The Rise of Self-Employment in India: Key Insights

In India, a significant number of individuals operate their own shops, farms, or small enterprises rather than being employed by others.

By 2025, self-employment in India is projected to encompass 50% of the workforce, indicating that half of the working adult population is self-employed.

The first table presents self-employment rates in percentage form, while the second details the number of self-employed individuals in crores.

Certain states exhibit high self-employment rates, whereas others depend more on traditional employment.

State-wise Self Employment Rates in India

Rank	State/Union Territory	Self-Employment Rate (%)
1	Bihar	61.0
2	Madhya Pradesh	59.0
3	Uttar Pradesh	58.0
4	Rajasthan	57.0
5	Odisha	56.0
6	Jharkhand	55.0
7	Chhattisgarh	54.0
8	Assam	53.0
9	Himachal Pradesh	52.0
10	West Bengal	51.0
11	India (National Average)	50.0
12	Punjab	49.0
13	Haryana	48.0
14	Uttarakhand	47.0
15	Jammu and Kashmir	46.0
16	Kerala	45.0
17	Tamil Nadu	44.0
18	Andhra Pradesh	43.0
19	Telangana	42.0
20	Karnataka	41.0
21	Maharashtra	40.0
22	Gujarat	39.0
23	Goa	38.0
24	Puducherry	37.0
25	Chandigarh	36.0
26	Delhi	35.0
27	Tripura	34.0
28	Manipur	33.0
29	Meghalaya	32.0
30	Nagaland	31.0
31	Arunachal Pradesh	30.0
32	Mizoram	29.0
33	Sikkim	28.0
34	Andaman and Nicobar Islands	27.0
35	DNHDD (Dadra and Nagar Haveli and Daman and Diu)	26.0
36	Ladakh	25.0
37	Lakshadweep	24.0

The first table organizes states according to their self-employment rates, indicating the percentage of workers aged 15-59 who manage their own businesses or farms.

Bihar ranks first with 61.0%, followed by Madhya Pradesh at 59.0%, Uttar Pradesh at 58.0%, Rajasthan at 57.0%, and Odisha at 56.0%.

The national average stands at 50.0%, while Lakshadweep (24.0%), Ladakh (25.0%), and Dadra and Nagar Haveli and Daman and Diu (26.0%) are at the bottom of the list.

Bihar’s leading position is attributed to its rural economy, where 61% of the workforce is engaged in farming or selling products such as vegetables.

Madhya Pradesh’s 59.0% reflects the prevalence of small-scale agriculture and handicrafts in its villages.

Uttar Pradesh’s 58.0% is linked to the millions who operate roadside stalls or tailoring businesses.

These states heavily depend on agriculture and informal enterprises, which enhances self-employment.

What accounts for the lower rates in some states?

Lakshadweep’s 24.0% is a result of its limited population and dependence on fishing or government employment.

Ladakh’s 25.0% faces comparable challenges, with tourism providing few opportunities for self-employment.

Urban regions like Delhi (35.0%) tend to favor salaried positions in technology or government sectors over entrepreneurship.

Total Self Employed in India across different different states

Rank	State/Union Territory	Self-Employed People (in Crore)
1	Uttar Pradesh	3.68
2	Bihar	3.03
3	Maharashtra	2.60
4	West Bengal	2.06
5	Madhya Pradesh	1.87
6	Rajasthan	1.84
7	Tamil Nadu	1.60
8	Karnataka	1.44
9	Gujarat	1.41
10	Andhra Pradesh	1.08
11	Odisha	1.07
12	Telangana	1.02
13	Kerala	0.97
14	Punjab	0.82
15	Haryana	0.78
16	Chhattisgarh	0.71
17	Jharkhand	0.67
18	Assam	0.66
19	Delhi	0.43
20	Uttarakhand	0.25
21	Himachal Pradesh	0.17
22	Jammu and Kashmir	0.18
23	Tripura	0.09
24	Manipur	0.08
25	Meghalaya	0.07
26	Nagaland	0.05
27	Arunachal Pradesh	0.04
28	Mizoram	0.03
29	Sikkim	0.02
30	Goa	0.05
31	Puducherry	0.03
32	Chandigarh	0.03
33	Andaman and Nicobar Islands	0.01
34	DNHDD (Dadra and Nagar Haveli and Daman and Diu)	0.02
35	Ladakh	0.01
36	Lakshadweep	0.005

The second table illustrates the count of self-employed individuals in crores. Uttar Pradesh leads with 3.68 crores, followed by Bihar (3.03 crores), Maharashtra (2.60 crores), West Bengal (2.06 crores), and Madhya Pradesh (1.87 crores).

Smaller regions such as Lakshadweep (0.005 crores), Ladakh (0.01 crores), and the Andaman and Nicobar Islands (0.01 crores) report the lowest figures.

Uttar Pradesh’s 3.68 crores is indicative of its large population (241.5 million) and a significant self-employment rate (58.0%), with many individuals engaged in agriculture or operating small businesses.

Bihar’s 3.03 crores is derived from its 125 million inhabitants and a self-employment rate of 61.0%, predominantly consisting of farmers.

Maharashtra’s 2.60 crores encompasses street vendors and small-scale manufacturers in Mumbai, despite a lower self-employment rate (40.0%).

The small territories exhibit minimal numbers due to their limited populations.

Lakshadweep’s 0.005 crores corresponds to its 64,000 residents, primarily involved in fishing.

Ladakh’s 0.01 crores aligns with its 290,000 population, which is largely engaged in tourism or government employment.

Why Are There Disparities?

Several elements account for the inconsistent self-employment rates in India:

Rural and Urban Disparity: Rural regions such as Bihar (61.0%, 88% rural) exhibit elevated self-employment rates due to the prevalence of agriculture and small retail businesses.

In contrast, urban areas like Delhi (35.0%, 93% urban) tend to favor salaried positions in corporate or technological sectors, resulting in a decrease in self-employment.

Economic Structure: The 56.0% self-employment rate in Odisha is driven by agriculture and handicrafts, where individuals engage in farming or weaving for income.

Conversely, Chandigarh’s 36.0% rate is hindered by its urban economy, which emphasizes stable government employment.

Population Dynamics: Uttar Pradesh boasts 3.68 crore self-employed individuals, overshadowing Lakshadweep’s 0.005 crore, primarily due to its vast population, despite facing similar economic hurdles.

Larger states inherently have a greater number of self-employed individuals.

Educational Attainment and Skills: The lower literacy rate in Bihar (67%) contributes to a 61.0% self-employment rate, as individuals often resort to farming or street vending.

In contrast, Kerala, with a higher literacy rate of 94% and a 45.0% self-employment rate, encourages skilled employment, thereby reducing self-employment opportunities.

Government Initiatives: Programs such as PMMY provide loans amounting to 4.14 lakh crore for small enterprises (PIB, 2025), enhancing Rajasthan’s self-employment rate to 57.0%.

However, remote regions like Nagaland (31.0%) receive less governmental assistance, which restricts self-employment growth.

Progress and Obstacles

India’s self-employment rate remains stable at 50%, with approximately 25 crore individuals managing businesses or agricultural operations (PLFS 2023-24).

Rural regions are the primary contributors, with 55% self-employed compared to 40% in urban areas. States like Bihar illustrate how necessity drives self-employment in agriculture.

Nevertheless, challenges remain. Low income levels in Jharkhand (55.0%) complicate self-employment, while urban centers like Delhi experience fewer startups due to elevated costs.

Northeastern states such as Mizoram (29.0%) face infrastructural challenges that hinder the growth of small businesses.

Source

• Ministry of Finance, Government of India. (2024). Economic survey 2023-24.
• Ministry of Health and Family Welfare, Government of India. (2021). National Family Health Survey (NFHS-5) 2019-21: India report. International Institute for Population Sciences (IIPS).