level will have a cascading effect on the economy.

Well-remunerated unorganised sector workers will give much better results of equitable, inclusive, and sustainable economic growth than may be possible through the ‘trickle-down approach. Unorganised sector workers toil
hard day and night, but their efforts are not well rewarded.

The risks they undertake are not matched by their rewards. These workers are so fragmented that they cannot influence market prices with their products or services. They operate in the same market where big industries operate.

This market tends to accept the prices thrown by the big corporate houses but bargains hard with unorganised sector participants. This is unequal competition.

Here comes the question of governmental or institutional intervention. The need of the hour is to organize the unorganised sector. Subdued, ill-paid workers are undesirable in a fast-developing economy.