{"id":150131,"date":"2021-12-01T20:59:45","date_gmt":"2021-12-01T15:29:45","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=150131"},"modified":"2021-12-02T13:53:01","modified_gmt":"2021-12-02T08:23:01","slug":"indias-informal-economy-has-not-shrunk","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/indias-informal-economy-has-not-shrunk\/","title":{"rendered":"India\u2019s informal economy has not shrunk"},"content":{"rendered":"\n

News: <\/strong>SBI Research study claimed that there is greater formalisation of the economy<\/p>\n

According to a recent State Bank of India (SBI) Research report<\/a><\/strong><\/span>, the informal economy in India has been shrinking since 2018.<\/p>\n

The report claims that the share of the informal sector is just 15-20% in 2021 compared to 52.4% in 2018.<\/p>\n

According to the report, Formalisation, has taken place through the gross value-added (GVA) route, consumption through increased digital payments, and the employment route.<\/p>\n

However, the report’s claim is unfounded.<\/p>\n

What is the definition for informal enterprises?<\/strong><\/h5>\n

According to ILO, informal enterprises are defined as,<\/p>\n

Household enterprises not constituted as separate legal entities independently of the households or household members that own them, and for which no complete accounts are available and those without social security.<\/em><\/p>\n

Why the report’s claim is unfounded?<\/strong><\/h5>\n

Firstly, <\/strong><\/em>The SBI study adopts multiple definitions of formality<\/strong> (digitisation, registration in GST, cashless payments), which are not used by anyone.<\/p>\n

Secondly<\/strong>,<\/em> The SBI study confuses the shrinking of the informal sector\u2019s share of the GDP due to demonetisation and COVID-19\u2019s impact on the economy with formalisation.<\/p>\n

Thirdly,<\/strong><\/em> the formal sector has been treated as a homogenous entity<\/strong> in the study. In reality, there are various layers within the formal sector. Not all workers engaged in the formal sector are \u2018formal\u2019. There has been large-scale informalisation of the formal sector over the last three decades through contractualisation and outsourcing of labour. As a result, the proportion of non-permanent, casual and contract workers increased in the organised sector from 1999-00 to 2011-12.<\/p>\n

Fourthly<\/strong>,<\/em> registration under miscellaneous laws does not imply that they have become formal. For instance, registration under acts like local municipal acts or tax laws does not indicate formalisation.<\/p>\n

Read more here<\/strong>:<\/p>\n

– High cost of India’s illusive quest for formalization<\/a><\/strong><\/span><\/p>\n

– An estimate of a big formal shift that stretches credulity too far<\/a><\/strong><\/span><\/p>\n

– Big claims of rapid economic formalization are suspect<\/strong><\/span><\/a><\/p>\n

Source:<\/strong> This post is based on the article \u201cIndia\u2019s informal economy has not shrunk<\/strong>\u201d published in The Hindu on 1st<\/sup> Dec 2021<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

News: SBI Research study claimed that there is greater formalisation of the economy 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. According… Continue reading India\u2019s informal economy has not shrunk<\/span><\/a><\/p>\n","protected":false},"author":10316,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10498],"class_list":["post-150131","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":1700776336,"cached_date":1704930645},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/150131","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10316"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=150131"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/150131\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=150131"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=150131"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=150131"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}