India’ Informal Sector

The informal economy is a global and pervasive phenomenon. According to International Labour Organisation, approximately 60 per cent of the world’s population participates in the informal sector. Although this is mostly prevalent in emerging and developing economies, it is also an important part of advanced economies.

In developing countries like India, large share of the population typically depends upon the informal economy.

Need for Governmental push for Formalisation

• Informal operations pose many challenges to the government, like the inability to raise tax revenue, collect data, and regulate firms.
• India’s informality is one reason why its tax-to-GDP ratio has been stuck, impacting education ....