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The service sector, also called the tertiary sector, is one of the three parts of the economy in the

Three-sector hypothesis. This hypothesis breaks the economy into three main areas so it can be better understood. The other two are the primary sector, which covers areas such as farming, mining and fishing; and the secondary sector which covers manufacturing and making things. The service sector provides a service, not an actual product that could be held in your hand. Activities in the service sector include retail, banks, hotels, real estate, education, health, social work, transport, computer services, recreation, media, communications, electricity, gas and water supply.[1] The service sector is an important part of the economy. For example, in Australia in 2007, 85% of all businesses were in the service sector.[1]. In 2009 there were more than nine million people employed in the service sector in Australia, which was 86% of all jobs.[1] In India, there has been a huge growth in service sector businesses which made up 55% of India's GDP in 20062007.[2] Computer software businesses in India are increasing at a rate of 35% per year.[2] Increasingly service sector businesses need to focus on what is now being called the knowledge economy.[3] They need to keep ahead of other businesses by understanding what it is their customers want and be in a position to give it to them quickly and at low cost. One good example of this are banks which have gone through enormous changes in recent years. Using information and communication technology, banks have vastly reduced the number of people they need to employ, and lowered the cost of providing bank service. For example, an automated teller machine is able to provide basic banking services 24 hours a day, 7 days a week, in many different places. Before this, banking services were only available from the bank when it was open. Many banks and building societies have joined together to form much lower cost businesses that can make more money from a wider customer base. The key to this process is gaining information about their customers and constantly coming up with new services for them. An example of a company trying to come up with a new service for customers is iCard, which is looking at ways to link mobile phones to computers and social networking.

Indian Service Sector

India depends on service sector heavily around 60% of its GDP and growth. It is also a significant employment generator. Service sector encompasses a variety like tourism, rail freight, logistics, hotel industry; healthcare, financial services like insurance and banking have been growing at 28% over the last 5 years, which is remarkably higher than the GDP growth of 7%. Further, service sector will not be dampened much by the gloom, as healthcare, financial services; tourism has not shown any slackness in the last quarter of 2008. Prospects over the next few years are robust and industry confidence is high. Many feel, the current year may remain flat but it will recover in the last quarters. Indias service industry is also contributing though a meagre 2% service exports but is on growth stage. Investments : Though manufacturing sector takes lion share when comes to garnering share in FDI but services sector have attracted FDI investments around 1/4th of the total investments over the years. With SEZ going into active mode, more investments have been made in IT & ITES.

After success stories in IT, ITES; pharma contracting services, media and entertainment industries have been in lime light. Recent acclaim of Indian media in Oscars and global entertainment will pave way for future investments.
The Services Sector constitutes a large part of the Indian economy both in terms of employment potential and its contribution to national income. The Sector covers a wide range of activities from the most sophisticated in the field of Information and Communication Technology to simple services pursued by the informal sector workers, for example, vegetable sellers, hawkers, rickshaw pullers, etc. The following broad grouping of activities can be considered to form part of the Services Sector:

Trade (b) (c) Hotels and restaurants Transport including tourist assistance activities as well as activities of travel agencies and tour operators Storage and communication Banking and insurance Real estate and ownership of dwellings Business services including accounting; software development; data processing services; business and management consultancy; architectural, engineering and other technical consultancy; advertisement and other business services Public administration and defence Other services including education, medical and health, religious and other community services, legal services, recreation and entertainment services Personal services and activities of extra-territorial organisations and bodies

(d) (e) (f) (g)

(h) (i)


Although the Services Sector has a very pivotal role in the countrys economic development, the database in this Sector is highly disorganised. A major limitation of the existing statistical system in this respect is the absence of a well-organised mechanism for maintaining a regular and proper database for this Sector. Like the Annual Survey of Industries (ASI) that is devoted to collection of data from manufacturing and few other categories of units included in the lists maintained by the Chief Inspectors of Factories, there is no such scheme in the Services Sector for annual collection of data from the units either having a large number of workers or contributing significantly in terms of annual turnover. The main difficulty in this regard is the non-availability of an up-to-date frame of such units. The problem of data collection from this Sector through the Follow-up Enterprise Surveys of Economic Census is compounded by the fact that the Sector is dominated by a large number of unorganised units. Further, the composition of units in the domain undergoes changes at a rapid pace because new units or newer service areas come into existence and others disappear with alarming frequency. Thus, a sound official statistical system should endeavour to address all these methodological issues for properly estimating the size and contribution of the Services Sector marked by a rapid change in its composition.

7.1.5 The Services Sector of the economy can be broadly grouped into three broad segments namely, the public sector, private corporate sector and the household sector. The first two are generally referred to as the organised part of the economy, as the accounts of all the business transactions of these sectors are recorded in specified documents and are made available as public documents at regular intervals. The remaining part of the economy, that is the household or unorganised sector, constitutes all unincorporated enterprises including all kinds of proprietorship and partnerships run by the individuals. 7.1.6 As regards the organised sector, the data contained in various budget documents or reports and the accounts provide the basis for the estimates for the public sector. For the Private Corporate Sector, the annual reports of the companies are the main source of data for estimation of number of workers, gross value added (GVA), etc. The estimation of various characteristics is based on the company finance studies carried out by the Reserve Bank of India taking the annual reports of a sample of companies. The estimates so obtained are suitably inflated to derive the current estimates for the entire population of joint stock companies registered with the Registrars of Companies (ROCs) in the various zones or States of the country. 7.1.7 The Follow-up Enterprise Surveys of the Economic Census (EC) periodically conducted by the Ministry of Statistics and Programme Implementation (MoS&PI) provide estimates of number of enterprises, workers, GVA, etc. for the unorganised Services Sector. The estimates of GVA per worker obtained from these surveys are used as a benchmark for the subsequent years, till the results of the next survey on the same subject are available. The benchmark estimates of GVA per worker are carried forward using suitable indices. 7.1.8 All the joint stock companies registered under the Companies Act are required to submit their annual reports to the Department of Company Affairs (DCA). However, this is an area where there exists huge data gap. The estimates based on the study of a sample of companies, carried out by the Reserve Bank of India, suffer from serious limitations. The sample drawn for this purpose is not based on a scientific sampling procedure, as there is no authenticity in the total frame available with the DCA. Moreover, the size of the sample is not adequate enough to provide satisfactory estimates for the private corporate segment. 7.1.9 As regards data relating to the unorganised Services Sector, it is argued that the estimates of GVA per worker based on the Follow-up Enterprise Surveys of EC are often too low. Further, the estimates of the number of workers in different sub-sectors as per these surveys differ widely with those available from other sources like Employment-Unemployment Surveys of the National Sample Survey Organisation (NSSO) and decennial Population Censuses. 7.1.10 The departments outside the MoS&PI generate a huge volume of data, either as a by-product of their regular activity or through studies meant for generating the required data. However, it appears that these agencies do not take into account the exact data requirements of the Central Statistical Organisation (CSO) for national accounting purposes. 7.1.11 With the increasing use of computers and telecommunication in business transactions, the domain of the Services Sector is growing bigger day by day. The software industry, and particularly its share in external transactions, has grown at a rapid pace during the last decade. Much of these external transactions are carried through the Internet, and thus are not reflected in the regular imports and exports data obtained from the custom ports. The area of mobile commerce (e-commerce) is another emerging field that falls beyond the coverage of the present system of data generation.

7.1.12 After reviewing the existing mechanism for the compilation of Services Sector statistics and the deficiencies of the system, the Commission decided to deliberate on the following important issues for suggesting improvements in the database of the Services Sector: (a) (b) (c) (d) Devising a Proper Classification of Services; Assessing the Quality of the Survey Estimates; Finding out Ways and Means to Collect Data for Emerging Areas; Introducing a Survey of Non-Manufacturing Industries (Bigger Units); and

(e) Working out a Proper Time Frame for Follow-up Enterprise Surveys of Economic Census.


Current Status

7.2.1 In India, a wide variety of industrial classifications, including services, have been used by various organisations entrusted with the task of collection of statistical data in various censuses, surveys, etc. The need to evolve a common industrial classification for the use by different agencies was felt to be extremely important. Accordingly, the CSO took up the task of evolving an industrial classification as early as 1960 and evolved a Standard Industrial Classification (SIC) in 1962. 7.2.2 To incorporate the significant changes in the organisation and structure of industries taking place over a period of time, the necessity to periodically revise the industrial classification has often been felt. With this objective, the CSO revised SIC 1962 in 1970 and accordingly brought out the National Industrial Classification (NIC-70). This was subsequently revised in 1987 (NIC-87), which was further revised in 1998 (NIC-98). 7.2.3 All the industrial classifications developed by the CSO broadly accepted the major features of the International Standard Industrial Classifications (ISIC), with further extension of codes at the ultimate digit level. This was done to give due recognition to the special features of the Indian economy and also to meet the emerging requirements of user organisations. 7.2.4 The NIC-98, which followed the principles of the ISIC-1990 (Revision 3), is a classification of all economic activities, including services, undertaken by the economic units. The NIC-98 codes extend up to the 5-digit level. Total number of such 5-digit codes in NIC-98 is 1021 (see Annexe 7.1 for details). 7.2.5 The NIC classification of the CSO has found wide use in the country. These classifications are used by various divisions of the MoS&PI for carrying out Economic Censuses and sample surveys, for releasing national accounts statistics as well as for other purposes. Further, other important organisations outside the Ministry, like the offices of the Registrar

General and Census Commissioner, India and the Development Commissioner, Small Scale Industries have also found significant use of the NIC classification. The adoption of the NIC by the important organisations mentioned above gives ample scope for cross-examining alternative data sets by industrial categories as available from different sources.

7.2.6 As stated already, NIC-98 is based on the ISIC (Revision 3), which was brought out a decade ago. But newer and newer types of services are coming into existences that have a parallel in other countries. Clearly, there is an urgent need to have an inventory of the emerging service areas and have a detailed classification of these. It may be desirable to have a classification of services in India such that it is comparable with other countries. In this context, the World Trade Organisations (WTOs) List of Services (see Annexe 7.2) sheds important light on the various service areas that have been recognised. While it is likely that the importance of many service areas may differ from country to country, it will be noticed from this List that none of the areas seem irrelevant for the Indian context. It is possible that the level of operation of some of these services may be very low at present in the Indian context, but with progressive development they will tend to change. With increasing communications and free flow of information, it is very likely that services, which seem unimportant today, could acquire significance in the near future. At any rate, the objective to study the WTOs list is to merely provide an indicative list of services. In the WTOs List of Services presented in Annexe 7.2, an indication is given as to whether the various services listed are provided with specific Codes in the NIC-98 or not. A comparison of the two lists reveals the following: (a) (b) (c) Number of sub-categories or activities in the WTOs list 155; Those listed as others in the WTOs list 17; Remaining sub-categories with proper description of activities 138. Out of (c): (i) (ii) 25; Number of activities not listed in the NIC 35; Number of activities that are clubbed with other activities in the NIC

(iii) Number of activities where the NIC either gives specific codes to the activities or splits the activity in the WTOs list into more than one activities 78.
Conclusions and Recommendations

7.2.7 It may be seen that there are cases where NIC-98 gives a more elaborate classification than the WTO list. But in many cases, NIC-98 has scope for further detailing. Thus there is a need for developing a proper Classification of Services. For the purpose of developing the suggested Classification, it is necessary to identify first the variety of services already in existence in India by considering all available sources. The task would involve identification of new activities by:

(a) Looking at the international documents, websites and list of service providers that have made their appearance in the plethora of Yellow Pages of numerous cities and towns across India or in telephone directories; (b) Interacting with various agencies or associations that will be in a position to throw light on emerging areas or new activities; and (c) Examining alternative data sets like those of Follow-up Enterprise Surveys, Annual Survey of Industries as well as production data available from other sources. 7.2.8 Once the new but important activities are identified, the next task would be to classify them appropriately for meeting the requirements of the users. It may be mentioned that at the international level, including WTO, UN systems, IMF and World Bank, an effort is being initiated for properly coding commercial trading in Services, which has been already classified into 12 categories and 155 sub-categories in the WTOs list. 7.2.9 It may also be mentioned that ISIC (Revision 3) took place during the year 1990. But the National Industrial Classification (NIC-98) was developed in 1998, i.e. after a gap of eight years. For maintaining international comparability, there is a need to reduce such gaps in future. In other words, when the next revision of the ISIC takes place, the CSO may immediately consider revising the existing National Industrial Classification. Of course, in the event of no such revision taking place at the international level in near future in the industrial classification, India has yet a case for revising the NIC-98 by properly classifying all important activities that have already assumed significance in the countrys economy, or are likely to do so in near future. 7.2.10 The Commission accordingly recommends that:

(i) The work of identification and the preparation of a list of new activities in the Services Sector that are coming into existence should be carried out on a regular basis. (ii) All such activities should be assigned proper codes within the framework of NIC and International Classification, periodically by the CSO for the benefit of user organisations with a view to maintaining international comparability. (iii) The suggested list of new activities with their codes should be released through the website as well as other media. (iv) Of these new activities, those, which are important at the international level, should be taken up with the organisations like WTO, IMF, etc. for their proper representation in the international classification. (v) Periodic revision of NIC should be attempted within a reasonable time frame after revision of the classification takes place in the international scenario. (vi) The CSO should monitor the work stated above.



7.3.1 The main sources of data in the Services Sector are (a) the Follow-up Enterprise Surveys of Economic Census conducted by the MoS&PI, (b) Department of Company Affairs (DCA), and (c) Reserve Bank of India (RBI). So far as data pertaining to the Corporate Sector are concerned, the DCA and Registrars of Companies are not processing and disseminating the information contained in the annual reports or balance sheets at present. As a result, the estimates of capital formation and valued added for the Corporate Sector are at present based on the company finance studies of the RBI which also suffer from an inadequacy of the sampling frame and limitation of sample size. 7.3.2 The Expert Group on Savings and Capital Formation under the Chairmanship of Dr. Raja J. Chelliah examined the estimates of the Corporate Sector. The Group submitted the report in December 1996. While recognising the weaknesses of the sampling procedure, the Group recommended that the present database of the DCA should be sufficiently broadened so that the reliability of the estimates obtained from the RBI studies is improved substantially. The Commission has studied the deficiencies of the Corporate Sector Statistics in great detail and made a number of wide-ranging recommendations for improvement of the database. 7.3.3 As regards the Follow-up Enterprise Surveys (FuS) of the Economic Census (EC) on the Services Sector, so far twelve such surveys have been conducted (see Annexe 7.3) after the EC was introduced in 1977. In the FuS, a stratified sampling design with villages and urban blocks as the first-stage units and enterprises as the ultimate-stage sampling units is adopted. For selection of the villages and urban blocks, generally the village and urban block-level data of the number of enterprises or workers as per the EC are used as the sampling frame subject to their availability or usability. The FuS provide detailed information on the estimated number of enterprises, workers, fixed assets, working capital, gross value added, etc. for various activities covered in the survey. Apart from the FuS, information on the number of enterprises is also available from the EC and the data of number of workers are available from three more sources namely, the EC, Population Census and Employment-Unemployment Surveys (EUS) of the NSSO. 7.3.4 Normally, a wide divergence between the numbers of enterprises as per the EC and FuS is observed, with EC figures being much lower than the FuS estimates. A similar trend is also observed in the estimates of number of workers as per the two sources. This is despite the fact that the FuS do not take into account the public sector enterprises while the EC does so. A wide divergence in the figures of number of workers as per the FuS, Population Census and EUS is also observed. 7.3.5 The Expert Committee to examine wide variations in data sets on the same subjects (Report submitted in February 2000) examined in great detail the said alternative data sets of the number of enterprises and workers as per the Third EC (1990), FuS conducted around the year 1990 for different activities, Population Census (1991) and EUS (1993-94). A comparative picture of the estimated number of enterprises and workers as per the alternative sources as included in the Report of the Expert Committee is presented in Annexes 7.4, 7.5, 7.6, 7.7, 7.8 and 7.9. The all-India figures as per the alternative sources are quoted in Box 7.2. It may be seen that there are wide divergences in the alternative data sets. The divergence is very pronounced for the transport activity.

7.3.6 The EC and the FuS define an enterprise in exactly the same manner. Hence the numbers of enterprises as per these two sources should ideally be in fair agreement. Studies carried out in the past revealed that the divergences in the number of enterprises as per the two sources are mainly due to an under-listing of enterprises by the enumerators in the EC. As regards the number of workers, the estimate as per the EC is expected to be low because of under-listing of enterprises in the EC as stated above. Another reason for divergences could be the differences in the definition of workers and in the reference period for determining the number of workers as per the alternative sources (see paragraph 5.2.17 of chapter 5 on Industrial Statistics). Divergences in the estimates of number of workers as per the FuS and EUS could partially also be due to the difference in the approaches of the two sources in counting workers. While the former counts the workers by visiting the enterprises, the latter does so by visiting the households. To what extent the observed divergences are explainable due to the differences in the concepts and definitions as stated above needs to be assessed. 7.3.8 In the opinion of the data users the estimates of gross value added (GVA) per worker based on the FuS are sometimes unrealistic and, in fact, they are alleged to be underestimated. Much of the reported data may be based on the accounts, which may be inaccurate. The Commission has observed that there is no regular mechanism to address this grievance by cross validating the estimate of GVA per worker with the estimates of other correlated socio-economic variables available through different surveys or censuses. For example, in the survey on trade, one could explore the possibilities to derive estimate of sales by applying the data on trade margin over the purchase data and accordingly obtain an alternative estimate of GVA per worker based on this derived sale data. Similarly, efforts could be made to evolve a suitable method of data collection for improving the estimate of GVA per worker in respect of certain categories of service providers say, doctors, medical specialists, advocates, etc. The Commission has further observed that the survey reports do not generally discuss the quality of the FuS estimates.


After reviewing the deficiencies, the Commission recommends that:

(i) A unit in the proposed National Sample Survey Office of the National Statistical Organisation should be set up to regularly undertake studies for bringing about improvement in the survey methodologies, including method of data collection, and also suggest measures for minimising non-sampling errors in the surveys. The National Sample Survey Office should publish standard errors of important estimates in the survey reports. These recommendations on the improvement of data quality and release of standard errors of estimates are relevant for surveys pertaining to numerous areas including the Services Sector.

7.4.1 That the Information Technology, Communication and Entertainment Sector (ICE Sector) has already emerged as a significant economic sector is known. Over a period of time, the ICE Sector will be a major driving force for the growth of the Services Sector in particular and the economy in general. But there are obvious problems and limitations for gathering reliable and timely data, on the ICE segment of the Services Sector. Therefore, it is pertinent that

data gathering of the ICE Sector needs proper attention. Although such data will largely fall in the area of National Income System, the Commission makes certain recommendations in the subsequent paragraphs for improvement of the database of this sector. 7.4.2 Within the Services Sector the share of newly-emerging areas, like software exports, e-commerce, etc. and the ICE areas in the GDP is increasing at a fast rate. As ecommerce transactions are unlikely to take place in Physical space, the Commission recognised the need to develop a suitable methodology for estimating this. In this context, it was also felt that the information available on the Internet as also that collected by various associations from their members for meeting their own requirements could be utilised for cross validating the existing data in the Services Sector and taking appropriate measures to improve the reliability of data. 7.4.3 The sphere of entertainment is also one of emerging importance in the Indian context. This is no doubt aided by the boom in satellite TV, cable networks, music (both audio and video) and national and State-level cinema. It is also an area that provides employment to a large number of people. Even though film making has been given industry status recently, a large part of the entertainment industry is still in the unorganised sector and information is hard to come by. However, there is no doubt that the size of one component of the Entertainment Sector, i.e. the film industry is quite large. A recent Study on Copyright Piracy in India (1999), sponsored by the Ministry of Human Resource Development, Government of India, stated in its third chapter: The total turnover of the film industry during 1996 was about Rs.2500 crores. As far as cable and satellite television network is concerned the same study estimated the turnover from the countrys cable industry to be Rs. 1101.60 crores in the year 1997. Clearly, there is a need to look at the Entertainment Sector as an important emerging service area from an economic point of view. 7.4.4 There are a large number of Non-Profit Institutions Serving Households (NPISHs) including Non-Governmental Organisations (NGOs) operating in India. These should also be part of services. Given that NPISHs including NGOs offer employment to a large number of individuals and provide valuable service, it is necessary to obtain detailed information on these. Although there exits a system of filing returns by the NPISHs including NGOs, a mechanism to compile data relating to them needs to be evolved. In this context, the availability of information from the Charity Commissioner and Registrar of Cooperative Societies should be evaluated. Even though all NPISHs including NGOs may not be registered with the Charity Commissioner and/or Registrar of Cooperative Societies, this can be a starting point for such an evaluation. Further, the Directorates of Economics and Statistics in the States should be involved in this task. 7.4.5 The existing data on scientific and technical manpower (knowledge workers) not only have several limitations but such data are also not readily available. Although such data have a demographic and socio-economic connotation, these data should also be a sub-set of Services Sector data. This is particularly because the role of knowledge workers is significantly increasing within what Peter Drucker has described as a knowledge society. There is an urgent need to develop a mechanism so that data on knowledge workers are regularly collected. At present such data are usually compiled by the Ministry of Human Resource Development, Department of Science and Technology, etc. Certain data are also obtained through the Education Census. There has to be an integrated system so as to obtain data on knowledge workers. 7.4.6 The Commission therefore recommends that:

(i) A suitable methodology should be developed to estimate the contribution of emerging areas like software exports, e-commerce, Entertainment Sector, and related fields in employment, GVA, etc. (ii) An appropriate mechanism to compile data related to the NPISHs including NGOs at the national and State level should be evolved. (iii) An integrated system to improve the database on scientific and technical manpower (knowledge workers) should also be evolved. (iv) The MoS&PI should be entrusted with the responsibility to operationalise these recommendations.


Current Status

7.5.1 At present the independent scheme of collection of data pertaining to bigger units or enterprises on an annual basis exists only for those enterprises belonging to the manufacturing and repair sub-sectors. The Annual Survey of Industries (ASI) aims to collect data with respect to the units in these sub-sectors that are registered under sections 2m (i) and 2m (ii) of the Factories Act 1948 or under Bidi and Cigar Workers (Condition of Employment) Act, i.e. the units employing 10 or more workers and using power or 20 or more workers but not using power. The sub-sectors of (a) electricity, gas and water supply, and (b) storage and warehousing, covered so far under the ASI till recently, have also been discontinued from such coverage since ASI 1998-99 for which the survey was carried out during 1999-2000. 7.5.2 For sub-sectors other than manufacturing and repairing, there exists no such scheme of independent collection of data from bigger units on a regular basis. The existing Follow-up Enterprise Surveys (FuS) on the Services Sector, carried out by the MoS&PI, collect data for all types of enterprises (other than those in the public sector), irrespective of their size, through these integrated surveys by bringing all such enterprises under the same survey coverage.

7.5.3 The existing approach to data collection for all types of enterprises, irrespective of their size, through the same integrated survey (i.e. FuS) has the following limitations: (a) The integrated survey may not ensure adequate representation of bigger units in the sample (such units are fewer in number as compared to the smaller units but their contribution to the total work force and GDP is quite substantial); (b) Inclusion of few such bigger units in the sample may distort the estimated results to a great extent; (c) Non-inclusion of bigger units in the sample may underestimate survey parameters; and

(d) Due to the highly-skewed distribution of enterprises in the population in terms of number of workers, estimates based on the existing integrated Follow-up Enterprise Surveys are likely to be subject to a large margin of sampling error.
Conclusions and Recommendations

7.5.4 To overcome the above limitations and to improve the database, a Survey of NonManufacturing Industries (SNMI) for bigger units, other than those in the public sector, should be introduced on the lines of ASI. The term non-manufacturing used in the SNMI would refer to all non-agricultural activities other than manufacturing and repairing. Bigger units would refer to those units or enterprises having a certain minimum number of workers and/or those contributing significantly in terms of annual turnover. The residual category of smaller units should be covered through the usual Follow-up Enterprise Surveys of Economic Census (EC). 7.5.5 The development of the list of bigger units or Business Register (BR), discussed by the Commission in paragraphs 14.2.26 to 14.2.28 of Chapter 14 on Indian Statistical System, would make available a proper frame of eligible enterprises to be covered under the SNMI. The ultimate objective should be to bring all units with at least 10 workers and other units having a significant annual turnover under the coverage of the SNMI. However, in case a problem occurs in the effort to immediately develop a list of all bigger units with at least 10 workers; a higher cut-off point (say, 20 or more workers in the enterprise) could also be considered for implementation of the scheme. Thereafter, the ultimate objective should be achieved in a gradual manner. The residual category of smaller enterprises, i.e. those not covered under the SNMI, should be surveyed through the usual Follow-up Enterprise Surveys of EC by adopting a twostage sampling design as done at present. 7.5.6 It may be re-iterated that the survey coverage of the SNMI should also include enterprises in emerging areas like e-commerce, software development, hardware manufacturing and marketing, etc. if they qualify as per the definition of bigger units discussed above. 7.5.7 The Commission desired to form an idea about the composition of units in the frame of the SNMI in terms of the number of units and their distribution by size class of employment for various activity groups before making the recommendations on the scheme. Annexe 7.10 gives the distribution of enterprises (other than manufacturing and repairing) as per the Fourth Economic Census (1998). It may be seen from the Annexe that the total number of eligible units in the frame of SNMI would be about 3 lakhs if units with at least 10 workers are included under the coverage. However, if the survey considers enterprises employing at least 20 workers and other significant units, the total number of such units in the frame would be of the order of about 1 lakh. A technical committee should be appointed to go into the details of the survey coverage, sample size, sample design, method of data collection, etc. 7.5.8 As the existing database for the Corporate Sector suffers from serious limitations, the SNMI should also take into account the Private Corporate Sector units. The Commission has recommended the strengthening of the Department of Company Affairs (DCA) and Registrars of Companies (ROCs) for processing and dissemination of Corporate Sector Statistics in respect of a set of variables for monitoring and policy formulation. Once this is achieved, the coverage of the SNMI should be modified to exclude the Corporate Sector units so as to avoid duplication of work.


Thus the Commission recommends the following:

(i) To improve the database, it would be desirable to carry out a survey of bigger units in the sub-sectors other than manufacturing and repairing. For this, an appropriate method of data collection and other methodological aspects need to be first worked out. Also, as the subjects of trade and services are in the States domain, it will be necessary to decide upon an appropriately decentralised survey mechanism in collaboration with States.

7.6.1 The Follow-up Enterprise Surveys (FuS) of the EC are periodically carried out by the MoS&PI to collect detailed information about employment, fixed assets, working capital, receipts, expenditure, gross value added, etc. from the enterprises. With the stabilisation of the system of regular flow of information by the SNMI and the DCA, the coverage of the FuS should be confined to the units or enterprises (other than those in the public sector) that are not included in the frame of the above two sources. 7.6.2 Gross value added per worker as per the FuS for different industry groups is required to estimate the share of the respective industry groups in GDP. Apart from this, estimates of important characteristics as per the FuS have got various other uses. It is, therefore, necessary that a proper time frame for covering various industry groups in the FuS is worked out keeping in view the requirements of the data users as well as availability of resources for carrying out the survey. Annexe 7.3 lists out the surveys devoted to Services Sector since the First Economic Census came into being in 1977. 7.6.3 The following important facts emerge from Annexe 7.3:

(a) Activities of trade, hotels and restaurants as well as transport have been covered more or less regularly in the FuS; (b) Construction activity has been covered only once, i.e. during 1999-2000;

(c) Activities of electricity (other than those pursued by the undertakings registered with the Central Electricity Authority), gas and water supply have not been covered in the FuS; (d) Activities of storage and warehousing, and other services were covered after a gap of 9 years and 8 years, respectively after the year1983-84; (e) Out of 6 broad activity groups (listed under Sl. No. 12, Annexe 7.3), all of them were covered in 1999-2000, 5 activity groups in each of 1979-80 and 1998-99, and 4 activity groups in 1983-84; and (f) Certain survey years were devoted to only single activity groups (i.e. years 1985-86, 1990-91, 1991-92 and 1992-93) as against some years being burdened with the coverage of a large number of activity groups.


The Commission recommends that:

(i) A proper time schedule for covering various activity groups with specified periodicity should be framed by the MoS&PI and strictly implemented for providing benchmark estimates required for national accounting. (ii) While finalising the said time schedule, efforts should be made to evenly group various activities among different survey years.