STATUS OF SELF EMPLOYMENT IN INDIA
Self employment in India is almost up to 50% of available workforce.
One big reason for the very high retail shop density in India is the fact that there arenâ€™t enough jobs in the other sectors. The results of the 61st round of NSS, released recently, show that while wage employment is falling self-employment is increasing.
Roughly half of Indiaâ€™s working population is no longer working for an employer, whether on a casual or on a regular basis. This segment is instead eking out an existence on its own. While this mostly comprises cultivators, the trend is significant in urban areas too.
More and more workers are being crammed into certain types of services like trade, construction and hospitality. Besides occupations such as pulling cycle rickshaws (just selling labor to random buyers), the other major means of earning or supplementing incomes is the retail trade — selling tea, vegetables or peanuts, or just working in shops.
The large disposable income in the hands of one section of the population helps maintain many of these shops. So, what happens when retail chains wade into this ocean of small shops?
A study by the US Bureau of Census of the major restructuring that shook up the US retail industry in the 1990s indicates that large national chains displaced the single unit stores through use of technology, sourcing cheap materials and squeezing out the small retailer.
Will the big chains provide goods at cheaper rates? Perhaps they will. According to research done by retail consultant KSAâ€“Technopak, the consumer pays about 3.5 times of the cost that the farmer gets for agricultural produce like vegetables.
The same study shows that even if there is one consolidator in the field, prices will be 2.4 times those given to the farmer.
By controlling both ends of the supply chain, buying cheap and selling dear, they will still be raking in enormous profits. If this indeed is the case, lower prices draw consumers to the big chains. And the net result will be that shop density in India will ease up. This may affect self employment initially but after a while the big retail chains may be able to absorb more people as their employees including the semi-urban areas population.