Comment on the situation of the informal sector in India. What are the challenges faced by them? Enumerate the government’s initiatives to benefit this sector.
The informal economy is a widespread and worldwide phenomena. The informal sector employs over 60% of the world’s population, according to the International Labor Organization.
Informal sector in India:
- Despite being more common in emerging and developing nations, this also plays a significant role in established economies.
- A sizable portion of the population often relies on the informal sector in developing nations like India.
- The sustainability of the informal economy is essential to India’s overall economic growth and development as well as the livelihood and wages of the vast majority of employees.
- Over 90% of employees in India, according to the Periodic Labour Force Survey, are informal labourers.
- Out of them, the number of individuals employed in rural regions exceeds that in metropolitan ones.
- This is due to the fact that many of them work in agriculture. Urban dwellers work mostly in industries like manufacturing, trade, restaurants, construction, etc.
Issues faced by them:
- Inadequate health and safety regulations.
- Irregular minimum wage rates.
- Long working hours.
- Indebtedness and poverty.
- Lack of a suitable physical environment.
- Low-paying, irregular employment is the norm.
- There are no provisions for paid time off, holidays, sick leave, or overtime.
- There is no job security.
- Absence of Social Security payments.
- Vulnerability to economic shocks.
Government’s push to formalization:
- E-Shram Portal for extending the benefits of the social security schemes to the informal sector.
- Pradhan Mantri Jeevan Jyoti Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY).
- Udyam Portal for registration of MSMEs.
- Pradhan Mantri Shram Yogi Maan-dhan yojna to benefit workers from the unorganized sector.
- PM SVAnidhi scheme for providing affordable loans to street vendors.
- Deendayal Antyodaya Yojana aims to improve prospects for sustainable livelihoods for urban poor people.
- Labor law reforms to take care of the informal economy.
- Unorganised Workers’ Social Security Act, 2008.
- One Nation One Ration Card.
- Atmanirbhar Bharat Abhiyan.
- MGNREGA.
Way forward:
- The improvement of conditions for a large number of individuals who work informally is crucial to the quality of life in the country.
- From the standpoint of inclusive growth, it becomes important to improve the working conditions of those who operate in the informal sector.
- The government needs to take action to set minimum wages for the informal sector, keeping in mind the low incomes of these jobs.