India is undergoing a significant transformation in its employment landscape, as self-employment emerges as a dominant trend. According to the Economic Survey, the proportion of self-employed workers has risen from 52.2 percent in 2017-18 to 58.4 percent in 2023-24. This shift indicates the growing preference for entrepreneurial ventures and independent work models, driven by economic resilience, digital advancements, and evolving labor market conditions. Concurrently, unemployment has witnessed a significant decline, underscoring the broader economic recovery.
The Surge in Self-Employment
The increasing number of self-employed individuals reflects a structural change in India’s job market. The share of regular salaried jobs declined from 22.8 percent in 2017-18 to 21.7 percent in 2023-24, while casual labor employment fell from 24.9 percent to 19.8 percent. This trend suggests that many workers are moving away from temporary, insecure jobs toward more stable and independent work arrangements.
A notable aspect of this shift is the rise in “own account workers,” or individuals running their own businesses without employing others. Their share increased from 19 percent in 2017-18 to 31.2 percent in 2023-24. This surge indicates that a significant portion of the workforce is choosing self-employment as a sustainable and flexible alternative to traditional jobs. Factors such as improved access to digital platforms, government support programs like Mudra loans, and a growing gig economy have further accelerated this transition.
Women in the Self-Employment Sector
One of the most impactful dimensions of this employment shift is its effect on women’s participation in the workforce. The Periodic Labour Force Survey (PLFS) highlights that women, especially in rural areas, are moving away from regular salaried jobs towards self-employment. The proportion of women in regular wage jobs in rural areas declined from 10.5 percent in 2017-18 to 7.8 percent in 2023-24. However, many have taken up self-employment opportunities, either by working independently or contributing to household enterprises.
In urban areas, the trend is similar, with women’s participation in salaried jobs dropping from 52.1 percent in 2017-18 to 49.4 percent in 2023-24. The COVID-19 pandemic accelerated this transition, as many women sought home-based work, digital freelancing, and self-driven businesses due to flexible working conditions and the need for financial stability.
Sectoral Distribution of Employment
The self-employment surge is also reflected in the sectoral distribution of workers. Male workers in urban areas predominantly engage in manufacturing, construction, and trade-related activities, many of which offer self-employment opportunities. At the same time, there has been a rise in family-oriented economic activities, as evidenced by the increase in unpaid family labor, or “helpers in household enterprises,” which grew from 38.7 percent in 2017-18 to 42.3 percent in 2023-24.
The rapid expansion of e-commerce, digital platforms, and delivery services has played a significant role in boosting self-employment. Gig economy jobs, including app-based transportation services and home-based businesses, have become viable alternatives to traditional employment. Additionally, government initiatives promoting micro, small, and medium enterprises (MSMEs) and startup ecosystems have further facilitated the rise of self-employment.
Decline in Unemployment and Labor Market Dynamics
While self-employment is growing, India’s unemployment rate has shown a significant decline. The PLFS report indicates that the unemployment rate for individuals aged 15 and above fell from 6 percent in 2017-18 to 3.2 percent in 2023-24. This decline suggests a broader economic recovery, supported by increased labor force participation and employment generation.
The labor force participation rate (LFPR) and the worker-to-population ratio (WPR) have also improved, reflecting a higher number of individuals engaged in economic activities. Among the states and union territories, 12 recorded a worker-to-population ratio below the national average of 43.7 percent, while 15 states exceeded the national LFPR average of 45.1 percent. States like Arunachal Pradesh, Nagaland, Tripura, Jharkhand, Assam, Odisha, Uttarakhand, Sikkim, Gujarat, Himachal Pradesh, Madhya Pradesh, and Uttar Pradesh reported significant employment growth, driven by policy initiatives and sectoral expansions.
Key Drivers of Self-Employment Growth
Several factors have contributed to the rising self-employment trend in India:
- Government Support: Initiatives such as Mudra loans, Startup India, and Skill India have encouraged entrepreneurship and self-reliance.
- Digital Revolution: The rise of digital platforms, e-commerce, and gig economy jobs has created new income-generating opportunities.
- Work Flexibility: Many individuals prefer self-employment due to flexible working conditions and financial independence.
- Pandemic-Induced Changes: The COVID-19 crisis led to job losses in formal employment, prompting individuals to explore self-sustaining economic activities.
- Sectoral Shifts: Growth in the services sector, especially in IT, e-commerce, and digital content creation, has boosted self-employment opportunities.
Challenges and Future Prospects
Despite the positive trends, self-employment comes with challenges such as income volatility, lack of social security benefits, and limited access to formal financial resources. Policymakers must focus on enhancing financial inclusion, skill development, and market access for self-employed individuals.
Going forward, the Indian workforce is likely to continue evolving, with self-employment playing a crucial role in job creation and economic growth. Strengthening support systems, promoting entrepreneurship education, and facilitating credit access will be essential in sustaining this momentum.
Conclusion
The rise in self-employment, coupled with a decline in unemployment, marks a significant shift in India’s labor market. The transition towards independent work models, especially among women and in emerging sectors, highlights the changing dynamics of employment. As India moves towards a more entrepreneurial economy, ensuring adequate support mechanisms and policy interventions will be key to leveraging the full potential of this workforce transformation.