TL Project- Unorganised Sector

7/27/2019 TL Project- Unorganised Sector

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Importance of Unorganised Sector

Unorganised or informal sector constitutes a pivotal part of the Indian economy. More than90 per cent of workforce and about 50 per cent of the national product are accounted for bythe informal economy. A high proportion of socially and economically underprivileged

sections of society are concentrated in the informal economic activities. The high levels ofgrowth of the indian economy during the past two decades is accompanied by increasinginformalisation. There are indications of growing interlinkages between informal and formaleconomic activities. There has been new dynamism of the informal economy in terms ofoutput, employment and earnings. Faster and inclusive growth needs special attention toinformal economy. Sustaining high levels of growth are also intertwined with improvingdomestic demand of those engaged in informal economy, and addressing the needs of thesector in terms of credit, skills, technology, marketing and infrastructure.

Economic Contribution of Unorganised Sector

The informal sector contributes to the economy and caters to the wide ranging requirements

of formal sector. The non-farm informal enterprises are predominantly own accountenterprise and enterprises operated in self employed mode, more particularly in urban areas.

In the informal sector people often undertake multiple jobs, pursuing of multiple jobs by aperson may be taken as a sign of insecurity in jobs. A single job or even two may generateincome barely enough for subsistence. It therefore necessitates knowing the size of the classof persons who are forced to take up multiple jobs just for a living to address the issue of howto mitigate these conditions of job- insecurity.

Workforce and Number of Jobs5 in Unorganized Sector

The labour contribution in the economic activities is generally seen from two maindimensions: (i) population share in workers, their nature and type of participation, and (ii)number of jobs/positions in the enterprises. The estimates of workforce and jobs inunorganised sector may be worked out from workforce participation rates (WPRs) of NSSOEmployment Unemployment Surveys (EUS) and population estimates from the PopulationCensus, separately for rural and urban areas and also by gender. The total workforce soestimated through this procedure refers to the number of jobs performed and is taken as thecontrolling total. The workforce in each industry group estimated from the EUS is then cross-validated with the workforce data available from the decennial population census, to checkfor inconsistencies. Suitable adjustments in workforce estimates are made from the

population census for some of the industry groups, for which the sample survey estimates are

not considered reliable, without changing the total estimated level of workforce from theEUS.

Once the industry-group wise total workforce is estimated by using workforce participationrates (WPRs) from EUS, the workforce is divided between organized (comprising publicsector and private organized sector) and unorganized sectors. The total labour input and theshare of organised sector is presented in tables below. The data on total estimated workforcein public sector and private organized sector is available annually from the administrativesources6, which was used in the Indian NAS till the 1999-2000 base year series. However, inthe NAS series with 2004-05 base year, data on employment in organized sector7 too (alongwith the total employment) has been taken from the EUS of NSSO, which provides


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employment by type of units (enterprise type code in the questionnaire), in which they areemployed. The residual is the labour input in unorganized sector.

Estimated Workforce and Number of Jobs from the 61st Round of EUS

Adjusted for Census Projected Population for the Year 2004-05

Share of Labour Input in unorganized Sector -2004 (%)

Logistics

Industry structure

Logistic is defined as management of business operations such as acquisition, storage,transportation and delivery of goods along the supply chain which involves string of activitiesthrough various modes of infrastructure and transport points. Strong economic growth,increase in domestic and international trade together with increased outsourcing of logisticneeds by industries have driven the logistic sector in India. In the present scenarioIndia is emerging as one of the world's leading consumer market with the raise of middleincome group. Estimated at US$ 991 billion in 2010, total consumption expenditure is

expected to grow to nearly US$ 3.6 trillion in 2020. Food, housing & consumer durables andtransport & communication are expected to be the Top 3 categories, accounting for 65

percent of consumption in 2020. The FMCG sector alone is expected to grow at a base rate ofat least 12 per cent annually to become an INR 4000 billion industry by 2020. To servicesuch large market at shortest possible time with least cost, the logistics sector is expected to

play an important role in accessing this emerging market and enabling this growth.

Currently India's logistic sector is valued at around US$110 billion and is expected to touchUS$200 billion by 2020. The cost of logistics in India is valued at 13 - 14% of GDP where asin developed nations the cost is in the range of 7-8% of their GDP. Since the cost of logisticsis a key component in the overall cost of a product or service, manufacturers and providers of

various services are always on a constant search for more efficient and cost effective logisticssolutions, which would make them more competitive in the national and international


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markets. Currently the players in this sector broadly consist of local transporters, transporterswith some value added services like warehouse and integrated players providing 3PLservices.

Key drivers of growth

Economic growthIndia has witnessed strong economic growth and GDP in last five years. Along withliberalization, rise in trade and export together with progress of service sector and market sizehas paved the way for growth of logistic sector. India today is viewed as an importantmanufacturing hub. Consequently the need of logistic services such as transportation,handling warehousing has gone up sharply across all industries.

Infrastructure investmentTransportation cost constitutes major portion of overall logistic cost. Increased expenditureon transportation infrastructure would bring more efficiency by creating time and place utility

for goods. Investment in the logistics infrastructure has been raised from $201 bn under the10th Plan to $492 bn under the 11th Plan.

GlobalisationGlobalisation of manufacturing sector coupled with technological enhancement has helpedindustries across globe to go for cost saving options by way of outsourcing.

GST

With current tax structure decisions in logistic sector are based on tax avoidance rather thanoperating efficiency. Proposed introduction of a Goods and Services Tax (GST) are expectedto significantly reduce the number of warehouses which manufacturers are required tomaintain in different states, thereby stimulating integrated logistics solutions.

Express IndustryExpress industry in India offers distribution services of documents, small packages andfreight on time definite basis carried by fleets of fully owned or dedicated aircraft, trucks,trains and delivery vans both in domestic and overseas. The industry is highly fragmentedwith large number of domestic players from unorganized segment and few global players.

According to Express Industry Council of India, Express industry is valued at Rs 90 bn whichis expected to grow at 25% and carrying over 1 bn shipments yearly. It employs over 1 mnpeople and contributes over Rs 6 bn in federal taxes. The players of Indias express servicesindustry can be broadly classified into three segments: large mainly organised players whooperate on a national and international level; medium regional players whose operations areconcentrated within particular geographical areas; and small players who are unorganised.

3PL3PL companies provide one stop shop logistic services to its customers for part or all of theirsupply chain management. Among the services 3PLs provide are transportation,warehousing, cross-docking, inventory management, packaging, and freight forwarding.

Increased focus on manufacturing activities by industries and potential for significant cost


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reduction has made many small and medium companies to opt for 3PL services for theirlogistic needs. Planning commission of India has estimated the Indian 3PL market, at aboutXLII US$ 890.3 mn in 2005 which is expected to grow at a CAGR of 21.9% to reach US$3556.7 mn in 2012. The various sectors which have contributed significantly to 3PL growthinclude automobile, IT hardware, FMCG and retail. The Indian 3PL industry can be divided

into three distinct tiersnational major 3PL companies with nationwide presence, regional3PL companies with strong presence in one or two regions, and small remote 3PL companies.

4PL

Fourth-party logistics (4PL) differs from 3PL in that it is primarily a strategic partnershipwith the client rather than a tactical engagement with a supply chain function. They work as

business process providers and coordinates with various 3PL. The no of companies offering4PL services are still low.

Container logistic:This segment consists of inland container depot (ICD) and container freight station (CFS) is

also one of the fastest growing segments of logistic sector. ICD and CFS mainly carry outancillary activities such as handling, sorting, stuffing and de stuffing and storage pertaining toimport and export of goods. The concerns identified mainly include procedural issues andhigh cost of developing facility, lack of technologically advanced equipments. India has 130CFS and 61 ICD, with 10 mn TEUs compare with China which is 150 mn TEUs with 3000ICDs and CFS and global volume of 600 mn TEU. Currently More than 40% of up-countrycargo is being transported to CFSs for carting and is containerized at CFS and transported toJawaharlal Nehru Port (JPT) for loading on the vessels at JNPCT, NSICT and GTI.

Warehouse and logistic park

Warehouse and logistic park is crucial link of logistic more so in case of just in time supply.unlike ICD and CFS which are developed for EXIM cargo, warehouses and logistic parks areestablished for handling domestic cargo. As on the 31st March, 2010, Central WarehousingCorporation operated 487 warehouses with a total storage capacity of 1059.8 MMT withcapacity utilization ratio of 85%. Indian railway is also developing logistic parks andassisting private players to acquire land near railway stations. However there are still lesserno of logistic park in India and they are looked upon as mere warehouse station rather thanvalue added service provider. In terms of modernization there are approximately 7-8% ofwarehouses which are well equipped with racking systems, palletization and standardization,

having leak proof structures, 24 hour security, multi user facility located near optimallocations with best use of automation and IT and about 3-4% of logistic parks with modernamenities.


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Newspaper Logistics

In a newspaper organization like Mail Today, one of the rising newspapers from the TVToday Media group, in the Delhi-NCR region, there are various factors that determine thesuccessful operation of the sales and distribution channels. Accordingly, even minor issues in

these operations can adversely affect the newspaper. A customer may choose a newspaper forvarious reasons. However, its up to the newspaperagencies to communicate to the customerthat their newspaper can deliver all the values a customer may look for. The reach and

popularity of a newspaper to a large extent depends on its distribution network. Here we havecarried out an analysis on the delivery and sales management of the Mail Today in order to

better understand their channel and also identify and provide possible solutions to anyshortcomings.

TL Project- Unorganised Sector

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