NDA government under Narendra Modi has embarked upon a major drive aiming increased formalization of Indian Economy. Starting with Demonetization, followed with GST and many other initiatives have focused upon formalizing the informal economy.

More than 80% of Indian workforce contributing more than 50% to India’s GDP is part of the informal economy. Most of the poverty, disguised employment and economic inequalities have been due to large prevailing informal sector. The intention of making the transformation is good, but is it leading to greater distress due to the improper execution. Covid pandemic has brought the focus back on the plight of informal sector employees who were left to fend for themselves. Most of these workers fled to their villages to survive from poverty more than survival from Covid.

Michal Rutkowski, Global Director, World Bank rightly pointed out that instead of solely focusing on the formalisation of the Indian economy, policymakers should focus on increasing the productivity in the informal sector.

Author:
Nityanand Jha, Assistant Professor, Unitedworld School of Law (UWSL)

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