Growing jobs, tepid output: Contrasting story of manufacturing industry in 5 charts

The story of India’s manufacturing industries is marked by contrasts, with job growth hitting a 12-year high in 2022-23 and the real output growing at a lacklustre rate, reveals the latest Annual Survey of Industries (ASI).

According to the report, the gross value added (GVA) of the manufacturing industry grew 7.3% in 2022-23 at current prices. While the growth rate may seem decent at current prices, it is not much, especially when it is adjusted for wholesale price inflation for manufactured products, which was 5.6% during the year. Moreover, the growth rate was less than the average growth of 8% witnessed between 2010-11 and 2019-20.

The Annual Survey of Industries, conducted by the government, covers units in the organized manufacturing sector that are registered under the Factories Act, 1948. It includes those employing 10 or more workers using power, and those employing 20 or more workers without using power. It also covers registered bidi and cigar manufacturing establishments, and electricity undertakings not registered with the Central Electricity Authority, among others.

The number of persons engaged in the manufacturing sector grew 7.4% in 2022-23, which is the highest since 2010-11. Between 2013-14 and 2019-20, the growth was stuck in the slow lane, growing less than 5%, followed by a decline in the pandemic-hit year of 2020-21. However, the decline of 3.2% in 2020-21 was immediately followed by a 7% growth in the next year, suggesting a quick recovery.

The food industry engaged the most workers, followed by textiles and basic metals.

Another metric that gives insight into the level of employment in the manufacturing industry is workers per factory, which also showed an encouraging trend. The number of workers per factory increased to 71 in 2022-23, up from 68 the previous year.

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For the purpose of this survey, workers include individuals employed directly or indirectly, paid or unpaid, involved in any manufacturing process or tasks related to it.

However, apart from tepid output growth, the ratio between input cost and value of output (which measures the efficiency in the production process) also painted a different picture of the manufacturing industry. The output-to-input ratio declined to 1.179 times from 1.207 times the previous year. In fact, the ratio has consistently declined since 2016-17, when it had reached 1.232 times.

In terms of state-wise ranking, Tamil Nadu has emerged as the top state both in terms of the share in total number of factories and persons engaged in factories. Gujarat and Maharashtra are the next two states on the list.

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While Gujarat has secured the second spot in terms of share in the total number of factories, it falls behind Maharashtra in terms of share of persons engaged in factories.

Pragya Srivastava has contributed to this story.