The cumulative impact of macroeconomic shocks between 2016 and 2023 led to an estimated loss of Rs 11.3 lakh crore for the Indian economy, the ratings agency India Ratings and Research has said, reported The Hindu on Wednesday. This was in addition to the loss of 1.6 crore informal sector jobs.

There were three primary shocks to the economy in the eight-year period of assessment: The demonetisation of high-denomination currency notes in 2016, the implementation of the Goods and Services Tax in 2017 and the economic downturn brought about by the Covid-19 pandemic in 2020.

The economic losses they caused are equal to 4.3% of India’s gross domestic product in the financial year 2022-’23, the agency said.

The informal sector was “severely impacted” by these shocks. An estimated 63 lakh informal enterprises shut down between 2015-’16 and 2022-’23 and around 1.6 crore jobs were lost, according to the ratings agency.

“This period also coincided with the rise in the formalisation of the economy, which has led to robust tax collections,” the newspaper quoted the rating agency’s principal economist Sunil Kumar Sinha as saying.

“While formalisation of the economy is the way forward, the reduced unorganised sector footprint has implications for employment generation,” Sinha added.

The India Ratings and Research report was based on the Annual Survey of Unincorporated Sector Enterprises released by the Ministry of Statistics and Programme Implementation on July 5.

The ministry’s survey noted that the total number of enterprises in the non-agricultural sector increased from 5.97 crore in 2021-’22 to 6.5 crore in 2022-’23. During the same time, the employment generated by this sector rose from 9.79 crore workers to 10.96 crore workers.

In 2015-’16, however, before the first economic shock of demonetisation, around 11.13 crore workers were employed by the sector, reported The Hindu.

In the absence of the macroeconomic shocks that began in 2016, the total number of non-agricultural enterprises in India would have stood at 7.14 crore in 2022-’23. This is based on the pattern of growth that the economy had seen between 2010-’11 and 2015-’16.

The number of workers employed by the sector would have risen to 12.53 crore, the report added.

In 2022-’23, the Gross Value Added to the economy by informal enterprises was still 1.6% lower than in 2015-’16, according to the ratings agency.

Gross Value Added is the economic value that producers add to their goods and services. When a producer sells their commodity, their income from the sale should be more than their cost. The difference between the two is the value added by the producer.