Digital Transformation And Enterprise Performance in India : Evidence From Unincorporated Sectors
DOI:
https://doi.org/10.66635/d2tvks24Keywords:
unincorporated enterprises, Digital adoption, productivity, employment, ASUSE, informal sector, MSMEs, IndiaAbstract
The unincorporated non agricultural sector in India is one of the greatest sources of employment, diversification of livelihoods and grass root entrepreneurship. Small establishments have been growing rapidly in digital adoption in recent years, which introduces a crucial aspect of the connectivity between productivity and creation of jobs. The paper discusses the trend of digital adoption, productivity and employment in the unincorporated sector of India, using the secondary data where the Annual Survey of Unincorporated Sector Enterprise (ASUSE), especially ASUSE 2023-24 and ASUSE 2025 have been used. The research discovers that the industry has grown to 7.92 crore establishments in 2025 with employment rising to 12.81 crore workers as compared to 7.34 crores establishments in 2023-24. The proportion of establishments that are using the internet also goes up during the same period to 39.4 percent as compared to a 26.7 percentage. The productivity of labour in terms of gross value added per worker also improved from ₹149,742 to 156, 539 at the current prices. The study argues that digital adoption is becoming a crucial factor for production, market access and enterprise resilience, yet its advantages are being subjugated by urban-rural inequality, small business size, low hired employment rates, low capital intensity and a different digital capacity. Policy will then have to go further beyond digital access to digital capability, affordable credit, platform-inclusion, enterprise-skilling and data-based-monitored.
References
1.Atiyas, İ., & Dutz, M. A. (2021). Digital technology uses among informal micro-sized firms: Productivity and jobs outcomes in Senegal (Policy Research Working Paper No. 9573). World Bank.
2.Ayyagari, M., Demirgüç-Kunt, A., & Maksimovic, V. (2014). Who creates jobs in developing countries? Small Business Economics, 43(1), 75–99.
3.Begazo, T., Blimpo, M. P., & Dutz, M. A. (2023). Digital Africa: Technological transformation for jobs. World Bank.
4.Brynjolfsson, E., & Hitt, L. M. (2000). Beyond computation: Information technology, organizational transformation and business performance. Journal of Economic Perspectives, 14(4), 23–48.
5.Cirera, X., Comin, D., & Cruz, M. (2022). Bridging the technological divide: Technology adoption by firms in developing countries. World Bank.
6.Cunningham, J. A., Damij, N., Modic, D., & Olan, F. (2023). MSME technology adoption, entrepreneurial mindset and value creation: A configurational approach. The Journal of Technology Transfer, 48(5), 1574–1598.
7.de Mel, S., McKenzie, D., & Woodruff, C. (2008). Returns to capital in microenterprises: Evidence from a field experiment. The Quarterly Journal of Economics, 123(4), 1329–1372.
8.Goldfarb, A., & Tucker, C. (2019). Digital economics. Journal of Economic Literature, 57(1), 3–43.
9.International Labour Office. (2018). Women and men in the informal economy: A statistical picture (3rd ed.). International Labour Organization.
10.La Porta, R., & Shleifer, A. (2014). Informality and development. Journal of Economic Perspectives, 28(3), 109–126.
11.McKenzie, D., & Sakho, Y. S. (2010). Does it pay firms to register for taxes? The impact of formality on firm profitability. Journal of Development Economics, 91(1), 15–24.
12.Ministry of Micro, Small and Medium Enterprises. (2025). Annual report 2024–25. Government of India.
13.Ministry of Statistics and Programme Implementation. (2024). Annual Survey of Unincorporated Sector Enterprises, 2021–22 and 2022–23. Government of India.
14.Ministry of Statistics and Programme Implementation. (2025a). Annual Survey of Unincorporated Sector Enterprises, 2023–24: Fact sheet. Government of India.
15.Ministry of Statistics and Programme Implementation. (2025b). Annual Survey of Unincorporated Sector Enterprises, 2023–24: Operational and economic characteristics of unincorporated sector enterprises. Government of India.
16.Ministry of Statistics and Programme Implementation. (2025c). Annual Survey of Unincorporated Sector Enterprises, 2023–24: Unit-level data and metadata. Government of India.
17.Ministry of Statistics and Programme Implementation. (2026a). Annual Survey of Unincorporated Sector Enterprises, 2025: Fact sheet. Government of India.
18.Ministry of Statistics and Programme Implementation. (2026b). Annual Survey of Unincorporated Sector Enterprises, 2025: Operational and economic characteristics of unincorporated sector enterprises. Government of India.
19.Ministry of Statistics and Programme Implementation. (2026c). Annual Survey of Unincorporated Sector Enterprises, 2025: Unit-level data and metadata. Government of India.
20.Mishrif, A., & Khan, A. (2023). Technology adoption as survival strategy for small and medium enterprises during COVID-19. Journal of Innovation and Entrepreneurship, 12, Article 53.
21.Mukherjee, S. (2018). Challenges to Indian micro small scale and medium enterprises in the era of globalization. Journal of Global Entrepreneurship Research, 8, Article 28.
22.Nayyar, G., Pleninger, R., Vorisek, D., & Yu, S. (2024). Digitalization and inclusive growth: A review of the evidence (Policy Research Working Paper No. 10941). World Bank.
23.Organisation for Economic Co-operation and Development. (2021). The digital transformation of SMEs. OECD Publishing.
24.Organisation for Economic Co-operation and Development. (2023). OECD SME and entrepreneurship outlook 2023. OECD Publishing.
25.Papadopoulos, T., Baltas, K. N., & Balta, M. E. (2020). The use of digital technologies by small and medium enterprises during COVID-19: Implications for theory and practice. International Journal of Information Management, 55, Article 102192.
26.Priyono, A., Moin, A., & Putri, V. N. A. O. (2020). Identifying digital transformation paths in SMEs during the COVID-19 pandemic. Journal of Open Innovation: Technology, Market, and Complexity, 6(4), Article 104.
27.Radicic, D., & Petković, S. (2023). Impact of digitalization on technological innovations in small and medium-sized enterprises. Technological Forecasting and Social Change, 191, Article 122474.
28.Reserve Bank of India. (2025). Annual report 2024–25. Reserve Bank of India.
29.Sagala, G. H., & Őri, D. (2024). Toward SMEs digital transformation success: A systematic literature review. Information Systems and e-Business Management, 22(4), 667–719.
30.Sindakis, S., & Showkat, G. (2024). The digital revolution in India: Bridging the gap in rural technology adoption. Journal of Innovation and Entrepreneurship, 13, Article 29.
31.United Nations Conference on Trade and Development. (2021). Technology and innovation report 2021: Catching technological waves—Innovation with equity. United Nations.
32.World Bank. (2016). World development report 2016: Digital dividends. World Bank.
