Days after the statistics ministry said India’s GDP grew by a higher-than-expected 7.8 per cent in the April-June quarter, a new survey by the ministry has painted a worrying picture about the state of the informal manufacturing sector in the country. On Wednesday, the Ministry of Statistics and Programme Implementation’s (MoSPI) first-ever Quarterly Bulletin of Unincorporated Sector Enterprises showed that the number of enterprises in the informal manufacturing sector reduced by 4.7 per cent in April-June to 2.06 crore compared to January-March. Informal enterprises are those that are unincorporated, or not registered under the Companies Act of 1956 or the Companies Act, 2013. MoSPI’s survey of unincorporated enterprises only covers a part of the non-agricultural economy, namely establishments in manufacturing, trade, and services, excluding construction. The fall in the number of manufacturing enterprises in the informal sector in April-June occurred even as the total number of informal enterprises rose by 1.1 per cent compared to the previous quarter to 7.94 crore. Even in terms of jobs, manufacturing dragged down the informal sector in April-June. As per MoSPI’s broad activity categories, the number of workers in trade and ‘other services’ rose by 0.2 per cent and 1.1 per cent, respectively, in April-June compared to the previous quarter. On the other hand, employment in the unincorporated manufacturing sector fell by as much as 9.3 per cent to 3.35 crore. This led to total informal sector employment falling by 2.1 per cent to 12.86 crore from 13.13 crore in January-March. As per the most recent Annual Survey of Unincorporated Sector Enterprises, the number of establishments stood at 7.34 crore in 2023-24 (October-September), up almost 13 per cent year-on-year. The number of manufacturing establishments had risen 13 per cent to 2.01 crore, while employment was 10 per cent higher at 3.37 crore. “The fluctuation in employment estimates during April-June 2025 is mainly linked to reduction in the number of establishments engaging hired workers and a moderate performance of the unincorporated manufacturing sector in the quarter that witnessed the share of employment of the manufacturing sector falling by more than 2 percentage points in comparison to the previous quarter,” the statistics ministry said in a statement. It added that a rise in the share of working owners from 58.29 per cent in January-March to 60.18 per cent in April-June was indicative of a shift towards self-employment and entrepreneurial activities. “The shift was particularly evident in manufacturing, where the share of hired workers saw the steepest decline, accompanied by the highest increase in working owners, signaling a strong move towards owner-driven enterprises,” MoSPI said. The data on the informal sector is particularly sobering as it comes after the latest GDP data, released last week, showed that manufacturing sector growth jumped to 7.7 per cent in April-June, up from 4.8 per cent in January-March and 7.6 per cent a year ago. This helped propel the headline GDP growth rate to a five-quarter high of 7.8 per cent, more than a full percentage point higher than the Reserve Bank of India’s (RBI) forecast of 6.5 per cent. However, economists have warned that MoSPI’s methods might be leading to the overstating of manufacturing sector growth. According to HSBC economists, manufacturing sector growth in April-June, as per the GDP data, may have been overstated by around 150 bps, with the headline real GDP growth number exaggerated by around 20 bps. To be sure, the statistics ministry cautioned that trends seen in the quarterly report “may not directly align with the corresponding quarterly GDP estimates which covers the entire economy”. The statistics ministry’s first-ever Quarterly Bulletin of Unincorporated Sector Enterprises provides estimates for the first two quarters of 2025. Prior to this survey, the unincorporated sector was surveyed only on an annual basis, starting 2021-22. The quarterly report aims to capture short‑term dynamics in the unincorporated non-farm sector and surveyed 1.64 lakh establishments in total. This, MoSPI said, is “significantly” smaller than the annual sample size, cautioning about how quarterly movements are interpreted.
