The informal sector in India is plagued by several issues. In this context, highlight the measures taken by GOI to tackle these issues.

Highly informal nature of Indian economy (around 90%) is among the biggest challenges for growth and development of the nation.

Its characteristics are:

  • Absence of social security benefits
  • Poorly regulated.
  • Largely invisible despite major share in GDP.
  • Related to high incidence of poverty, underemployment.
  • Casualization of labour.


  1. Poor security net
    • Most welfare legislations and labour laws apply to organisations employing workforce beyond certain limit.
    • Informalization results in organisations outside purview of such laws.
  2. Regulatory incentives to remain informal
    • Complex maze of labour laws coupled with high compliance cost.
    • Easy lay off entrenchment.
  3. Workmen exploitation
    • Unhygienic work conditions, inadequate wages, absence of safety measures.
  4. Careless and useless manpower
    • Employer – no incentive to invest in capital formation.
    • Employee – No loyalty towards organisation.

Measures taken:

  1. Social security code
    • Includes gig worker, platform worker and unorganised worker within the ambit.
  2. Occupational safety hazard code
    • Apply to all hazardous industries irrespective of size and number of workmen.
    • Targeted at street vendor income security.
  4. Formalisation of economy
    • E.g. GST (registration compulsory to claim input tax credit).
  5. Skill training
    • E.g. National skill mission – Digi-SAKSHAM.

Success of these initiative hinges upon political will and regulatory oversight to ensure inclusive growth.


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