India's war on informal labour is turning out bad for workers

Informality seen as a by-product of tax evasion is failing the effort

- ANDY MUKHERIEE

India’s mission to bring its vast workforce into formal jobs is faltering, leaving a majority of non-farm labour in unincorporated businesses. It isn’t just tax evasion that’s prompting employers to keep workers under the radar. Therefore, putting more transactions under the government’s scanner—via the digital trail of a goods and services levy—may not be the solution.

The [latest] Periodic Labour Force Survey shows that 74% of non-farm workers are in proprietorships and partnerships, officially classified as informal-sector enterprises. Between July 2020 and June 2021, when India battled multiple waves of covid, the number was three percentage points lower. A reopened economy may have brought back livelihoods; it doesn’t appear to have made a dent into precarity.

Some part of self-employment is no doubt richly remunerated and voluntary. It’s undertaken by people with professional expertise, for instance in law, consulting or creative fields. Still, in a country where the working-age population has swelled to nearly 1 billion, this upper tier of informality is unlikely to be a significant factor.