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India Has 110 Million Informal Sector Workers, Govt Releases Data for the First Time in a Decade

Experts say lack of data on the informal sector for more than a decade has had a 'crippling impact' on the credibility of all economic data. The latest findings are based on NSSO's Annual Survey of Unincorporated Sector Enterprises.
Representative image. Photo: IISG/Flickr (CC BY-SA 2.0)

New Delhi: India’s 65 million informal or unincorporated sector enterprises employed 110 million workers in 2022-23. These enterprises cumulatively created a gross value added (GVA) worth 15.4 lakh crore, a government report said.

The GVA and employment share of the informal sector outside of agriculture, therefore, accounts for 6% and 19% respectively.

Considering 45% employment and 18% income share of agriculture in overall GVA, it becomes clear that two-thirds of workers account for just one-fourth of India’s GVA. These numbers indicate the deep-seated inequality in the Indian economy.

These figures, based on the National Sample Survey Organisation’s Annual Survey of Unincorporated Sector Enterprises (ASUSE) for 2021-22 and 2022-23, provide a big boost to the task of updating many statistical series, including the overall Gross Domestic Product (GDP) numbers. While the full reports are yet to be out, the above figures are from preliminary findings.

“The necessity for comprehensive data pertaining to the unincorporated sector, including the informal sector for planning and policy formulations needs no emphasis,” Hindustan Times quotes from the fact sheet released for the ASUSE report.

What the latest findings clarify is that 110 million workforce is only 20% of India’s projected workforce of 567 million in the 2022-23 Periodic Labour Force Survey, which was conducted between July 2022 and June 2023.

On the other hand, the latest findings also underscore that inequality and low incomes are problems outside India’s agriculture and construction sector, both of which are known to provide a lot of low-income employment in the economy. It should be noted that ASUSE report findings do not take into account the construction sector, as they only include manufacturing, trade and other services.

“Lack of data on the informal sector for more than a decade has had a crippling impact on the credibility of all economic data beginning with GDP numbers. It is welcome that we finally have some data to fill this vacuum,” HT quoted Himanshu, associate professor of economics at Jawaharlal Nehru University.

“The government should release the full report along with unit-level data in a transparent manner as soon as possible and undertake wide and open-minded consultations before updating other statistical series to restore the credibility of India’s statistical system which was once among the best in the world,” he added.

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