Context According to the SBI in a research report, there has been a greater shift towards formalisation of the economy.
The share of the informal sector in overall economic activity has reduced sharply in 2020-21 even as informal workers continue to bear the brunt of the pandemic’s adverse effects.
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.
Key takeaways
The share of the informal economy may have shrunk to about 20% of the economic output from about 52% in 2017-18.
It has been termed as positive development amid the pandemic.
Besides, an IMF policy paper earlier this year estimated that the share of India’s informal economy in the Gross Value Added (GVA) was at 53.9% in 2011-12 and improved only marginally to 52.4% in 2017-18.
As per a National Sample Survey (NSS) of 2014, around 93% of the workforce earned their livelihoods as informal workers.
