Institute for Social and Economic Change
Working Paper: 468
Status of Unorganised Food Processing Industry in India -
A Study on Key Performance Indicators
This paper examines the structure and composition of the food processing enterprises in the unorganised sector in India and explores the interstate disparities using two recent NSS rounds (67th and 73rd) data. The findings reiterate the fact that the unorganised food manufacturing enterprises are highly labour-intensive, as its share in the total unorganised manufacturing employment is sizable. The sector is undergoing a structural transformation, moving away from establishments to self-owned enterprises in urban India, which in turn, has helped in the attainment of a more rapid growth in labour productivity. A correlation analysis reveals a positive and significant association existing between GVA per worker and capital-labour ratio. A regional analysis reveals that bigger states, with a relatively larger share in enterprises and workers, have performed poorly with respect to GVA per worker and capital-labour ratio. The industry has the potential to eliminate poverty to a fair extent, however, the relatively low-income states (Assam, Bihar, Odisha and Madhya Pradesh) do not account for a substantial share in the workforce, which may erode non-farm employment opportunities that are crucial for poverty reduction. Therefore, the study calls for policy intervention and program incentives on the part of the government in order to lessen these interstate disparities.