Demonetization Woes (5) - Black, White and Green

(via Sunny Narang)

 Green Money: It is my belief that probably 95% of Indians work best in groups of 5 or below

There are many e-mails, essays , I have written over the last 10-15 years on the 90% "iceberg-truths" not much known or publicised in mainstream media . The 90% of unorganised/informal economy is done in cash but that is not mostly "black-money" , it is "white" as most people earn much below the annual taxable incomes but not passing via banks or post office accounts . 

So there is not just "White" or "Black" money in India , there is "White" which is not in mainstream financial systems . 

What do we call that money ? It is not Black even if it is cash , and it is in Cash and also mostly White .

This "Demonetisation Gambit" is making all Cash seem Black. Nothing could be further from the truth .

I call this Cash Economy which is what maybe almost 80-90% of Indians live in , neither "White" nor "Black" . This is the "Green" Money .

That has very small enterprises , minimum working capital mostly below Rs.10 lacs , employ the family and 2-20 people , is sustainable and small , in fact tiny or micro enterprise is the word .

For India we need another category that mainstream economists have not categorised .

I will call it "Green Money "

This essay was written in November , 2015 .

There are about 200-250 million ownership-enterprises in India .

Agriculture 140 MSME 30 Retail 20 Hawkers 10 Crafts 7 Organised Companies registered 1.5 million.

Less than 5% are large to medium . 95% are micro and small , and that is what runs India . Mostly are family owned , 2-5 employees . 

7% are organised , 6% about 5 employees and less , 87%  maybe 2 employees and family . Even in organised sector 75% will be small service businesses or services if you look at schools , there are 1.5 million , majority primary . 

So psychologically I call it the 5 limit of Paanch-Paandav group psychology , Guru Gobind Singh also chose Punj Pyaare ! 

It is my belief that probably 95% of Indians work best in groups of 5 or below . 

29 million organised employment , of which about 9 million Industrial employment . 70% in Government Sector . About 160,000 factories of which 75% employ less than 50 workers . 

70 million in MSME sector employment 30 million enterprises.

40 million in retail and logistics with about 18-20 million stores and truck operators .

7 million artisan families . Home -based enterprises .

10 million hawkers , about 1% of Urban population and 0.3% of Rural Population NSS 1991 figures . 

140 million agricultural holdings . 400 million employment in mixed agriculture-dairy-immigrant workers part time-craft ; Rural lifestyles foundation . 

"Based on that definition they found that the EUS data for 2004-05 showed that 84.7 per cent of jobs in the economy were in the informal sector, 4.5 per cent in the public sector, 2.5 per cent in the private corporate sector and 8.4 per cent in the ‘formal’ household sector, consisting of enterprises employing more than five workers (Chart 2).

http://www.thehindubusinessline.com/opinion/columns/c-p-chandrasekhar/india-still-a-vast-informal-economy/article5282078.ece

17.5 million in Govt . only 2.5 million in Central Govt . 15 million in state , local government . (2011)

Govt. Manufacturing about 1 million only. Mining another 1.1 million. 

Private Sector Mining only 132,000 employment . Manufacturing 5.4 million . Total 11.4 million . 

Total Organised about 29 million . Less than 10% mining employment in Organised Private Sector . 

The MSME sector is an important pillar of Indian economy as it contributes greatly to growth of Indian economy with a vast network of around 30 million units, creating employment of about 70 million,manufacturing more than 6000 products, contributing about 45% to manufacturing output and about 40% of exports.

Enterprises in MSME 30 million . Employment 70 million. 

The ASI report notes that though the class of factories with the lowest employment of less than 50 workers comprises the largest share of factories (72.04 per cent), it utilises only 8.45 per cent of the fixed capital, provides employment to 17.23 per cent of total employees, produces 11.63 per cent of the total output and generates 8 per cent of the national income in the form of net value added by manufacture. On the other hand, factories that employ 200 or more employees comprise 8.39 per cent of all factories, utilise 77.37 per cent of thefixed capital and contribute to 57.99 per cent of employment, 69.60 per cent of the total output and 76.35 per cent of net value added in manufacturing.

There is, of course, a sharp regional disparity in the number of factories across states. Almost 30 per cent of the total factories in India are in Tamil Nadu and Maharashtra, but there is barely any presence of factories in small states like Manipur, Nagaland and Meghalaya.

About 160,000 factories providing employment to about 9 million people . 

Retail Sector : Retailing in India is one of the pillars of its economy and accounts for about 22 percent of its GDP.. India's retail and logistics industry employs about 40 million Indians (3.3% of Indian population.  Supermarkets and similar organised retail accounted for just 4% of the market. The typical Indian retail shops are very small. Over 14 million outlets operate in the country and only 4% of them being larger than 500 sq ft (46 m²) in size. India has about 11 shop outlets for every 1000 people. Vast majority of the unorganised retail shops in India employ family members. 

The figure of full time artisans is about 7 million but part-time can go upto any number ranging upto 200 million .

So basically the farming/dairying/rural services population will be all inter-mixed as a lifestyle at about 800-900 million , with temporary immigration to towns and cities at about 200 million. 

 An estimated 63% of artisans are self-employed while 37% are wage earners according to facts presented in J Jaitley’s book Vishwakarma’s Children, 2001. Traditional knowledge and craft skills are passed down from one generation to another, so that whole families and communities are engaged in production. An estimated 71% of artisans work as family units and 76% attribute their profession to the fact that they have learnt family skills. It is important to note that most official figures count only the head of the production unit and wage earners in official figures, leaving out the 5-6 family members who are also dependent on crafts for sustenance, thus creating an incomplete understanding of the sector’s size and importance.

There are about 140 million land holdings supporting about 350 -400 million working people , in agriculture and dairying . Population supported about 700 million. 

 India has the second largest agricultural land in the world. As India Brand Equity Foundation, a trust established by the Ministry of Commerce and Industry points out: “At 157.35 million hectares, India holds the second largest agricultural land globally.” Only, the United States has more agricultural land than India.

The average holding size of land has come down over the decades. The State of the Indian Agricultural Report for 2012-2013 points out that: “As per Agriculture Census 2010-11, small and marginal holdings of less than 2 hectare account for 85 percent of the total operational holdings and 44 percent of the total operated area. The average size of holdings for all operational classes (small & marginal, medium and large) have declined over the years and for all classes put together it has come down to 1.16 hectare in 2010-11 from 2.82 hectare in 1970-71.”

 Nearly 58 percent of India's population (as per India Brand Equity Foundation) agriculture is a primary source of livelihood. But agriculture accounts only 14 percent of the GDP.

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Sunny	Nov 19 (8 days ago)
to jugaadparty, bcc: me