It was envisaged by the developmental planning that 'as the economy grows' more and more workers become formal sector workers and the number of workers in the informal sector would fall. But in the case of India the reverse happened. Why so? Explain.
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It is correct to say that in case of India the number of workers in the informal sector increased instead of falling. Out of 460 million workers in the country about 29 million workers worked in the formal sector. This is about $7\%\Big(\frac{29}{460}\times100\Big).$ Are occupied in the informal sector.
- The answer to this anomaly lies in the fact that since the late 1970's many developing countries like India, shifted their attention to the enterprises and workers with the informal sector. The reason mainly being the fact that the formal sector was not growing. So as a result these countries shifted their attention to the informal sector growth.
- A big feat in this direction is due to the efforts of the International Labour Organisation (ILO). The Indian government initiated a move to modernise the informal sector enterprises and to provide social security measures like pension, provident fund, gratuity, health care etc. to the workers in the informal sector.
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