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Informal sector in India

Informal sector in India is broadly defined as consisting of units engaged in the production of goods and services with the primary objectives of generating employment and incomes to the persons concern. These units operate at low level of organization with little or no division between labor and capital as factors of production and on a small scale. Labor relations where they exist are based mostly on casual employment, kinship or personal or social relations. The production units in informal sector are not constituted as separate legal entities independently of the household or household members that own them and for which no complete sets of accounts are available. The owners of their production units have to raise the finance on their own risk and personally liable for any debts incurred in the production process. Expenditure for production is often indistinguishable from household expenditure. The informal sector is regarded as a group of production units which form part of the household sector as household enterprises owned by the households. In India the informal sector comes in the category of unorganized sector. The unorganized sector refer to those enterprises whose activities or collection of data is not regulated under any legal provision or do not maintain any regular accounts. The informal sector provides income-earning opportunities for a large number of workers. The enactment of legislations and other measures to bring them under the regulatory and social protection will hamper the existing mechanism prevailing in the informal sector, as it would lead to market imperfections creating hurdles in the smooth functioning of the market economy. The government has to play the role of facilitator an promoter so that the workers employed in the informal sector are able to get requisite level of protection and security to have decent work environment enabling them to express their skills fully and according to their capabilities necessary for enhance the quality of their outputs and thereby raising their income and socio-economic status.

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