Seven Years, Three Shocks: India's Informal Sector Loses Over 16 Lakh Jobs

The number of workers in India's informal sector has decreased by 0.45 lakh (0.5%) to 10.96 crore, down from 11.13 crore in 2015-16, according to the Annual Survey of Unincorporated Enterprises (ASUSE) for 2021-22 and 2022-23.

This survey provides the first data since 2015-16 and examines the effects of demonetisation, GST rollout, and the Covid-19 pandemic on unincorporated enterprises and their employment.

Photo Credit: PTI

Impact on Top States

Among the top ten states that account for nearly three-quarters of informal sector workers, five states—Maharashtra, Bihar, Gujarat, Madhya Pradesh, and Odisha—saw an increase in informal employment.

On the other hand, Uttar Pradesh, West Bengal, Tamil Nadu, Karnataka, and Andhra Pradesh experienced a decline in such employment.

Overall, 16 out of 34 states and union territories recorded a decrease in informal sector workers in 2022-23 compared to the previous data from 2015-16, reported the Indian Express.

However, most states saw an increase in informal sector workers immediately after the pandemic, indicating economic distress and a possible shift from formal to informal employment.

Economic Contribution

The unorganised sector contributes over 44% to India's gross value added (GVA) and employs nearly 75% of the workforce in non-agricultural enterprises.

This data is crucial for understanding employment trends during periods of economic slowdown in the formal sector.

The survey highlights how significant events like demonetisation and GST implementation have impacted unincorporated enterprises. The Covid-19 pandemic further exacerbated these challenges, leading to shifts in employment patterns within this sector.

These findings highlight the importance of monitoring the informal sector's health as it plays a vital role in India's economy. Policymakers can use this data to devise strategies that support both formal and informal sectors during economic fluctuations.

The ASUSE report serves as a valuable resource for understanding how external factors influence employment trends within unincorporated enterprises. It provides insights into how different states are adapting to these changes over time.

This comprehensive analysis helps stakeholders identify areas needing intervention to stabilise employment rates across various regions. By addressing these issues proactively, India can better manage its workforce distribution between formal and informal sectors.

The overall trend suggests a complex interplay between economic policies and external shocks affecting employment dynamics nationwide.