Self-employment is growing in India, but incomes are still low

Why in the news ?

The number of self-employed small traders and unregistered businesses in India is growing rapidly, but their incomes remain extremely low. The latest report from the National Statistical Office (NSO), under the Ministry of Statistics and Program Implementation, has revealed the true economic situation of small businesses in the country.

What does the Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2025 report say ?

• The National Statistical Office (NSO) released the Annual Survey of Unincorporated Sector Enterprises (ASUSE) 2025 report.
• This report is based on the economic condition and functioning of small, unorganized, and unregistered businesses in the non-agricultural sector.
• The survey was conducted between January 2025 and December 2025.
• A total of 670,650 establishments were surveyed across the country.
• These included 294,318 establishments in rural areas.
• 376,332 establishments in urban areas were also included in the survey.

5.8 million new small businesses in a year

• According to the report, the number of small and unorganized businesses in India is steadily increasing.
• The total number of such businesses is projected to increase to 79.2 million by 2025, compared to 73.4 million in 2023-24.
• This means that approximately 5.8 million new small and micro businesses were started across the country in just one year.
• This growth has been recorded at a time when employment growth in the organized sector remains relatively slow.
• The report indicates that a large number of people are now earning their livelihoods through small shops, home-based units, repair work, local services, self-employment, and micro-businesses.

7.5 million new jobs created

• According to the report, the non-agricultural unorganized sector generated approximately 7.5 million new jobs in a year.
• Approximately 128.1 million people were employed in this sector between January and December 2025.
• This includes self-employed individuals, salaried employees, family helpers, and other workers.
• Employment growth of 6.2 percent was recorded compared to 2023-24.

Employment Growth in Rural and Urban Areas

• Employment in rural areas increased from 56.1 million to 60 million.
• Employment in urban areas increased from 64.5 million to 68 million.
• Employment growth in rural areas during this period was 6.9 percent.
• While employment growth in urban areas was 5.6 percent.

Earnings are extremely low, even below the minimum wage.

• While the increase in the number of businesses and employment can be considered a sign of economic activity, the report shows that the income, productivity, and social security of small businesses remain extremely weak.
• According to the report, the average gross value added (GVA) per establishment was approximately ₹2.5 lakh per year.
• The average GVA per worker was approximately ₹1.6 lakh per year.
• On a daily basis, the average income of a business is approximately ₹685 per day.
• While the average economic output per worker is approximately ₹440 per day.
• This amount does not represent the worker's actual income, but reflects the total economic value.
• It also includes raw materials, rent, electricity, transportation, and other operating expenses.
• This means that actual earnings may be even lower.

Income Less Than the Minimum Wage

• In most states, the minimum wage is set at ₹15,000 or more.
• Despite this, reports indicate that millions of workers in the unorganized sector and small businesses are forced to work for even lower incomes.

Average Annual Salary

• The average annual salary in the manufacturing sector was recorded at approximately ₹1.40 lakh.
• In the business sector, it averaged ₹1.44 lakh.
• In other service sectors, the average annual income was approximately ₹1.51 lakh.
• On a monthly basis, this income amounts to approximately ₹12,000 to ₹13,000 per month.
• Given rising inflation and the increasing cost of living, this income is considered extremely limited and inadequate.

Small Businesses Trapped in Debt Trap

• According to the report, accessing credit remains a significant challenge for small businesses.
• The average outstanding debt per establishment in the non-agricultural unorganized sector was approximately ₹42,776.
• Although approximately 80 percent of loans were obtained from banks and other institutional sources, the average loan amount remained quite low.
• Small businesses face numerous challenges due to limited capital and inadequate financial support.
• Most small businesses are unable to purchase new machinery.
• They are also unable to invest in modern technology.
• Expanding their business also remains difficult for them.
• This is why most small businesses in the unorganized sector are trapped in low incomes and slow economic growth.

What does this report indicate ?

• The ASUSE 2025 report clearly shows that entrepreneurship and self-employment are growing rapidly in India.
• A large number of people are earning their livelihoods through small businesses and the unorganized sector.
• However, the economic situation of these small businesses remains weak.
• The report states that low income, limited capital, weak social security, and low productivity are the major challenges facing this sector.
• Experts believe that if small businesses receive better policy and financial support, this sector can play a major role in India's economy.

What areas need improvement ?

• Affordable and easy credit access
• Expanded social security
• Technical assistance and digitization
• Skill development and training
• Improved market access
• According to experts, strengthening these facilities can increase the income of small businesses and boost job creation.

Conclusion

The ASUSE 2025 report shows that unorganized and small businesses have become a major source of employment in India. Millions of people earn their livelihoods through self-employment and micro-enterprises, fostering a culture of entrepreneurship.

However, the low income, limited capital, low productivity, and weak social security of these businesses indicate that simply increasing the number of businesses is not enough. If the government strengthens financial assistance, skills development, technical support, and market access, this sector can become a major driver of India's economic growth, job creation, and self-reliance.