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Service Producing Manufacturing Units and Their Impact on Sectoral GDP

Manufacturing services are characterised as outsourced parts of a total production process and comprise output of those manufacturing activities that are performed on the physical inputs owned by units other than the units providing the service. According to standard industrial classifications, these are included in manufacturing. Sixty-four per cent of the unregistered manufacturing establishments in India are, in fact, engaged - more often than not solely - in providing manufacturing services. Generally, these activities are treated as "manufacturing" while estimating domestic product or supply side aggregates, but as "services" while estimating expenditure or use side aggregates. This paper presents a profile of the manufacturing services providing segment of the unregistered manufacturing sector and briefly dwells on the ambiguities inherent in the accepted definitions of "manufacturing" activities and "services". It illustrates the implications of the dual treatment in estimating sectoral distribution of domestic product and concludes that distinguishing manufacturing services from other manufacturing activities in the industrial classification might help resolve this issue as well as related problems in a wide range of applications.

Service Producing Manufacturing Units and Their Impact on Sectoral GDP

Manufacturing services are characterised as outsourced parts of a total production process and comprise output of those manufacturing activities that are performed on the physical inputs owned by units other than the units providing the service. According to standard industrial classifications, these are included in manufacturing. Sixty-four per cent of the unregistered manufacturing establishments in India are, in fact, engaged – more often than not solely – in providing manufacturing services. Generally, these activities are treated as “manufacturing” while estimating domestic product or supply side aggregates, but as “services” while estimating expenditure or use side aggregates. This paper presents a profile of the manufacturing services providing segment of the unregistered manufacturing sector and briefly dwells on the ambiguities inherent in the accepted definitions of “manufacturing” activities and “services”. It illustrates the implications of the dual treatment in estimating sectoral distribution of domestic product and concludes that distinguishing manufacturing services from other manufacturing activities in the industrial classification might help resolve this issue as well as related problems in a wide range of applications.

VISHNU KUMAR, ALOKE KAR, SANJAY

I Introduction

T
he national industrial classification (NIC), or for that matter international standard industrial classification (ISIC), essentially consists of recognisable groups of productive processes or economic activities. In these classifications, activities are grouped according to the distinctive features of processes employed. The NIC and the ISIC are not based on the type of products (goods and services) that constitute the output of an economic unit1 but on the kind of process it employs. In particular, the ISIC Rev 4 [UNSD 2005] defines “manufacturing” as a process that “… comprises the physical or chemical transformation of materials, substances, or components into new products”. As a result, units engaged in transforming materials on their own or on contract with other units to process their materials for them are both included in manufacturing. The ISIC Rev 4 further clarifies that “manufacturing units may process materials or may contract with other units to process their materials for them. Both types of units are included in manufacturing.” For example, custom tailoring is classified under manufacturing in the ISIC, as this activity involves transformation of materials though all that is paid for is the tailoring services provided. As a general rule, a manufacturing unit is engaged in the transformation of materials into new goods or products. The new product is the material output of a manufacturing unit. But, for units undertaking manufacturing activity on contract with others, the output consists exclusively of services without any material output. In the central product classification (CPC) version 1 [UNSD 1997], services involving manufacturing processes undertaken for a fee or on contract are called “production services”. In the draft CPC version 2 [UNSD 2006], these are classified as “manufacturing services on physical inputs owned by others” and are characterised as outsourced portions or parts of a total production process. These services include those performed on the physical inputs owned by units other than the units providing the service. These have special significance in the Indian context, as a large number of establishments classified in manufacturing according to the NIC are, in fact, engaged – more often than not solely

– in providing services of transforming materials on contract with others. The services provided by such establishments are henceforth called “manufacturing services” in this paper. The ASICC used for conducting the annual survey of industries (ASI) and the enterprise survey on unregistered manufacturing in India, however, do not recognise “manufacturing services on physical inputs owned by others” as a separate group of products.

The present paper is mainly concerned with the question of classification of manufacturing services. Though the question of classification does not have a direct bearing on measurement of domestic product as such, the inclusion of manufacturing services in manufacturing has obvious implications that deserve a closer look for estimating sectoral distribution of domestic product. Section II presents a profile of the manufacturing services providing segment of the unregistered manufacturing sector and seeks to illustrate its importance in terms of prevalence. The estimates presented in this section are derived from the unit level data of the survey on unorganised manufacturing conducted in the 56th round (2000-01) of the National Sample Survey Organisation (NSSO). Since some of the confusing issues arise from the ambiguities inherent in the accepted definitions, a brief review of the definitions of ‘manufacturing’ activities and ‘services’ is presented in Section III. It is followed by a discussion on the implications of including “manufacturing services” in the manufacturing sector in estimating the sectoral distribution of domestic product.

II Manufacturing Services in India

The enterprise surveys2 conducted by the NSSO are nationwide sample surveys and are carried out on different non-agricultural

Economic and Political Weekly September 15, 2007

economic activities. The enterprise surveys on unorganised manufacturing are conducted for collecting data on those manufacturing establishments that are not regulated under sections 2m(i) and 2m(ii) of the Factories Act. The establishments registered under the Factories Act are surveyed annually under a different scheme called the annual survey of industries. Thus, the surveys on unorganised manufacturing are also called enterprise surveys on unregistered manufacturing. So far, five enterprise surveys on unorganised manufacturing have been conducted, the last being in the 56th round (2000-01)3. The profile of the manufacturing services providing segment of the Indian manufacturing sector discussed here is based on the findings of the enterprise survey of the 56th round of the NSSO. The main findings of the survey relating to manufacturing services (in the unorganised manufacturing sector) are presented in Table 1.

Needless to say, identification of units engaged in the production of manufacturing services does not form an objective of the enterprise surveys on unorganised manufacturing. But, from the detailed data on input and output collected in the survey, it is possible to identify the establishments of this kind. For the purpose of this study, the establishments reporting no material (goods) output are taken to be establishments engaged solely in the production of manufacturing services. The justification of adopting this criterion for identifying the units carrying out manufacturing services is discussed in the next section.

Evidently, there would be units producing manufacturing services other than those exclusively engaged in doing so. In the absence of a separate code for manufacturing services in the ASICC and provision for recording receipts from rendering manufacturing services in the schedule of enquiry for the enterprise survey on unregistered manufacturing, the establishments providing these services as well as producing physical output cannot be identified. Thus, the estimates of manufacturing service producing units and their workers presented in Table 1 should be regarded only as lower limits. However, since the data collected from most of the establishments in the sample pertain to the last 30 days of their operation preceding the date of survey, a small fraction of those identified as manufacturing service producing (MSP) units may actually be not so classifiable. Some units not reporting any material output during “the last 30 days” may be involved in transformation of material on their own during the reference year.

Notwithstanding these limitations of the criterion adopted for identifying MSP units, it is seen from Table 1 that over 64 per cent of the establishments in the unorganised manufacturing sector were solely engaged in the production of manufacturing services. Moreover, the MSP establishments had a share of 50 per cent in the GVA in unorganised (unregistered) manufacturing, which, in turn, accounts for about 34 per cent of the gross value added in the entire manufacturing sector4. Thus, leaving aside the prevalence of the activity in registered manufacturing, manufacturing services account for at least 17 per cent of the total GVA in the manufacturing sector. These figures unquestionably establish the need for closer examination of the associated measurement problems.

Of the 47 million jobs in manufacturing, 37 million were in unregistered units other than small scale industry (SSI) units in 1999-2000 [CSO 2006]5. This is of the same order as the estimate of the number of workers in unregistered manufacturing in 2000-01 obtained from the enterprise survey of the 56th round of the NSSO. It is seen that, of these 37 million, as many as 20 million (54 per cent) were engaged in MSP units. Characteristically, the MSP establishments are small and are run without hired workers. The results of the survey reveal that as much as 87 per cent of the MSP establishments did not employ hired workers. Mostly the MSP establishments carry out their activities on materials supplied by their clients – about 78 per cent of them did not report any expenditure on material input (other than fuel, lubricants, stationery and consumable stores, packing materials, etc). These establishments derive their principal income in the form of commissions and service charges – as much as 95 per cent of their receipts were of this kind. As a result, in spite of the major shares of the MSP units in employment and GVA, the total receipts of the MSP units form just about 22 per cent of the total receipts (output) of unregistered manufacturing.

The activity of producing manufacturing services is carried out predominantly in certain specific sub-sectors of the manufacturing industry. Table 2 gives the number and percentage of MSP establishments for the top 25 economic activities with high (in terms of numbers) MSP establishments. About 89 per cent of the establishments pursuing these activities are MSP establishments. In most of these activities, over 90 per cent of the establishments are MSP establishments. Among these, the activities of custom tailoring6, flour milling (‘aata chakkis’) and jewellery making mostly serve households directly. Among the rest, the MSP units pursuing activities of manufacture of all types of textile garments and clothing accessories, weaving, manufacture of cotton and cotton mixture fabrics, manufacturing matchboxes and diamond cutting and polishing and other gem cutting and polishing are most likely carried out by MSP establishments for other businesses. MSPs pursuing other activities appear to be serving both households and businesses.

III Definition of ‘Services’ and MSP Activities

The act of providing a “service” has been defined as a process that creates benefits by bringing about a change in the customers or in their tangible possessions, or in their intangible assets. But a change in customers’ tangible possessions may involve physical or chemical transformation of materials that also qualifies to be regarded as a manufacturing process. Owing to this overlap in the underlying concepts, the boundary between

Table 1: Manufacturing Services in Unorganised Manufacturing Sector – Enterprise Survey NSS 56th Round

Parameter Estimate

All Unregistered Manufacturing Establishments 1 Number of establishments (000) 17,024 2 Number of workers (000) 37,082 3 Total receipts (Rs crore) 187,186 4 Gross value added (Rs crore) 60,195 Manufacturing Service Producing (MSP) Unregistered Establishments 5 Number of establishments (000) 10,835 (64) 6 Number of workers (000) 20,146 (54) 7 Total receipts (Rs crore) 41,431 (22) 8 Gross value added (Rs crore) 30,175 (50) 9 Number of establishments with no expenditure

on material input (000) 8,425 10 Percentage of 9 to 5 78 11 Number of establishments without hired workers (000) 9,478 12 Percentage of 11 to 5 87 13 Value of commissions received (Rs crore) 39,323 14 Percentage of 13 to 7 95 15 Value of total material input (Rs crore) 2,490

Note: Figures in parentheses indicate the percentage of aggregates relating to MSP units to those of all units.

Economic and Political Weekly September 15, 2007 “manufacturing” and the activities of providing “services” in the existing classification systems of ISIC and NIC is somewhat blurred. It is precisely the ambiguity inherent in the definitions that is addressed in this paper.

Till recently, though there were some attempts at defining “services”, there was no internationally agreed definition. To the definition of “services” cited above and which he himself had suggested earlier, Peter Hill added the following:

… it is inherent in the idea of a service that it should be provided to some economic unit. In this context, the verb “provide” always carries an indirect object as well as a direct object, explicitly or implicitly. This is a marked contrast to goods production where the producer may have no idea who will acquire the goods on which he is working. A farmer may grow crops in complete isolation from his eventual customers, but a teacher cannot teach without pupils.

An additional criterion suggested distinguishing “goods” and “services” is that while ownership of the former is well defined, the latter cannot be owned. However, as virtually all goods embody services, it is quite possible to own “services” embodied in tangible assets as well as in consumable goods. But, on their own, “services” can neither be preserved nor owned.

All these ideas were assimilated in the system of national accounts 1993 (SNA 1993) [ISWGNA 1993] that provides an exhaustive definition of services which serve a wide range of applications. It defined services as heterogeneous outputs produced to order and typically consist of changes in the conditions of the consuming units realised by the activities of producers at the demand of the consumers. The following are the distinguishing characteristics of services laid down in SNA 1993:

(1) Services are intangible while goods are tangible.

  • (2) Services are produced and consumed simultaneously and thus they cannot be stored.
  • (3) Services are not separate entities over which ownership rights can be established (but for those embodied in goods).
  • (4) Service outputs are produced to order and cannot be traded or transported or transferred separately from their production.

    (5) The production of services must be confined to activities that are capable of being carried out by one unit for the benefit of another.

    However, there is a group of activities, generally classified as service industries, some of whose outputs have characteristics of goods. These are those industries concerned with the provision, storage, communication and dissemination of information, advice and entertainment in the broadest sense of those terms. The products of these industries, where ownership rights can be established, may be classified either as goods or services depending on the medium by which these outputs are supplied.

    Table 3: Distribution of GDP (Rs Crore) by Broad Industry and Commodity Groups

    Broad Industry/ 1998-99 Product Group Distribution of GDP by Industry Product (NAS 2005) (IOTT)

    1 Agriculture, forestry and fishery 442,494 432,995

    (I-O sectors 1 to 22) (27.7) (27.1) 2 Mining, manufacturing, electricity, gas

    and water supply and construction 423,546 387,629

    (I-O sectors 23 to 102) (26.5) (24.3) 3 Services 732,087 777,503

    (I-O sectors 103 to 115) (45.8) (48.7)

    3.1 “Selected services” 203,527 225,134

    (I-O sectors 111 to114) (12.7) (14.1) 4 Total 1,598,127 1,598,127

    (100.0) (100.0)

    Notes: 1 Figures in parentheses are percentage shares of the broad industry/ commodity groups. 2 The domestic product of the industry group “selected services” is the sum of the GDPs of “real estate, ownership dwellings and business services” and “other services” as given in Statement 10 of NAS 2005 [CSO 2005b]. 3 The I-O sectors are mentioned in parentheses for each of the broad industry/product groups.

    Table 2: Top 25 Economic Activities with High (in Terms of Number) MSP Establishments

    Sl NIC Description Number of Establishments Percentage No 1998 MSP All of MSP Establishments

    1 18105 Custom tailoring 2,487,479 2,510,555 99.1 2 16002 Manufacture of bidis 1,964,697 2,054,277 95.6 3 15311 Flour milling 814,633 840,631 96.9 4 20221 Manufacture of structural wooden goods 755,320 805,673 93.8 5 17115 Weaving, manufacture of cotton and cotton mixture fabrics 465,715 591,249 78.8 6 36911 Manufacture of gold, silver and other precious metal jewellery; precious and semi-precious stone jewellery 406,145 465,764 87.2 7 17291 Embroidery work and making of laces and fringes 289,884 293,135 98.9 8 36101 Manufacture of furniture and fixtures made of wood, cane and reed 265,485 346,079 76.7 9 20295 Manufacture of wooden agricultural implements 211,513 224,392 94.3 10 18101 Manufacture of all types of textile garments and clothing accessories 203,070 235,106 86.4 11 28932 Manufacture of tools of a kind used in agriculture, horticulture or forestry; carpentry,

    mechanical assembly work 188,054 251,079 74.9 12 15312 Rice milling 179,928 403,881 44.5 13 17116 Weaving, manufacture of silk and silk mixture fabrics 166,086 202,245 82.1 14 17292 Zari work and making of other ornamental trimmings 125,263 128,066 97.8 15 24291 Manufacture of matches 97,571 100,415 97.2 16 17223 Manufacture of woollen carpets 82,569 88,153 93.7 17 36996 Manufacture of imitation jewellery 71,072 78,736 90.3 18 24248 Manufacture of agarbatti and other odoriferous preparations 65,246 73,880 88.3 19 17111 Preparation and spinning of cotton fibre including blended cotton 64,854 78,532 82.6 20 15316 Manufacture of breakfast foods obtained by roasting or swelling cereal grains 58,142 258,493 22.5 21 17118 Weaving, manufacturing of man-made fibre and man-made mixture fabrics 51,824 64,325 80.6 22 22219 Printing and allied activities, nec 51,160 74,329 68.8 23 36912 Diamond cutting and polishing and other gem cutting and polishing 47,449 48,319 98.2 24 18109 Manufacture of wearing apparel, nec 47,387 52,004 91.1 25 36998 Manufacture of other made-up textile goods except apparel 46,972 52,287 89.8

    Total 9,207,518 10,321,605 89.2

    Economic and Political Weekly September 15, 2007

    On the other hand, the activity of manufacturing service production, though classified in manufacturing, satisfies all the above criteria to be regarded as service production. Besides, the MSP units earn mainly service charges and do not have tangible output of their own. These economic activities do not produce an output that they can themselves own and thus should ideally be classified as “services”.

    What is more important to note in this context is that the client production units for whom the MSP units undertake transformation of materials under contract are also classified in the manufacturing sector, whether or not the clients themselves carry out any “transformation of materials”. This is essential for accounting purposes, since the quantity and value of production of tangible products can be arrived at only if the client units are treated as goods producing units. It is indeed a departure from the general principle of industrial classification that lays more stress on the process of production employed by a production unit than the type of product it markets.

    IV Implications for Estimating Sectoral Distribution of Domestic Product

    In general, the shares of goods and services in production and expenditure aggregates are not the same. While the activities of trade, freight transport and other distributive services are considered service activity in the production account, commodities purchased by households and businesses from traders are treated as goods, which include all the distributive services embodied in the commodities. But, the practices followed for national accounting take care of these while compiling macroeconomic aggregates, in particular while compiling input output transaction tables (IOTT) or while applying the commodity flow approach (or supply use table approach) of estimation of expenditure and production aggregates.

    Treatment of MSP units as manufacturing establishments, however, affects the balance of the macroeconomic identities in a different way. In the book of accounts of a diamond dealer, the payment to those cutting diamonds for him are recorded as payment of service charges, while the output of the diamond cutting industry falls in the manufacturing sector, i e, production of goods. Moreover, if the diamond dealer is treated as a trader, the value of finished diamonds is not going to be included in the output of manufacturing industry, leading to distortion even in the sectoral distribution of domestic product by industry. Evidently, diverse treatments of the same product on the supply and use sides can potentially lead to

    Table 4: Output to Value Added Ratio (GVO-GVA Ratio) in Manufacturing and Manufacturing Services

    I-O sector/sub-sector GVO-GVA Ratio

    1 Registered manufacturing 4.9 2 Unregistered manufacturing 3.1 3 All manufacturing 4.3 4 Unregistered MSP units 1.4 5 ‘Other services’ (I-O sector 114 in absorption matrix) 1.6 6 ‘Other services’ (I-O sector 114 in CxC I-O table) 2.1

    Notes: 1 GVO-GVA ratio stands for gross value of output to gross value added. 2 The estimates for unregistered manufacturing are based on the results of ES of 56th round of NSSO and pertain to 2000-01. 3 The rest of the estimates are based on IOTT 1998-99. Only the ratio for ‘all manufacturing’ is obtained as the weighted average of the ratios of registered and unregistered manufacturing, with weights of 66 and 34 respectively.

    severe inconsistencies in IOTT. This kind of inconsistency is in principle caused by lack of homogeneity in the production function, i e, within-industry (or I-O sector) homogeneity in respect of products produced.

    The accepted framework of compiling IOTT, however, provides for standard methods of separating data on output and associated inputs of main and secondary products that help derive symmetric and consistent I-O tables [UN 1999]. For the compilation of IOTT in India, as the data for MSP units and the units undertaking transformation of material of their own accord are not available separately, manufacturing service by even the units solely engaged in providing it is treated as secondary product of all individual I-O sectors of manufacturing industries. In effect, while MSP units are treated as part of manufacturing industry, their products are treated as a kind of service. This is clearly reflected in the “absorption” (input flow) and “make” (output flow) matrices of IOTTs for 1993-94 and 1998-99 [CSO 2000, CSO 2005a].

    As seen from these matrices, the value of “other services” (I-O sector code: 114) on the use side exceeds the value of that supplied by the sector itself by Rs 64,000 crore (80 per cent) in 1998-99 and by Rs 25,000 crore (86 per cent) in 1993-94. As a general rule, the use side figure of output for an I-O sector and the output of the corresponding industry in these matrices are not the same, since the “industry” identified with an I-O sector often produces commodities that are main products of other I-O sectors. But, in the case of I-O sector 114, the divergence owes more to treating the MSP units as manufacturing units (which follows the internationally recommended classification of the ISIC) than to the product composition of individual production units.

    For derivation of the commodity x commodity input-output (CxC I-O) table in India, all commission and service charges paid for work done by others are treated as input of services, even when the “work” involves a manufacturing process. Similarly, receipts of units (including those classified under manufacturing) for work done for others are taken as value of output of services. These payments and receipts for work done for others are included in the I-O sector 114, i e, “other services”. The I-O sector 114, as a group of industries, consists of real estate, religious, legal, recreation and entertainment, domestic laundry, cleaning and dyeing, barbers and beauty shops and other personal services, sanitary services etc, wrapping, packing and filling of articles, and information and broadcasting services. Inclusion of payment and receipts for work done for others in I-O sector 114 implies that “manufacturing services”, by the product classification, are included in “services”, as they should be.

    The CxC I-O table is derived from the “absorption” and “make” matrices by separating the output and inputs associated to the by-products and joint products from those associated to the main product of an I-O sector and transferring them to the I-O sector to which they characteristically belong. As most of the industries constituting an I-O sector also produce some secondary products that characteristically belong to other I-O sectors, the distribution of domestic product by industrial sectors ought to differ from that by broad commodity groups of (1) agriculture, forestry and fishing (I-O sectors 1 to 22);

    (2) mining, manufacturing, electricity, gas and water supply and construction (I-O sectors 23 to 102); and (3) services (I-O sectors 103 to 115). Table 3 reveals how different the two distributions are.

    Among the activities appearing in Table 2 (in which there are large numbers of MSP units), the activity of “custom tailoring”

    Economic and Political Weekly September 15, 2007 is treated as service for both derivation of the CxC I-O table and compilation of GDP. Besides, some manufacturing activities like extraction, breaking, milling, washing, cleaning, grading and processing of agricultural produce are included in the I-O sectors of the broad group “agriculture, forestry and fishery” in the IOTT. Table 3 reveals that the share of services is higher in the distribution by industry than that in the distribution by product, by about three percentage points. Much of this difference is explained by the difference between the shares of “selected services” in the two distributions, which in turn is due principally to that of “other services”. Separating output and associated input of manufacturing services from manufacturing and transferring them to “other services” is the main reason for the higher share of the latter in the distribution of GDP by product groups.

    V Concluding Remarks

    The derivation CxC I-O is based on one of the recommended methods for separating secondary products that is founded on the assumption (called “industry technology” assumption) that inputs are consumed in the same proportions by every product produced by a given industry. This means that principal and secondary products are all produced using the same technology, i e, the same input structure. Given that the data are collected at the establishment level and consist of data on MSP units which are not engaged in any other activity, it should be possible to collect input data separately for these units. This would permit estimation of the input structure free from the “industry technology” assumption, which does not appear to hold good for transferring out manufacturing services from manufacturing to “other services”.

    Since “industry technology” is adopted for derivation of the CxC I-O table, the input structure of MSP units is assumed to be the same as that of other manufacturing I-O sectors. The estimates of gross output to value added (GVO-GVA ratio) presented in Table 4, however, reveal that the input structure of MSP units is characteristically different from that of the entire manufacturing sector. The “industry technology” assumption used for derivation of the CxC I-O table causes an undesirable upward shift in the GVO-GVA ratio of the “other services”, in which manufacturing services have a major share. This indicates that the assumption is not appropriate for transferring manufacturing services from manufacturing to “other services”. Given the prevalence of MSP units in the Indian economy, this is likely to affect the estimate of sectoral distribution by product group seriously. This being an exercise carried out with the data on only one part (unregistered) of the manufacturing sector, it is not possible to provide an estimate of the magnitude of its effect considering all MSP units.

    Needless to say, there is no perfect method for separation of secondary products from the main products for derivation of the CxC I-O table. But, once the manufacturing services are clearly identified and treated separately, the input structure can be worked out independently for these activities, without depending on any assumption – at least for the units solely engaged in the production of manufacturing services.

    This brings us back to the issue of classification. It is indeed possible to obtain estimates on manufacturing services production by cross classifying the establishments by ISIC and CPC (draft version 2). Yet, the option of introducing separate categories for manufacturing service production in industrial classification deserves consideration, particularly because the principle of grouping by “productive process employed” is not universally applicable. The requirement for estimates of output of manufactured goods dictates inclusion of the client production units served by MSP units in the manufacturing sector, even when the clients do not undertake any transformation of materials on their own. Otherwise, i e, if the client units are classified in other sectors, the sectoral distribution of GDP by industry as well as that by product would be distorted. Distinguishing manufacturing services from other manufacturing in the product classification used for surveys on manufacturing, ie, ASICC, as well as in industrial classification should not only help resolve this issue but also the related problems in a wide range of applications.

    EPW

    Email: v-kumar@nic.in

    Notes

    [This paper expresses the authors’ personal views and does not represent the opinions of the organisation to which they belong.]

    1 The Central Product Classification (CPC) formulated by the UNSD is the internationally used classification of products [UNSD 1997]. In India, a classification called annual survey of industries commodity classification (ASICC) is used for surveys on manufacturing.

    2 Though called enterprise surveys, these are, in fact, surveys of establishments. According to the generally accepted definition, an “establishment” is an economic unit engaged in one or predominantly one economic activity at a single physical location under single ownership control of a firm or enterprise, which may have more than one establishment engaged in different activities at the same location or the same activity at different locations. For conducting the enterprise surveys, however, the NSSO uses the term “establishment” for those units that employ at least one hired worker.

    3 The NSSO is conducting an enterprise survey on unregistered manufacturing in the 62nd round (2005-06). 4 See Table 1 on page 10 of the Brochure on New Series on National Accounts Statistics (Base Year 1999-2000).

    5 The estimates of workforce for this segment of unregistered manufacturing, i e, for the units belonging neither to ASI nor to SSI, were obtained by subtracting the workforce in units covered in ASI (8.2 million) and unregistered SSI units from the total workforce on manufacturing activities [CSO 2006].

    6 For compilation of GVA, custom tailoring is included in the services sector and not considered as manufacturing.

    References

    CSO (2000): ‘Input-Output Transaction Tables 1993-94’, Central Statistical Organisation, Government of India. CSO (2005a): ‘Input-Output Transaction Tables 1998-99’, Central Statistical Organisation, Government of India. CSO (2005b): ‘National Accounts Statistics 2005’, Central Statistical Organisation, Government of India.

    CSO (2006): ‘Brochure on New Series on National Accounts Statistics (Base Year 1999-2000)’, Central Statistical Organisation, Government of India.

    ISWGNA (1993): ‘System of National Accounts 1993’, Inter-Secretariat Working Group on National Accounts, United Nations, New York.

    UNSD (2006): ‘Draft CPC Ver 2 Structure’, prepared as agenda paper for the Thirty-seventh session of Statistical Commission, United Nations Statistics Division, March 2006.

    UNSD (2005): ‘International Standard Industrial Classification of All Economic Activities (ISIC)’, Revision 4, United Nations Statistics Division, New York.

    UNSD (1997): ‘Central Product Classification’, version 1.0, Studies in Methods, Series M, No 77, United Nations Statistics Division, New York.

    UN (1999): ‘Handbook of Input-Output Table Compilation and Analysis’, Studies in Methods, Series F, No 74, United Nations publication, Sales No F.99.XVII.4, United Nations, New York.

    Economic and Political Weekly September 15, 2007

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