Informal Economy

Subject – Economy

Context – According to a recent State Bank of India (SBI) Research report, the informal economy in India has been shrinking since 2018.

Concept –

According to a recent State Bank of India (SBI) Research report, the informal economy in India has been shrinking since 2018.
The report claims that the share of the informal sector is just 15-20% in 2021 compared to 52.4% in 2018.
Informal economy represents enterprises that are not registered, where employers do not provide social security to employees.
It is characterized as a range of economic units which are mainly owned and operated by individuals and employ one or more employees on a continuous basis.
It includes farmers, agricultural labourers, owners of small enterprises and people working in those enterprises and also the self-employed who do not have any hired workers.
National Accounts Statistics (NAS) defines the unorganised sector in addition to the unincorporated proprietary or partnership enterprises, including enterprises run by cooperative societies, trust, private and limited companies.
The informal sector can, therefore, be considered as a subset of the unorganised sector.
According to the Periodic Labour Force Survey, over 90 per cent of workers in India are informal workers. Out of these, those engaged in rural areas workers are significantly more than urban areas workers.