03-October-2024-Special-Article

ANNUAL SURVEY OF INDUSTRIES (ASI) REPORT 2022-23

The Ministry of Statistics and Programme Implementation (MoSPI) recently published the Annual Survey of Industries (ASI) for 2022-23. This report provides crucial data about the manufacturing sector’s recovery and growth following the disruptions caused by the Covid-19 pandemic.

The survey was conducted from November 2023 to June 2024 and presents several noteworthy statistics regarding employment, output, and investment in the sector.

Employment Growth in Manufacturing

• Rise in Employment: The manufacturing sector saw employment growth of 7.5%, increasing from 1.72 crore workers in 2021-22 to 1.84 crore in 2022-23, marking the highest growth in 12 years.
• Job Creation: The sector created 13 lakh jobs in 2022-23, a significant increase from the 11 lakh jobs created in the previous year.

Gross Value Added (GVA) and Output Growth

• GVA Growth: The manufacturing sector’s GVA increased by 7.3%, reaching Rs 21.97 lakh crore in 2022-23, up from Rs 20.47 lakh crore in the previous year.
• Increase in Output: The total industrial output rose by 21.5%, while industrial input grew by 24.4%, highlighting a strong recovery in manufacturing activities.

Main Drivers of Manufacturing Growth

• Key Industries: The main drivers behind the sector’s growth were basic metals, refined petroleum products, chemicals, food processing, and motor vehicles.
• Contribution: These sectors accounted for approximately 58% of the total manufacturing output.

Regional Performance

• Top States: The five leading states in terms of employment were Tamil Nadu, Maharashtra, Gujarat, Uttar Pradesh, and Karnataka.

Increase in Number of Factories

• Growth in Factories: The number of factories increased from 2.49 lakh in 2021-22 to 2.53 lakh in 2022-23, signifying the sector’s full recovery after the pandemic.

Shift from Informal to Formal Sector

• Decline in Informal Employment: Employment in the informal manufacturing sector declined by 1.5%, with a drop from 16.45 lakh workers to 10.96 crore, indicating a shift towards formal employment.

Average Salaries

• Increase in Emoluments: The average salary per employee rose by 6.3%, reaching Rs 3.46 lakh in 2022-23, compared to the previous year.

Surge in Capital Investment

• GFCF Growth: Gross Fixed Capital Formation (GFCF) increased by 77% to Rs 5.85 lakh crore in 2022-23.
• Net Fixed Capital Formation: This saw an extraordinary rise of 781.6%, reaching Rs 2.68 lakh crore, indicating strong capital investment.
• Profit Growth: Profits in the manufacturing sector grew by 2.7%, reaching Rs 9.76 lakh crore.

What is the Annual Survey of Industries (ASI)?

• About ASI: Launched in 1960, the ASI serves as the primary source of industrial statistics in India. It has been conducted annually except in 1972, under the Collection of Statistics Act, 1953, and later under the updated 2008 Act.
• Implementing Agency: The National Statistical Office (NSO), under MoSPI, conducts the ASI.
• Scope: The survey covers all factories registered under the Factories Act of 1948, bidi and cigar manufacturing units, and electricity companies, excluding those registered with the Central Electricity Authority (CEA).

Opportunities in the Manufacturing Sector

• Large Domestic Market: The Indian manufacturing sector benefits from a vast domestic market and increasing international demand. The Purchasing Managers’ Index (PMI) for May 2024 stood at 58.8, reflecting strong expansion.
• Sectoral Advantages: Sectors like chemicals, pharmaceuticals, automotive, and electronics have shown steady growth. Pharmaceutical manufacturing, in particular, is 30-35% cheaper in India than in the US or Europe.
• Global South Outreach: India is increasingly participating in Global Value Chains (GVCs) with Asian and Southern countries, offering opportunities for expansion.
• MSME Growth: Micro, Small, and Medium Enterprises (MSMEs) account for 30% of India’s GDP and 45% of exports, with 4 crore MSMEs registered as of March 2024, 67% of which are in manufacturing.
• Growth Potential: India’s manufacturing sector has the potential to reach USD 1 trillion by 2025.

Challenges to the Manufacturing Sector

• Outdated Technology: Many manufacturers still rely on old technologies, making it difficult to compete globally.
• Workforce Skill Gaps: Only 24% of India’s workforce possesses the skills needed for advanced manufacturing jobs, far behind countries like South Korea (96%) and the US (52%).
• High Input Costs: Logistics costs in India are 14% higher than the global average, which negatively affects competitiveness.
• Dependence on Imports: India heavily relies on imports from China, especially in textiles, machinery, and electronics, affecting the domestic market.

Government Initiatives

• Production-Linked Incentive (PLI): Encourages manufacturing growth by providing financial incentives.
• PM Gati Shakti: A national infrastructure master plan aimed at boosting logistics.
• Make in India 2.0: Aims to transform India into a global manufacturing hub.
• Atmanirbhar Bharat: Focuses on self-reliance, particularly in manufacturing.
• Special Economic Zones: Provide tax incentives and infrastructure to boost exports.
• MSME Schemes: Provide financial support and innovation programs for small industries.

Way Forward

• Infrastructure Investment: Improving infrastructure and reducing logistics costs will attract more investment in manufacturing.
• Adoption of Industry 4.0: Leveraging digital transformation will help the sector contribute 25% to GDP by FY26.
• Export-Oriented Manufacturing: Supporting businesses to expand in global markets through targeted policies will enhance competitiveness.
• Financial Support for MSMEs: Providing better access to credit for MSMEs will enable their growth and contribution to exports.
• Skill Development: Increasing training programs can address the workforce skill shortage and improve productivity, much like in Vietnam’s successful manufacturing sector.

Mains Question:

1. “Examine the key findings of the Annual Survey of Industries (ASI) 2022-23 and analyze its implications for the growth and challenges of the Indian manufacturing sector.” (150 WORDS)