Comment on the situation of the informal sector in India. What are the challenges faced by them? Enumerate the government’s initiatives to benefit this sector.

The informal economy is a widespread and worldwide phenomena. The informal sector employs over 60% of the world’s population, according to the International Labor Organization.

Informal sector in India:

• Despite being more common in emerging and developing nations, this also plays a significant role in established economies.
• A sizable portion of the population often relies on the informal sector in developing nations like India.
• The sustainability of the informal economy is essential to India’s overall economic growth and development as well as the livelihood and wages of the vast majority of employees.
• Over 90% of employees in India, according to the Periodic Labour Force Survey, are informal labourers.
• Out of them, the number of individuals employed in rural regions exceeds that in metropolitan ones.
• This is due to the fact that many of them work in agriculture. Urban dwellers work mostly in industries like manufacturing, trade, restaurants, construction, etc.

Issues faced by them:

• Inadequate health and safety regulations. 
• Irregular minimum wage rates. 
• Long working hours. 
• Indebtedness and poverty.
• Lack of a suitable physical environment. 
• Low-paying, irregular employment is the norm. 
• There are no provisions for paid time off, holidays, sick leave, or overtime. 
• There is no job security. 
• Absence of Social Security payments. 
• Vulnerability to economic shocks.

Government’s push to formalization:

• E-Shram Portal for extending the benefits of the social security schemes to the informal sector.
• Pradhan Mantri Jeevan Jyoti Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY).
• Udyam Portal for registration of MSMEs.
• Pradhan Mantri Shram Yogi Maan-dhan yojna to benefit workers from the unorganized sector.
• PM SVAnidhi scheme for providing affordable loans to street vendors.
• Deendayal Antyodaya Yojana aims to improve prospects for sustainable livelihoods for urban poor people.
• Labor law reforms to take care of the informal economy.
• Unorganised Workers’ Social Security Act, 2008.
• One Nation One Ration Card.
• Atmanirbhar Bharat Abhiyan.
• MGNREGA.

Way forward:

• The improvement of conditions for a large number of individuals who work informally is crucial to the quality of life in the country.
• From the standpoint of inclusive growth, it becomes important to improve the working conditions of those who operate in the informal sector.
• The government needs to take action to set minimum wages for the informal sector, keeping in mind the low incomes of these jobs.

Topics: GS-II: Mechanisms Laws for Protection of Vulnerable Sections • GS-III: Indian Economy Issues Relating to Planning • GS-III: Economic Growth Development • GS-III: Inclusive Growth and Issues Arising From It