Factory jobs zoom 7% in FY22, but average growth stays just 2.5% over 4 years

The total number of jobs in Indian factories went up by 7 percent in 2021-22 to 1.72 crore, according to the statistics ministry's latest Annual Survey of Industries. This followed a 3.2 percent decline in 2020-21 - the year that was hit hardest by the coronavirus pandemic.

"Due to Covid pandemic, there had been a marginal fall in employment in 2020-21 which was more than compensated in the subsequent year i.e. in 2021-22 with total estimated employment in the sector showing a robust growth of 7.0 percent year-on-year," the statistics ministry said in a statement late on February 5.

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"In fact, the estimated number of persons engaged in this sector in 2021-22 has exceeded the pre-pandemic level (that is 2018-19) by more than 9.35 lakh," it added.

While the number of persons engaged in Indian industries did indeed exceed the pre-pandemic level in 2021-22, the growth over a longer period has been rather anaemic, with the average annual growth over the four-year period starting 2018-19 at just 2.5 percent.

The Annual Survey of Industries covers factories with 10 or more workers if using electricity for any manufacturing processes or 20 or more workers if they don't use electricity. Further, the survey also looks at bidi and cigar manufacturing establishments registered under the Bidi & Cigar Workers (Conditions of Employment) Act of 1966, electricity undertakings engaged in generation, transmission, and distribution of electricity but not registered with the Central Electricity Authority, units with 100 or more employees registered in states' Business Register of Establishments.

In contrast to the subdued employment growth, the government's survey found that Gross Value Added (GVA) of the factories increased by 26.6 percent in 2021-22 and 8.8 percent in 2020-21. While the GVA growth – which is computed by subtracting the input value from the gross value of output – in 2020-21 was driven by a sharp fall in input prices that more than cancelled out a fall in production due to Covid, the GVA growth in 2021-22 was because of high growth in industrial output.

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"The ASI results for the year 2021-22 exhibits the resilience shown by the Indian manufacturing sector and tells the unique turn-around story of the Indian manufacturing sector after the adverse effect of pandemic witnessed in 2020-21 in terms of output and input contraction and also a marginal fall in employment," the statistics ministry said.

According to the survey, the main drivers of the GVA growth in 2021-22 were industries such as manufacture of basic metal, coke and refined petroleum products, pharmaceuticals, motor vehicles, food products, and chemical and chemical products. Taken together, these industries accounted for roughly 56 percent of total GVA of the manufacturing sector and exhibited a GVA growth of 34.4 percent, while their output rose 37.5 percent.

Worryingly, the growth in fixed capital with the Indian factories has slowed down sharply in recent years from 5.5 percent in 2018-19 and 5.1 percent in 2019-20 to 1.5 percent 2020-21 and just 0.9 percent in 2021-22.