Shrinking Informal Sector

Subject – Economy

Context – In three years, informal economy down to 15-20% from 52%, says SBI report

Concept –

India’s informal economy has shrunk to around 15-20 per cent of the formal GDP as against 52 per cent three years ago following the adoption of GST, enhanced digitalisation, and demonetisation, a report by the State Bank of India’s (SBI) economic research department has said.
At least Rs 13 lakh crore has come into the formal economy through various channels over the last few years, including the recent scheme on the e-Shram portal, according to SBI Eco wrap.
The SBI projections suggest that the informal agriculture sector has shrunk from 97.1% of the sector’s GVA in 2017-18 to just 70%-75% in 2020-21, driven by the increased penetration of credit through Kisan credit cards.
The informal sector consists of “own-account” or unorganised enterprises employing hired workers, with the highest share of such unorganised activity being in agriculture where holdings are small and fragmented.