BackBarefoot business
Millions of Indians are leaving farms are being absorbed by informal economy rather than large firms that policymakers have been banking on
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India has seen explosive growth in tiny enterprises. The country now has 59 million enterprises that provide work to 127 million people. Seventeen million new enterprises have been added since 2005.
The economic census released by the government this week suggests that millions of Indians who are leaving overcrowded farms are being absorbed by the informal economy rather than the large firms that policymakers have been banking on. It is to be seen whether these enterprises in the informal economy get more policy attention.
That many have made the shift despite rising rural wages means they found value in their new enterprises, as Credit Suisseās Neelkanth Mishra points out in a report. Higher wages in general are an indicator of robust employment growth. One reason for this is that higher prices for farm goods and higher rural wage rates have helped generate localized demand that is met by these small firms. A similar pattern was seen in the recent rural housing boom.
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