Note Ban, GST, COVID Cost ₹11.3 Lakh Crore and 1.6 Crore Informal Jobs
- July 10, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Note Ban, GST, COVID Cost ₹11.3 Lakh Crore and 1.6 Crore Informal Jobs
Sub: Economy
Sec: National Income
Economic Impact Overview
- Cumulative Economic Loss: The cumulative impact of demonetization, GST rollout, and the COVID-19 pandemic is estimated at ₹11.3 lakh crore, equivalent to 4.3% of GDP in 2022-23, according to India Ratings and Research.
- Affected Sector: The informal sector has been severely impacted by these macroeconomic shocks.
Impact on Informal Sector
- Shutdowns and Job Losses: Between 2015-16 and 2022-23, 63 lakh informal enterprises shut down, resulting in the loss of approximately 1.6 crore jobs.
- Gross-Value Added (GVA): In FY23, GVA by unincorporated businesses was 1.6% below FY16 levels.
- Growth Rate Decline: The compounded annual growth rate (CAGR) for these enterprises was 7.4% between FY11 and FY16, but contracted by 0.2% since then.
Sectoral Data
- Establishments and Employment: Non-agricultural sector establishments rose to 6.5 crore in FY23 from 5.97 crore in FY22. Employment increased to 10.96 crore from 9.79 crore workers. However, this was lower than the 11.13 crore employed in FY16.
- Manufacturing Jobs: Declined to 3.06 crore in FY23 from 3.6 crore in FY16.
Real GVA of Unincorporated Firms
- Manufacturing, Trade, and Other Services (MTO): The real GVA was ₹9.51 lakh crore in FY23, contributing 18.2% to India’s real MTO GVA, down from 25.7% in FY16.
Shrinkage in Informal Sector
- Sectoral Shrinkage:
- Other Services and Trade: Informal sector share dropped to 32.3% and 21.2% in FY23 from 46.9% and 34.3% in FY16, respectively.
- Manufacturing: Share fell to 10.2% from 12.5% during the same period.
- Overall Contribution: The unorganised sector contributes over 44% to India’s GVA and employs almost 75% of the workforce in non-agricultural enterprises.
Unincorporated Sector Enterprises (USE) Growth
- Size and Growth Rate: The size of USE was ₹15.4 lakh crore in FY23, growing at a CAGR of 4.3% between FY16 and FY23, compared with a CAGR of 12.9% recorded between FY11 and FY16.