Analysis of Informal Economy and Labor Formalization

This technical report analyzes the dynamics of the informal economy and the formalization of the labor force in India, utilizing data from the Annual Survey of Unincorporated Sector Enterprises (ASUSE) for the years 2021-22 and 2022-23. It presents insights into the changing landscape of informal employment, highlighting that approximately 45% of the labor force remains informal, with significant contributions from agriculture and services. The report details the growth of unincorporated enterprises, particularly in rural areas, and notes a substantial increase in gross value added (GVA) per establishment. It also discusses the role of the e-Shram portal in facilitating the registration of unorganized workers, which has reached nearly 29.7 crore. The report estimates that the informal economy constituted about 23.7% of the total economy in FY23, reflecting a decrease from previous years. Additionally, it provides comparative wage data between formal and informal workers, emphasizing the disparities in earnings across sectors.