Kerala Database

Micro Enterprises and Livelihoods

Martin Patrick & S. Muraleedharan

1.0. Introduction

The imperative of poverty eradication has brought to the fore, the relevance of micro enterprises. Micro enterprises commonly share certain characteristics, like low fixed capital, low technology and a few workers (or even fully family labour-based). Attempts to define micro enterprises as a distinct analytical category have not often been found successful. It is clear that a sizeable segment of the non-agricultural sector of the economy, made up of small establishments and self-employed, contribute significantly to the national product. They employ a substantial proportion of non-agricultural workforce. However, they are deprived in the matter of access to inputs, skills, technology, basic infrastructure and the market. Micro enterprises are informal business entities. They do not keep proper accounts, especially for the previous years. Many of them have not even an idea about turnover and other related variables in the current period itself. They are not professionally managed enterprises. In many cases, information on profit is clubbed with the imputed salary of the owner or vice versa. Hence, it is often difficult to distinguish factor shares.

2.0. National Database

No systematic data is available on micro-enterprises. Attempts have been made in India to collect data relating to the informal sector even from the early 1950s. Since micro enterprises are a part of this sector it is possible to cull out some data. The following national level survey data are useful for this:

Various Rounds of NSSO (National Sample Survey Organization) .

The survey data provided by ASI and EMI.
The Census data collected by the Small Industries Development Organization (SIDO).

A major initiative to build up data on the informal sector was taken by the Central Statistical Organization (CSO) in 1977 when the first Economic Census covering non- agricultural enterprises (establishments) employing at least one hired worker on a fairly regular basis was launched. The NSSO Surveys on Employment and Unemployment (especially the comprehensive quinquennial surveys initiated since 1972-73) enabled estimates being made of the levels and structure of informal sector employment at roughly five year intervals. The NSSO carried out a sample survey of self employed households in non agricultural enterprises in its 29th round 1974-75 and of socio-economic conditions of slums in the major cities of the country in its 31st round (1976-77). Small establishments employing at least one hired worker and own account enterprises engaged in manufacturing were surveyed in the 33rd round in 1978-79.

Another source of data is the Annual Surveys of Industries (ASI) and Employment Market Information (EMI) Programme. They are, however, largely deals with formal sector, especially ASI. Whatever data are available on micro enterprises they are largely clubbed with 'unregistered component'. The first Census of Small Scale Industrial units were conducted during 1972-73 by the SIDO. Unfortunately the Census was repeated with a significant gap. In any case, the SIDO continue to publish data on small-scale industrial sector on the basis of the registration with the State Directorates of Industries. The Second Economic Census, which conducted in 1980, covered the entire informal sector and classified it into three groups, namely, Directory establishments consisting of establishments employing at least six persons, Non directory establishments consisting of establishments employing five persons or less and own account enterprises. Soon after the first economic census a programme of intensive follow up studies were initiated in specific sub sectors of the informal sector. In its 34th round of 1979, NSSO covered the non-directory establishments and own account enterprises in i) hotels and restaurants ii) mechanized passenger and goods transport and iii) non-mechanised passenger goods transport, non-directory establishments in community and non-commercial cultural activities and own account enterprises in the services sector.

Besides the countrywide surveys and data collection programmes referred to above, there are other sources which also provide data on the micro enterprises. Statutory returns filed under the shops and commercial establishments and weekly holidays act 1942 is an important source at state level. Non-official sources provide significant information about micro enterprises. A large number of research studies on the informal sector carried out in India since the seventies have contributed substantially to the understanding of the sector and in suggesting a framework for analyzing the micro enterprises.

3.0. State-level Data

In order to understand the state-level data sources relating to micro enterprises, it is better to identify their administrative affiliation. The Department of Industries consists of SSIs, handlooms and textiles, and coir; each division has a specific wing of cooperatives. Cooperatives have to register with the concerned cooperative wing. Naturally, Department of Industries can give details about micro enterprises in the cooperative sector. Local level data are available from offices at taluk (general) and development areas of handlooms and coir. The Directorates of Industries, Handlooms and Textiles, and Coir Development consolidate state-level data. The units other than cooperatives, under handlooms and textiles, and coir, also get some kind of assistance from the government; they are also registered with the respective departments. Cooperatives are also attached to Departments of Diary and Fishery. Data relating to the micro cooperative enterprises are available at the offices of Joint Registrar and Deputy Director of Diary and Fishery respectively. Data can be traced from the Office of the Joint Registrar of Co-operatives, as the Joint Registrar has to conduct statutory audit of such units.

Another set of data on micro enterprises are provided by the offices of Khadi and Village Industries Commission and the Khadi and Village Industries Board. The State office of Khadi and Village Commission of the Central Government supply information about micro enterprises affiliated to them. Kerala Khadi and Village Industries Board have district level offices. The Department of Mining and Geology possesses a list of micro enterprises in that sector. Any micro enterprise, which comes under the category of explosive, has to get license from the inspectors of Factories and Boilers. The related office is housed at the concerned Collectorate. The Labour Department keeps certain data pertaining to labour welfare measures. Offices at block and district levels of District Rural Development Agency (DRDA) keeps some details on micro enterprises. However, all the statutory data are available from the Directorate of Economics and Statistics.

Another such source data on micro enterprises are the Credit Plan of the district. The district offices of NABARD and the Lead Bank prepare the Credit Plan. At present, in Kerala, the most reliable data on micro enterprises is supplied by Kudumbashree, the official agency which carry out poverty eradication programmes in the line of Grameen Banking in Bangladesh. Based on the census and other official lines, the Kudumbashree Mission in Kerala has adopted an official definition. Accordingly, micro enterprises have the following features: i) investment between Rs 500 and 2.5 lakhs ii) individual or group based poor people iii) the entrepreneur should able to get monthly income worth Rs 1500, iv) the turnover must be between Rs one lakh and 5 lakhs ( yearly) and v) the manager and employee must be the same person.

Individual researchers as well as autonomous research centres also have conducted certain studies on micro enterprises. This also provides useful information about the micro enterprises.

4.0. Inadequacy of Database

The data regarding micro enterprises largely depend on informal sector at national level. Data collection on the informal sector was systematised only after 1977 when the first Economic Census was launched. Even these Censuses have so far not been conducted at five year intervals as originally planned. There is also a time lag in the publication of the results of the Economic Census and the follow up studies.

Trends in the level and sectoral structure of employment can be derived from the Census, EMI and the NSSO employment surveys .One of the major limitations is that the use of NSS data will restrict analysis at the state level while the Census data can be used for analysis at the district level. A comparison of EMI with the census or NSSO data, helps to estimate of levels of employment in different sectors, not exactly about micro enterprises.

What are the levels of earnings, productivity, input and output in the micro enterprises? These are rarely surveyed. It would be seen that the existing database on the micro enterprises is stronger in the manufacturing sector. The database for the construction segment is the weakest. Studies similar to those taken up in the manufacturing sector are necessary in other sectors. There is also not much information on qualitative aspects like unionisation, occupational mobility, heath, and social security.

It is difficult to get data on micro enterprises from sources such as District Industry Centre, District Labour Office etc. There is no system of publishing or keeping a printed copy of the data by these offices. The entire data has to be manually copied from their ledgers which is really a cumbersome work. This also is conditional on the cooperation of the bureaucracy.

5.0. Conclusion

The database on micro enterprises, in general, is weak, particularly in segments outside the informal manufacturing sector. With the basic frame of surveys available from the successive Economic Censuses, it should be possible to carry out surveys in these sub sectors to strengthen the database. Steps are also necessary to initiate collection of data on various aspects related to these enterprises. At the same time, the available data is not adequately utilized for analyzing the characteristics of the micro enterprises by the policy makers. However, the following suggestions are made to widen the existing database:

Quinqunneal survey on micro enterprises has to be conducted by the Department of Economics and Statistics with the help of district Panchayat and other local bodies.

The entrepreneurs may be educated that they won't normally come within the purview of excise duty and income tax, and therefore, by parting with data, they are in no way implicated.

Variables for data collection must be in the line of the ASI.

Steps are necessary to coordinate and supply the data properly from various district and local level institutions .The services of IT sector can be utilized for this purpose.

References

Government of Kerala (2001): Economic Review, (Trivandrum, State Planning Board)

Government of Kerala (2002): Kudumbashree: Training Manual for Panchayat Level Officers, (Kasargod District, Govt. of Kerala).

NABARD (1995): Linking Self-Help groups with Banks: An Indian Experience.

Nandakumar, M (2001): Small Strides, Big Leaps, (Trivandrum, Govt. of Kerala)