‘Around half the GDP comes from the informal sector’

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: of that in the formal sector

Q: Will the informal sector continue to grow? Which areas in the informal sector have the best and the worst prospects for employment and earnings?

Going by past experience, my estimate is that it would grow at 4-5%, while the formal, or organised, sector will grow at 12-13%. This would mean acceleration in the pace of economic inequality in the country unless concerted action is taken to level-up the informal sector to enhance its productivity and reduce the gap with the formal sector. The best prospects are in construction, garment and apparel making, food processing, gems & jewellery, transport and retail trade.

The worst prospects await those self-employed at the lower end (called ‘own-account’ enterprises) engaged in street vending, rickshaw-pulling and similar activities. Of course, agricultural labourers are at the bottom of this pyramid, with wages that are hardly adequate even to cross the abysmally low poverty line that we now have.

Q: What would you say are the main achievements of the NCEUS over the last four years?

The main achievement, in my view, is sensitising policymakers, as well as the public in general, to the plight of the poor and vulnerable working in the informal sector. A concrete achievement is in sizing up this vast informal sector and measuring it in terms of employment, conditions of work, enterprises, and contribution to GDP. Further, we have also highlighted the strong link of the informal sector not only to the poor and vulnerable but also to their socially underprivileged status and gender. It is for the first time that such a comprehensive, countrywide exercise has been undertaken.

Q: What is the NCEUS agenda for improving productivity in the unorganised sector?

The NCEUS adopted an unconventional approach by first pushing a human security agenda. We recommended a three-point, security-centred agenda. The first element is is what we call a national minimum social security by providing insurance cover for sickness, maternity, death or accident of a worker. To this, we added an old-age pension. Our argument was that this should be viewed as a floor level to which state governments could add higher or additional social security cover.